Date: 20141010
Docket: A-307-13
Citation:
2014 FCA 228
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CORAM:
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DAWSON J.A.
GAUTHIER J.A.
TRUDEL J.A.
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BETWEEN:
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THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS
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Appellant
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and
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ROBERT BO DA HUANG
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Respondent
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REASONS
FOR JUDGMENT
DAWSON J.A.
[1]
The central issue raised on this appeal is
whether paragraph 29(1)(a) of the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act, S.C. 2000, c. 17 (Act) permits the
Minister of Public Safety and Emergency Preparedness to return a portion of
seized currency established to have been legitimately obtained if there are
reasonable grounds to suspect that the remainder of the currency is proceeds of
crime?
[2]
The Minister takes the position the Act does not
authorize the partial return of seized currency; in the present case the
Minister applied the Act in accordance with that understanding.
[3]
For reasons reported as 2013 FC 729, [2013]
F.C.J. No. 803, a judge of the Federal Court concluded to the contrary.
Therefore, the Federal Court held that the Minister’s decision to confirm
forfeiture of seized funds, including legitimately acquired funds, was
unreasonable.
[4]
This is an appeal from that decision.
I.
Factual Background
[5]
On January 5, 2011, the respondent, Mr. Robert
Bo Da Huang, was approached by a Canada Border Services Agency (CBSA) customs
officer in the departures area of the Vancouver International Airport. Mr. Huang was awaiting a flight to Hong Kong. When the customs officer began advising
Mr. Huang of the cross-border currency reporting requirements imposed by the
Act on travellers carrying over $10,000, Mr. Huang responded “Yeah, I know. I have $15,000. Sorry.” The customs
officer subsequently verified that the actual amount of the currency carried by
Mr. Huang was $15,760.
[6]
After interviewing Mr. Huang, the customs officer
suspected the currency was proceeds of crime and seized the entire $15,760
under subsection 12(1) of the Act (Seized Funds). Mr. Huang requested a
ministerial review of the forfeiture pursuant to section 25 of the Act. The
ministerial review was conducted by officials in the CBSA Recourse Directorate.
[7]
The officials in the Recourse Directorate
accepted that $6,700 of the Seized Funds was legitimately obtained from the
sale of a car owned by Mr. Huang (Legitimate Funds). However, for various
reasons the officials of the Recourse Directorate still suspected the remaining
$9,060 to be proceeds of crime (Illicit Funds). Accordingly, all of the Seized
Funds were retained as forfeit.
II.
The Legislative Scheme
[8]
As stated above, this case is about the
interpretation of section 29 of the Act. To properly understand that provision,
it is necessary to review the scheme of the Act as it relates to the seizure
and forfeiture of currency. For simplicity these reasons will refer only to “currency”, notwithstanding that the Act deals with
both currency and monetary instruments. The relevant provisions of the Act are
subsections 12(1) and (3), subsections 18(1) and (2), sections 23 and 24,
subsections 24.1(1) and (2), and sections 25, 28 and 29.
[9]
Also relevant to the interpretation of section
29 is section 3 of the Act, which sets out the objects of the Act, and that
portion of subsection 462.3(1) of the Criminal Code, R.S.C. 1985,
c. C-46, which defines “proceeds of crime”.
This definition is incorporated by reference in subsection 18(2) of the
Act.
[10]
All of these provisions are set out in the
appendix to these reasons. However, for the purpose of these reasons, the key
aspects of the legislative scheme are as follows.
[11]
Under the Act, seizures and forfeitures take
place in three main stages.
[12]
First, subsections 12(1) and (3) require
declaration of imported or exported currency over a regulated limit.
[13]
Second, in order to seize non-declared currency,
a customs officer must have reasonable grounds to believe that a person or
entity failed to declare currency over the regulated limit (subsection 18(1)).
[14]
Third, the officer may seize the undeclared
currency as forfeit (subsection 18(1)). At this point, if the officer does
not have reasonable grounds to believe the funds were either the proceeds of
crime (within the meaning of subsection 462.3(1) of the Criminal Code),
or funds for use in terrorist activities, then subsection 18(2) mandates that
the funds shall be returned, subject to the payment of a prescribed penalty. If
the officer has reasonable grounds to believe the funds were the proceeds of
crime or for use in terrorist activities, the funds are retained. By reference
to the Criminal Code, the Act defines “proceeds
of crime” to mean 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
committed anywhere that, if it had occurred in Canada, would have constituted a
designated offence.
