Docket: T-145-10
Citation:
2014 FC 1027
Ottawa, Ontario, October 29, 2014
PRESENT: The
Honourable Mr. Justice O'Keefe
|
BETWEEN:
|
|
STEVEN WISE
|
|
Plaintiff
|
|
and
|
|
THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS
|
|
Defendant
|
REASONS FOR JUDGMENT AND JUDGMENT
[1]
Pursuant to section 18 of the Proceeds of
Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17 [the
Act], a customs officer penalized the plaintiff for not declaring currency over
the prescribed amount when leaving Canada. The plaintiff asked the Minister to
review that decision, but the Minister’s delegate agreed with the officer’s
decision. The plaintiff now appeals to this Court pursuant to subsection 30(1)
of the Act.
[2]
The plaintiff asks for the following remedies:
1.
A declaration that the plaintiff has not
contravened the Act;
2.
A declaration that the seizure of his funds was
unlawful;
3.
A declaration that the penalty imposed was
unlawful;
4.
A refund or partial refund of the penalty, with
interest;
5.
An order requiring every government agency which
has recorded the offence to correct that; and
6.
Costs on a substantial indemnity basis.
I.
Background
[3]
On February 14, 2009, the plaintiff and his wife
were catching a flight to St. Martin when they were stopped by an officer of
the Canadian Border Services Agency (CBSA). The officer told them about their
obligation to report any cash in the amount of $10,000 CAD or more and asked if
they had that much. They said they did not, but a search revealed that the
plaintiff was carrying currency worth $13,820.69 CAD. The officer therefore
seized the funds and penalized the plaintiff $2,500 before letting him leave
with the remainder.
II.
Decision
[4]
The plaintiff appealed that decision to the
Minister pursuant to section 25 of the Act, saying that he believed he did not
need to report the money since it was jointly owned by him and his wife.
However, the Minister’s delegate rejected that argument and affirmed the
officer’s decision that subsection 12(1) had been violated. The Minister’s
delegate also held that $2,500 was an appropriate penalty since the plaintiff
had made false statements to the officer prior to and during the search.
III.
Standard of Review
[5]
Though technically an appeal, this type of
proceeding is brought by way of an action and is a trial de novo. The
underlying decision is not entitled to any deference and the parties are free
to introduce evidence that was not before the Minister’s delegate (see Tourki
v Canada (Minister of Public Safety and Emergency Preparedness), 2006 FC 50
at paragraph 16, 285 FTR 291 [Tourki (FC)], aff’d on other grounds 2007
FCA 186, 284 DLR (4th) 356 [Tourki (FCA)]; Azouz v Canada (Minister
of Public Safety and Emergency Preparedness), 2009 FC 1222 at paragraph 16,
[2009] FCJ No 1544 [Azouz]).
IV.
Issues
[6]
The plaintiff says that his appeal raises three
issues:
1.
Was the plaintiff in possession of an amount of
currency in excess of Canadian $9,999.99?
2.
Was the plaintiff induced into a violation of
the Act as a result of the statements made to him by the officer immediately
prior to the plaintiff’s boarding the aircraft?
3.
In the circumstances, was the officer obliged to
correctly inform the plaintiff as to the provisions of the Act, including sections
12 and 13?
[7]
The defendant disagrees saying that the only
issue is “[w]hether the plaintiff had an obligation to
report the seized currency.”
[8]
I agree with the defendant that the overarching
issue is whether the plaintiff violated subsection 12(1) of the Act. Beyond
that, there are two main factual questions that need to be resolved: (1) were
the funds jointly owned by the plaintiff and his wife? and (2) what did the
officer tell the plaintiff and his wife about their obligation to report the
currency?
[9]
The legal sub-issues are: (1) if the funds were
jointly owned, could the plaintiff carry up to $19,999.98 (which is $9,999.99
by two)? and (2) if the officer gave erroneous advice, would that excuse the
plaintiff of his duty to declare the funds? and (3) what is the appropriate
remedy?
[10]
I would rephrase the issues as follows:
A.
If the funds were jointly owned, could the
plaintiff carry up to $19,999.98?
B.
If the officer gave erroneous advice, would that
excuse the plaintiff of his duty to declare the funds?
C.
What is the appropriate remedy?
V.
Plaintiff’s Submissions
[11]
The plaintiff argues that he never actually
possessed more than $9,999.99 because the funds he was carrying belonged to him
and his wife; she could have taken them from him at any time. In his view,
Parliament could not have intended to punish spouses for keeping their money in
one bag instead of two. Instead, the plaintiff argues that co-travelling
spouses should be able to carry up to $20,000 before incurring any obligation
to report.