[15]
Finally, pursuant to section 23 of the Act, any
funds properly seized under subsection 18(1), and not returnable under
subsection 18(2), are considered forfeit to the Crown from the moment the
person or entity breaches subsection 12(1).
[16]
The forfeiture of currency is final and not
subject to review except as provided by sections 24.1 and 25 (section 24).
[17]
Within 30 days after a seizure or an assessment
of a penalty, the Minister may cancel the seizure or cancel or refund the
penalty if the Minister is satisfied there was no contravention of the Act. If
satisfied there was a contravention and that there was an error with respect to
the penalty assessed or collected, and that the penalty should be reduced, the
Minister may reduce the penalty or refund the excess amount of the penalty
(section 24.1).
[18]
Within 90 days after a seizure, the person from
whom currency was seized, or the lawful owner of the currency may request a
decision of the Minister as to whether subsection 12(1) was contravened
(section 25).
[19]
If the Minister decides that subsection 12(1)
was not contravened, the Minister of Public Works and Government Services shall
return the penalty that was paid or the currency (section 28).
[20]
If the Minister decides that subsection 12(1)
was contravened, the Minister may decide that the currency be returned on
payment of a penalty in the proscribed amount. Alternatively, the Minister may
decide that any penalty or a portion of any penalty may be remitted. As a
further alternative, the Minister may confirm that the currency is forfeited
(subsection 29(1)).
[21]
In Sellathurai v. Canada (Minister of Public
Safety and Emergency Preparedness), 2008 FCA 255, [2009] 2 F.C.R. 576,
Justice Pelletier (writing for the majority, Justice Ryer concurring in the
result) concluded, at paragraphs 33 through 34 that, since a violation of
subsection 12(1) is a precondition for review under section 29, the starting
point for the Minister’s exercise of discretion is that the forfeited currency
is already the property of the Crown. An application under section 29 is,
therefore, essentially an application for relief from forfeiture.
[22]
In consequence, once the Minister begins a
review under section 29, “the 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” (Sellathurai at
paragraph 36); the only issue is whether the Minister is satisfied that the
seized funds are not proceeds of crime and is persuaded to exercise his
discretion to grant relief from forfeiture (Sellathurai at paragraphs 36
and 50).
III.
Decision of the Recourse Directorate
[23]
In a letter dated May 24, 2012, the Recourse
Directorate, acting as the Minister’s delegate, set out the basis for the
customs officer’s reasonable grounds to suspect that the currency was proceeds
of crime. It then informed Mr. Huang that because he had failed to substantiate
the legitimacy of the Illicit Funds, all of the Seized Funds would be held
forfeit. The Minister’s delegate found that, as a matter of law, it was not
possible to exercise his discretion to release any of the forfeit currency,
including the legitimately earned $6,700. Mr. Huang sought judicial review of
that decision in the Federal Court.
[24]
Parenthetically, I note for completeness that
there is no suggestion on the record that there was ever any suspicion that the
currency at issue was to be used to finance terrorist activities. It follows
that in this case there is no need to consider that element of subsection 18(2)
of the Act.
IV.
Decision of the Federal
Court
[25]
On judicial review to the Federal Court, the
Judge found that it was reasonable for the Minister to have confirmed the
forfeiture of all the Seized Funds, except for those found to have been
obtained from the sale of Mr. Huang’s car. To that end, she identified the main
issue before her as whether section 29 of the Act permits the Minister to hold
forfeit only those funds that were reasonably suspected to have been illicitly
obtained; framed another way, the issue was whether the Act allowed the
Minister to return the Legitimate Funds?
[26]
As part of her statutory interpretation analysis
the Judge then considered the relevant provisions governing the Act’s seizure
and forfeiture rules. With regard to subsection 18(1), she found the provision
was intended to make a penalty payable for any failure to report funds under
subsection 12(1); it permits the Crown to seize for forfeit only those funds
that a customs officer has reasonable grounds to suspect are the proceeds of
crime. In the Judge’s view, nothing in subsection 18(1) precluded the retention
of only that portion of the unreported funds that was subject to reasonable
suspicion.