[12]
Alternatively, the plaintiff argues that the
CBSA officer did not properly explain the reporting obligations and left them
with the impression that he was asking whether they were collectively carrying
more than $20,000.
VI.
Defendant’s Submissions
[13]
The defendant says that the officer advised the
plaintiff and his wife that they had to report any funds equal to or greater
than $10,000 that they were carrying whether it was theirs or not. The
defendant argues that was correct since paragraph 12(3)(a) of the Act refers to
“actual possession” not ownership. In its view, the Federal Court already settled
that the proper determination is physical possession in Khattab v Canada (Minister of Public Safety and Emergency Preparedness), 2010 FC 453 at paragraph
14, 371 FTR 35 [Khattab].
VII.
Analysis and Decision
A.
Issue 1: If the funds were jointly owned, could the
plaintiff carry up to $19,999.98?
[14]
Section 12 requires people to report any
currency they actually possess if it is equal to or greater than the prescribed
amount. The amount is prescribed as $10,000 by subsection 2(1) of the Cross-border
Currency and Monetary Instruments Reporting Regulations, SOR/2002-412.
[15]
The issue in this case largely revolves around
the interpretation of the term “actual possession” in paragraph 12(3)(a). The
plaintiff essentially contends that it should mean ownership, while the defendant
says it simply means physical possession.
[16]
The defendant’s position is supported by Khattab,
a case in which the plaintiff had crossed the border with over $18,000 but
claimed that half of it belonged to his daughter who was traveling with him.
Mr. Justice Michel Beaudry nevertheless held that subsection 12(1) was
violated, saying at paragraph 14 that “[t]he Act
specifically provides that it is actual possession that counts. Ownership of
the currency or monetary instruments is irrelevant.”
[17]
While that case did not analyze the provision at
length, that is a correct interpretation of the statute. In Rizzo &
Rizzo Shoes Ltd (Re), [1998] 1 S.C.R. 27 at paragraph 21, 154 DLR (4th) 193,
the Supreme Court of Canada approved the following approach to statutory interpretation:
“the words of an Act are to be read in their entire
context and in their grammatical and ordinary sense harmoniously with the
scheme of the Act, the object of the Act, and the intention of Parliament.”
Still, the “first and cardinal principle of statutory
interpretation is that one must look to the plain words of the provision”
before turning to external evidence (see R v DAI, 2012 SCC 5 at
paragraph 26, [2012] 1 S.C.R. 149).
[18]
Here, the term used by Parliament is “actual
possession”, which to me does not imply ownership. Indeed, in a different
context the Federal Court of Appeal reviewed the definitions of possession and
accepted that “a person may be in possession of
something, even though they do not own it” (see Ready John Inc v
Canada (Department of Public Works and Government Services), 2004 FCA 222
at paragraph 42, 324 NR 54).
[19]
However, that same case also said at paragraph
46 that, when applied to tangible personal property, the word possession “connotes control, often exclusive of others, or the legal
right to assume control.” If the currency was jointly owned, then it is
at least arguable that neither the plaintiff nor his wife possessed the funds
since neither exercised exclusive control. Alternately, it could be said that
both possessed the funds since either could exercise control over them at any
time.
[20]
Therefore, the term could have been ambiguous,
but here it is modified by the word, “actual”. That excludes constructive
possession and in my view, restricts the meaning of the phrase to physical
possession. Since the plaintiff held the bag and his wife could only access the
funds if he handed them to her, only he had actual possession of the funds and
so had to report the funds pursuant to paragraph 12(3)(a).
[21]
The plaintiff’s strongest argument against that
interpretation is that it seems absurd that the amount of money spouses can
carry with them without reporting depends on how they carry it and not on how
much it is. One couple could bring $19,999.98 without reporting it so long as
they each carry $9,999.99, but another that brings exactly $10,000 in one bag
will get caught.
[22]
That seems arbitrary since the objectives of the
Act set out in section 3 are not obviously advanced by drawing such distinctions.
For instance, subsection 3(a) says that one of the reasons for creating this
Act is “to detect and deter money laundering and the
financing of terrorist activities” and it would seem that objective is
better advanced by requiring the former couple to report than the latter.
[23]
However, the distinction makes more sense when
considering that the Act cannot advance any of its objectives unless it is
enforceable. In that regard, having possession trigger the obligation to report
makes more sense than having ownership do the same. Specifically, actual possession
is easier to understand for the travellers and easier to prove for the
officers. For instance, people travelling together could simply say that the
funds are owned jointly when they are really owned only by one of them. In that
case, it would be difficult for an officer to prove who owned the funds and
therefore find a violation of the Act.