[27]
Similarly, the Judge found that nothing in
section 29 expressly precludes the Minister from returning a portion of seized
funds once their legitimate origin had been established.
[28]
The Minister argued that the implied exclusion
principle of statutory interpretation necessarily led to the conclusion that
the Minister cannot exercise his discretion to return a portion of the Seized
Funds. The Minister supported this argument by drawing comparisons between
paragraph 29(1)(b), which allows the Minister to remit “any penalty or portion of any penalty”, with
paragraph 29(1)(a), which simply allows the Minister to return “the currency or monetary instruments”. Since
paragraph 29(1)(b) makes reference to a “portion
of” a penalty, while paragraph 29(1)(a) only refers to “the currency” without further qualifications, the
Minister argued that Parliament intentionally chose not to permit the return of
a portion of seized currency: once any portion of funds are found to have been
illicitly obtained, the entire amount must be held forfeit. The Minister
emphasized the differential treatment of “proximate
concepts” only subparagraphs apart.
[29]
The Minister also referred to numerous cases
from the Federal Court which supported this interpretation, arguing that
principle of judicial comity demanded that the Judge follow the decisions of
her colleagues.
[30]
The Judge did not agree. In her view, paragraph
29(1)(a) of the Act did not preclude the Minister from returning a
portion of seized funds if that portion was legitimately obtained. She then
outlined the following “strong reasons to the contrary” which she stated had
not been referenced in previous Federal Court decisions and justified departing
from her colleagues’ decisions:
i.
Confiscating legitimate funds would not further
the objectives of the Act as set out in section 3;
ii.
The relatively small penalty Mr. Huang would
have had to pay ($250) for failing to report the Legitimate Funds (i.e. $6,700)
meant the seizure of that amount imposed a draconian penalty not expressly
required by the Act;
iii.
If Parliament had intended to confiscate
legitimate funds it would have stated that fact in unequivocal terms;
iv.
If Mr. Huang had the documents about the sale of
his car with him at the airport, the customs officer would have been required
by subsection 18(2) to return the Legitimate Funds to him at that time, subject
to the payment of a penalty. It would be absurd to require the Minister to now
confiscate these funds simply because Mr. Huang provided the documentation
after the funds were seized. Such an absurdity could not have been intended by
Parliament;
v.
The Minister’s interpretation could lead to
further absurd results, such as the confiscation of very large sums of
legitimate funds on the commingling of only minor suspicious funds. This would
be an inequitable consequence that is incompatible with the objects of the Act;
vi.
Paragraph 29(1)(b) only refers to
penalties, which are limited to $5,000. Since the amount of funds caught by
paragraph 29(1)(a) could be vastly larger, the penalty for failing to
report and the forfeiture of suspicious funds are not “proximate
concepts” warranting recourse to the implied exclusion principle.
[31]
In the result, the Judge found paragraph 29(1)(a)
allows the Minister to return a portion of seized funds. The Minister’s
decision to confirm the forfeiture of the entire Seized Funds was, therefore,
an unreasonable exercise of discretion. In consequence, the Judge set aside the
decision and returned the matter to the Minister to reconsider Mr. Huang’s
request for the Legitimate Funds.
V.
Issues
[32]
The respondent did not appear on this appeal.
[33]
The Minister frames the issues to be:
A.
What is the standard of review to be applied to
the decision of the Federal Court and to the Minister’s interpretation of the
Act?
B.
Does section 29 of the Act allow the Minister to
grant relief from forfeiture in respect of a portion of seized currency?
C.
Was the Judge bound to accept the Minister’s interpretation
on the basis of judicial comity?
[34]
I agree this is a proper summary of the issues
raised on this appeal.
VI.
Consideration of the Issues
A.
What is the standard of review to be applied to
the decision of the Federal Court and to the Minister's interpretation of the
Act?
[35]
On an appeal from a decision on an application
for judicial review, the role of this Court is to first determine whether the
reviewing judge chose and applied the correct standard of review (Dr. Q v.