[24]
The same difficulty does not arise with actual
possession. It is a very simple concept and there is little potential for
travellers to confuse whether they have $10,000 or more on their person or in
their luggage. It is also much easier to enforce. The traveller can simply be
searched and if the officer finds $10,000 or more, he or she can seize the
funds and penalize the traveller. The officer does not need to complicate that
by making credibility findings or by conducting further investigations into the
source or ownership of the funds. Therefore, the distinction of which the
plaintiff complains is quite a sensible one from an enforcement perspective and
it advances the overall objectives of the Act. As such, there is no reason to
depart from the plain language of paragraph 12(3)(a) and read into it an
exception for joint owners travelling together.
B.
Issue 2: If the officer gave erroneous advice,
would that excuse the plaintiff of his duty to declare the funds?
[25]
Subsection 12(1) is a strict liability offence
and the plaintiff’s subjective intention is irrelevant (see Zeid v Canada (Minister of Public Safety and Emergency Preparedness), 2008 FC 539 at paragraphs 53 to 55,
326 FTR 219; Hoang v Canada (Minister of National Revenue), 2006 FC 182
at paragraph 30, [2006] 4 FCR 309). As a result, the plaintiff could be guilty
of this offence even had the officer not explained the law to him at all.
[26]
Of course, like all strict liability offences,
the plaintiff could escape liability if he took all reasonable care in the
circumstances (see R v Sault Ste Marie, [1978] 2 S.C.R. 1299 at paragraph
60, 85 DLR (3d) 161). However, this defence does not cover mistakes of law
except in certain circumstances. As the Supreme Court of Canada explained
recently in La Souveraine, Compagnie d’assurance
générale v Autorité des marchés financiers, 2013
SCC 63 at paragraphs 56 and 57, [2013] 3 S.C.R. 756:
56 The due diligence defence is
available if the defendant reasonably believed in a mistaken set of facts that,
if true, would have rendered his or her act or omission innocent. A defendant
can also avoid liability by showing that he or she took all reasonable steps to
avoid the particular event (Sault Ste. Marie, at p. 1326). The defence
of due diligence is based on an objective standard: it requires consideration
of what a reasonable person would have done in similar circumstances.
57 However, this defence will not be
available if the defendant relies solely on a mistake of law to explain the
commission of the offence. Under Canadian law, a mistake of law can ground a
valid defence only if the mistake was an officially induced error and if the
conditions laid down in R. v. Jorgensen, [1995] 4 S.C.R. 55, with
respect to the application of such a defence are met. A defendant can
therefore gain nothing by showing that it made a reasonable effort to know the
law or that it acted in good faith in ignorance of the law, since such evidence
cannot exempt it from liability.
[27]
Since the plaintiff here alleges a mistake of
law, he must show that it was an officially induced error. In R v Jorgensen,
[1995] 4 S.C.R. 55 at paragraph 36, 129 DLR (4th) 510, [Jorgensen] the
Supreme Court of Canada explained that excuse as follows:
In order for an accused to rely on this excuse,
she must show, after establishing she made an error of law, that she considered
her legal position, consulted an appropriate official, obtained reasonable
advice and relied on that advice in her actions.
[28]
Applying that to this case, a CBSA officer is an
appropriate official and it would have been reasonable to rely on advice that
implied that he could bring $20,000 if that advice was indeed given.
[29]
However, even if that advice was given, it is
not clear that all the pre-conditions would be met. Specifically, the evidence
shows that the officer approached the plaintiff, not the other way around.
Moreover, the Supreme Court in Jorgensen said at paragraph 35 that
reliance could be established “by proving that the advice
was obtained before the actions in question were commenced and by showing that
the questions posed to the official were specifically tailored to the accused’s
situation.” Here, it does not sound like the plaintiff asked any
questions or made any attempt to clarify how much money he could carry given
that he was travelling with his wife. As such, it is not obvious that the
plaintiff actually considered the legal consequences of his actions as is
required by Jorgensen at paragraph 29.
[30]
The plaintiff relies on R v Cancoil Thermal
Corp, [1986] OJ No 290, 27 CCC (3d) 295 (Ont CA) [Cancoil] for the
defence of “officially induced error of law.” The
plaintiff claims that he relied on something that the officer said to him about
the plaintiff being able to take for he and his wife, $9,999.99 each without
reporting or as argued, $10,000 each for a total of $20,000. I do not find the
evidence to support this. The officer gave no such advice to the plaintiff. The
Cancoil case is much different where an officer actually told the
accused that it was all right to operate the machine without the guard when in
fact, this was contrary to the law. I find the evidence in the present case
does not support an officially induced error of law.
[31]
Because of my conclusions, I find that the
plaintiff’s action (appeal) must be dismissed with costs to the defendant.
[32]
As the action (appeal) is dismissed, I need not
deal with remedy.
Email this Content