College of Physicians and Surgeons of British Colombia, 2003 SCC 19, [2003]
1 S.C.R. 226 at paragraph 43).
[36]
With respect to the Minister’s decision, this
Court has generally held that decisions made under section 29 of the Act are
discretionary and subject to deference. As such, this Court will only interfere
with a decision under section 29 if it is unreasonable (Sellathurai, at
paragraph 25, citing Dag v. Canada (Minister of Public Safety and Emergency
Preparedness), 2008 FCA 95, 70 Admin. L.R. (4th) 214 at
paragraph 4).
[37]
Moreover, since the Minister acts as an
administrative decision-maker when exercising his discretion under section 29,
his interpretation of the extent of his discretion is presumptively entitled to
deference (McLean v. British Colombia (Securities Commission), 2013 SCC
67, [2013] 3 S.C.R. 895, at paragraph 33).
[38]
The Judge concluded that the Minister’s decision
was unreasonable; this is consistent with the application of the reasonableness
standard of review. The Minister argues, however, that a close analysis of the
Judge’s reasons reveals that she actually applied the correctness standard of
review.
[39]
In my view, in the circumstances of this case,
it is unnecessary to engage in this analysis. As developed below, I have
concluded that the applicable principles of statutory interpretation lead to a
single reasonable interpretation of the scope of the Minister’s discretion: the
Minister may grant relief from forfeiture in respect of a portion of seized
currency. The Minister adopted the opposite interpretation. It follows that his
decision was necessarily unreasonable (McLean at paragraph 38).
B.
Does section 29 of the Act allow the Minister to
grant relief from forfeiture in respect of a portion of seized currency?
(i)
Applicable principles of Statutory
Interpretation
[40]
The preferred approach to statutory
interpretation has been expressed in the following terms by the Supreme Court
in Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 at
paragraph 21:
Today there is only one principle or
approach, namely, 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.
See
also: R. v. Ulybel Enterprises Ltd., 2001 SCC 56, [2001] 2 S.C.R. 867 at
paragraph 29.
[41]
The Supreme Court restated this principle in Canada
Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601 at
paragraph 10:
It has been long established as a matter of
statutory interpretation that “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”:
see 65302 British Columbia Ltd. v. Canada, [1999] 3 S.C.R. 804, at
para. 50. The interpretation of a statutory provision must be made according
to a textual, contextual and purposive analysis to find a meaning that is
harmonious with the Act as a whole. When the words of a provision are
precise and unequivocal, the ordinary meaning of the words play a dominant role
in the interpretive process. On the other hand, where the words can support
more than one reasonable meaning, the ordinary meaning of the words plays a
lesser role. The relative effects of ordinary meaning, context and purpose on
the interpretive process may vary, but in all cases the court must seek to read
the provisions of an Act as a harmonious whole. [emphasis added]
[42]
This formulation of the proper approach to
statutory interpretation was repeated in Celgene Corp. v. Canada (Attorney
General), 2011 SCC 1, [2011] 1 S.C.R. 3 at paragraph 21, and Canada
(Information Commissioner) v. Canada (Minister of National Defence), 2011
SCC 25, [2011] 2 S.C.R. 306 at paragraph 27.
[43]
Inherent in the contextual approach to statutory
interpretation is the understanding that the grammatical and ordinary sense of
a provision is not determinative of its meaning. A court must consider the
total context of the provision to be interpreted “no
matter how plain the disposition may seem upon initial reading” (ATCO
Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006
SCC 4, [2006] 1 S.C.R. 140 at paragraph 48). From the text and this wider
context, as well as the apparent purposes, the Court aims to ascertain
legislative intent, which is “[t]he most significant
element of this analysis” (R. v. Monney, [1999] 1 S.C.R. 652,
1999 CanLII 678 (S.C.C.) at paragraph 26).
[44]
I therefore turn to the required textual,
contextual and purposive analysis.
(ii)
Textual Analysis
[45]
The text of subsection 29(1) of the Act is:
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29. (1) If the Minister
decides that subsection 12(1) was contravened, the Minister may, subject to
the terms and conditions that the Minister may determine,
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29. (1) S’il
décide qu’il y a eu contravention au paragraphe 12(1), le ministre peut, aux
conditions qu’il fixe :
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(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;
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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;
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(b) decide
that any penalty or portion of any penalty that was paid under subsection
18(2) be remitted; or
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b) soit restituer tout ou partie de la
pénalité versée en application du paragraphe 18(2);
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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 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.
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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.
[emphasis added]
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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).
[Non souligné dans l’original.]
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[46]
The Minister points out that his authority
differs depending upon whether the sanction under consideration is forfeiture
or a penalty; the Minister argues that there is a marked difference between the
authority bestowed by paragraphs 29(1)(a) and (c) (relating to
forfeiture) and paragraph 29(1)(b) (relating to penalties).
[47]
More specifically, paragraphs 29(1)(a)
and (c) speak of “the currency or monetary
instruments”. This is to be contrasted with the wording in paragraph
29(1)(b) which speaks to both “any penalty or
portion of any penalty”.
[48]
Relying upon the implied exclusion principle of
statutory interpretation (sometimes referred to as the expressio unius est
exclusio alterius maximum of statutory interpretation) the Minister argues
that the use of different language illustrates Parliament’s intent that the
Minister not have discretion to afford partial relief from forfeiture of the
currency or monetary instruments seized pursuant to section 18 of the Act.
[49]
I begin consideration of the Minister’s
submission by observing that, while the Minister acknowledges the applicability
of the modern approach to statutory interpretation, his analysis is almost
exclusively textual. Both in written and oral submissions the Minister made a
brief submission that his interpretation of the Act facilitates its purpose: to
encourage self-reporting of large cross-border currency movements. The Minister
contends that this objective will be furthered if travellers risk losing the
legitimate portion of any currency they export or import if they do not make a
declaration at the border. This argument will be dealt with in the purposive
analysis of the provision at issue. The Minister advanced no well-developed
submissions based upon the context of the Act.
[50]
Turning to the substance of the submission, as
Chief Justice Laskin wrote in Jones v. New Brunswick (Attorney General),
[1975] 2 S.C.R. 182, 1974 CanLII 164 (S.C.C.) at 195-196, the implied exclusion
principle “provides at the most merely a guide to
interpretation; it does not pre-ordain conclusions”.
[51]
As noted by Professor Ruth Sullivan in Sullivan
on the Construction of Statutes, 5th ed. (Markham, ON: Lexis Nexis, 2008)
at 250-251, there are several ways to rebut an argument based upon the implied
exclusion principle. Citing Dersch v. Canada (Attorney General), [1990]
2 S.C.R. 1505, 1990 CanLII 3820 (S.C.C.), Professor Sullivan states that one
way of rebutting the principle is to offer an explanation as to why Parliament
would expressly address some things in some places, while remaining silent in
other places. Express reference may be appropriate in one context, but
inappropriate in another.
[52]
The Judge was not satisfied that the implied
exclusion principle of statutory interpretation was applicable. She reasoned
that the penalty on failing to report and the forfeiture of suspicious funds
are not “proximate concepts” (reasons at
paragraph 28(vi)).
[53]
I prefer to base my conclusion on the following
analysis.
[54]
Subparagraphs 29(1)(a) and (b) set
up a dichotomy with respect to the forfeiture of currency or monetary
instruments: the Minister may order their return or confirm their forfeiture.
[55]
Two relevant principles emerge from the decision
of this Court in Sellathurai. First, the Minister’s discretion must be
exercised within the framework of the Act (Sellathurai at paragraphs 38
and 53). Second, if currency can be shown to come from a legitimate source, by
virtue of the definition of proceeds of crime, the currency cannot be proceeds
of crime. In a decision rendered under subsection 29(1) of the Act, the only
issue is whether an applicant can persuade the Minister to exercise his
discretion to grant relief from forfeiture. An applicant does this by
satisfying the Minister that the seized funds are not proceeds of crime. The
obvious way to do this is to demonstrate that the funds come from a legitimate
source (Sellathurai at paragraphs 49 and 50).
[56]
The question the Minister must decide is whether
he is satisfied that funds come from a legitimate source. Therefore, it was
unnecessary for Parliament to allow for partial relief from forfeiture in
paragraph 29(1)(a). This flows from the fact that pursuant to
subsection 18(2) of the Act, the only basis for seizure (and the resultant
forfeiture under section 23) is a customs officer’s suspicion that monies are
the proceeds of crime as defined by subsection 462.3(1) of the Criminal Code.
While the customs officer may well have had reasonable grounds to seize the
currency, once the Minister is satisfied that funds come from a legitimate
source there is no basis at law for continued retention and forfeiture of the
funds. In that circumstance it would be unnecessary to state that, to the
extent the Minister was satisfied that an ascertainable amount of the seized
funds had a legitimate source the Minister could exercise his discretion to
relieve from forfeiture.
[57]
It follows from this analysis that the text of
subsection 29(1) is reasonably open to more than one interpretation. It further
follows that the text of subsection 29(1) does not play a dominant role in the
interpretive process.
(iii)
Contextual Analysis
[58]
At paragraphs 8 to 22 above, I have described
the legislative scheme.
[59]
As noted above, Sellathurai decided that
the Minister undertakes a de novo review of the decision to seize
non-declared currency. Thus, on ministerial review, a customs officer’s
decision that he or she had reasonable grounds to suspect that seized currency
was the proceeds of crime is spent. It is inconsistent with this scheme if on
ministerial review the Minister’s discretion would be bound by the customs
officer’s decision so that the Minister would not be able to relieve from
forfeiture funds shown to originate from a legitimate source, even where doubt
exists about the provenance of other currency.
[60]
Moreover, a comparison of section 28 and section
29 of the Act provides an alternative hypothesis to the Minister’s submission
based upon the implied exclusion principle of statutory interpretation.
[61]
Parliament’s use of the language of “portion” in relation to the penalty in section 29,
but not in section 28, is consistent with a simple intention to distinguish the
Minister’s discretion with regard to the return of penalties depending upon
whether an individual has or has not contravened section 12.
[62]
While section 29 stipulates what action the
Minister may take if he finds that subsection 12(1) was breached, section
28 stipulates what action the Minister of Public Works and Government Services
must take if the Minister concludes that subsection 12(1) was not violated.
Section 28, unlike section 29, states that the Minister of Public Works and
Government Services shall “return the penalty that was
paid” and does not stipulate that a “portion”
of the penalty may be remitted. This makes sense. If the Minister finds that
subsection 12(1) was not violated, then an individual should not have been
penalized at all and the penalty must be returned.
[63]
Where an individual has been found by the
Minister to have contravened section 12, then section 29 gives the Minister the
discretion to return the penalty in full or in part, or to not return it at
all. By explicitly stipulating that a “portion”
of the penalty may be returned Parliament clarified that, unlike section 28,
the partial return of a penalty would be an option where an individual has
contravened section 12.
[64]
Where an individual contravenes subsection
12(1), the Minister may well not want to remit the penalty in full to the
individual because a penalty is intended to punish and deter individuals from
failing to fulfill their duty to report. However, there may well be
circumstances in which the Minister may want to remit a portion of the penalty.
Section 18 of the Regulations provides that the applicable penalty may vary
between $250 and $5000. By expressly stipulating that a portion of the penalty
may be returned, Parliament is ensuring that the Minister will have the
discretion to return some of the penalty, where it is decided that the original
penalty paid was too high in light of the circumstances.
[65]
Section 24.1 further supports this view. Much
like section 28, if an individual is found to have fulfilled his reporting
duties, there is no mention of a portion of the penalty being returned.
However, subparagraph 24.1(1)(b) states that if, within a given period
of time, the Minister decides that section 12 has been contravened, he has the
discretion to reduce the penalty or refund the excess of the amount of the
penalty, providing that the Minister finds that “there
was an error with respect to the penalty assessed or collected and that the
penalty should be reduced”.
[66]
Finally, a further, relevant contextual factor
is subsection 462.37(2.03) of the Criminal Code.
[67]
As set out above, subsection 18(1) of the Act
incorporates by reference the definition of “proceeds
of crime” found in subsection 462.3(1) of the Criminal Code.
Subsection 462.3(1) is the first section found in Part XII.2 of the Criminal
Code that deals with “proceeds of crime”.
Part XII.2 creates certain offences (section 462.31), provides for the seizure
of certain property (section 462.32) and provides a mechanism for the
forfeiture of any property that is proceeds of crime (section 462.37).
Subsection 462.37(2.03) excludes from forfeiture any property that is
established, on a balance of probability, not to be proceeds of crime.
[68]
Parliament’s exclusion of legitimate funds from
forfeiture in the Criminal Code is consistent with interpreting
subsection 29(1) of the Act to allow the Minister to return any portion of
seized property he is satisfied is not “proceeds of
crime”.
(iv)
Purposive Analysis
[69]
Section 3 of the Act sets out its objects. A
review of this provision shows a focus on curbing money laundering, terrorist
financing, and organized crime. Paragraph 3(a) states that the various
administrative measures established by the Act were created to detect, deter,
investigate and prosecute money laundering and terrorist financing offences.
These measures include record-keeping and client identification requirements,
reporting requirements for suspicious transactions or cross-border currency
movement and the establishment of the Financial Transactions and Reports
Analysis Center of Canada. Paragraph 3(b) requires a balance between the
need to respond to the threat of organized crime by providing necessary
information to law enforcement officials and the protection against intrusions
on personal privacy. Finally, paragraph 3(c) recognizes the Act’s role
in fulfilling Canada’s international commitments in the fight against
transnational crime, particularly money laundering and terrorist activities.
[70]
The provisions at issue were added to the Act on
the coming into force of Bill C-22, An Act to facilitate combatting the
laundering of proceeds of crime, to establish the Financial Transactions and
Reports Analysis Centre of Canada and to amend and repeal certain Acts in
consequence, 1st Sess., 36th Parl., 2000 (assented to 29 June, 2000). A
Legislative Summary was prepared by the Library of Parliament, “An Act to facilitate combating the laundering of proceeds
of crime, to establish the Financial Transactions and Reports Analysis Centre
of Canada and to amend and repeal certain Acts in consequence” by
Geoffrey Kieley, LS-355E (9 February 2000; revised 5 May 2000).
[71]
At pages 2 to 3, the Legislative Summary noted
that “the broad purpose of [Bill C-22] was to remedy
shortcomings in Canada’s anti-money laundering legislation, as identified by
the G-7s Financial Action Task Force [FATF] on Money Laundering in its
1997-1998 report”. The FATF is an inter-governmental body whose purpose
is to develop and promote policies to combat money laundering. In 1990, the
FATF developed 40 Recommendations that countries were encouraged to adopt,
Financial Action Task Force, The Forty Recommendations of the Financial Action
Task Force on Money Laundering 1990 (Paris: FATF, 1990). The 40 Recommendations
set out a basic framework for anti-money laundering efforts and were designed
to be of universal application.
[72]
During the period from 1997 to 1998, Canada was examined by the FATF in order to assess the extent it had implemented effective
measures to counter money laundering. The Canadian anti-money laundering system
as a whole was found to be substantially in compliance with almost all of the
Recommendations issued in 1990. That said, as stated in the Legislative
Summary, a deficiency was identified. The Legislative Summary quoted this
deficiency:
The only major weakness is the inability to
effectively and efficiently respond to requests for assistance in relation to
restraint and forfeiture. The use of domestic money laundering proceedings to
seize, restrain, [and] forfeit the proceeds of offences committed in other
countries is recognized as sometimes ineffective, and legislation to allow
Canada to enforce foreign forfeiture requests directly should be introduced.
[73]
Other deficiencies noted by the FATF included
Canada’s inability to enforce forfeiture orders directly with respect to foreign
criminal proceeds and the need to mandate the reporting of significant
cross-border transportation of cash and monetary instruments.
[74]
In my view, none of these statements of purpose
shed light on the interpretation of subsection 29(1) of the Act. Some assistance
is, however, contained in the 40 Recommendations. Specifically, Recommendation
8 provided:
Countries should adopt measures similar to those set forth in the Vienna Convention, as may be
necessary, including legislative ones, to enable their competent authorities
to confiscate property laundered, proceeds from, instrumentalities used
in or intended for use in the commission of any money laundering offense,
or property of corresponding value.
Such measures should include the
authority to: 1) identify, trace and evaluate
property which is subject to confiscation; 2) carry out provisional
measures, such as freezing and seizing, to prevent any dealing, transfer or
disposal of such property; and 3) take any appropriate investigative measures.
In addition to confiscation and criminal
sanctions, countries also should consider monetary and civil penalties, and/or proceedings including civil proceedings, to void contracts
entered by parties, where parties knew or should have known that as a result of
the contract, the State would be prejudiced in its ability to recover financial
claims, e.g. through confiscation or collection of fines and penalties.
[emphasis
added]
[75]
This recommendation demonstrates that:
i)
the property to be confiscated was property
related to the crime of money laundering and such property was to be identified
and traced to money laundering; and
ii)
in addition to confiscation and criminal
sanctions, countries were encouraged to consider monetary and civil penalties.
[76]
In my view, the content and purpose of
Recommendation 8 is consistent with interpreting subsection 29(1) of the Act to
allow the Minister to relieve from forfeiture a portion of monies seized when
the Minister is satisfied that an ascertainable portion of seized funds is not
the proceeds of crime. This is because Recommendation 8 ties forfeiture to
criminal, not legitimate, activity. Importantly, the property subject to
forfeiture is to be traced to criminal activity. To the extent the Minister
argues that the forfeiture of legitimate funds will encourage reporting large
cross-border currency movements, this purpose is fulfilled through the
penalties the Governor in Council chooses to prescribe in the Cross-border
Currency and Monetary Instruments Reporting Regulations, SOR/2002-412.
[77]
The interpretation that the purpose of Bill C-22
is consistent with interpreting subsection 29(1) to allow the Minister to
partially relieve from forfeiture is also consistent with remarks made by the
Secretary of State (International Financial Institutions) on the second reading
of Bill C-22. Speaking for the Minister of Finance, Secretary Jim Peterson
observed that “[t]his bill is aimed at doing one thing,
and that is to help take the profit out of crime” [underlining
added].
(v)
Conclusion with respect to Statutory
Interpretation Analysis
[78]
Having conducted the required textual,
contextual and purposive analysis I am satisfied that subsection 29(1) of the
Act allows the Minister to grant relief from forfeiture in respect of a portion
of seized currency when he is satisfied the currency is not proceeds of crime.
While the text of the Act may be somewhat ambiguous, the Act’s context and
purpose permit only one reasonable interpretation since this is one of those
cases in which the ordinary tools of statutory interpretation lead to a single
reasonable interpretation (see: McLean at paragraph 38). The Minister’s
interpretation was, therefore, unreasonable.
C.
Was the Judge bound to accept the Minister’s
interpretation on the basis of judicial comity?
[79]
The Minister also argues that the Judge refused,
without proper justification, to apply the doctrine of judicial comity. This
argument does not assist the Minister for the following reasons.
[80]
First, the Minister argues that the Judge ought
to have issued an order consistent with the law as established by the
jurisprudence, while expressing her disagreement and the reasons for her
disagreement in her reasons for order. However, after considering the
applicable principles of statutory interpretation, I have found that the
Minister’s interpretation was unreasonable. By implication, the prior
jurisprudence of the Federal Court was incorrectly decided. Therefore, nothing
turns on the Judge’s decision not to follow that jurisprudence.
[81]
Second, the prior jurisprudence of the Federal
Court, beginning with Admasu v. Canada (Minister of Public Safety and
Emergency Preparedness), 2012 FC 451, 408 F.T.R. 134, was based upon a
textual analysis of subsection 29(1). As a contextual and purposive analysis
was also required, this warranted the Judge’s departure from the jurisprudence.
The Judge did give reasons for her departure from the jurisprudence, the first
of which was based upon a purposive analysis of the provision at issue.
VII.
Conclusion
[82]
For these reasons, I would dismiss the appeal.
“Eleanor R. Dawson”
“I agree.
Johanne Gauthier J.A.”
“I agree.
Johanne Trudel J.A.”
APPENDIX
Section
3, subsections 12(1) and (3), subsections 18(1) and (2), sections 23 and 24,
subsections 24.1(1) and (2), and sections 25, 28 and 29 of the Proceeds
of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17
read as follows:
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3. The object of
this Act is
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3. La présente
loi a pour objet :
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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
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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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(i) establishing
record keeping and client identification requirements for financial services
providers and other persons or entities that engage in businesses,
professions or activities that are susceptible to being used for money
laundering or the financing of terrorist activities,
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(i) imposer des
obligations de tenue de documents et d’identification des clients aux
fournisseurs de services financiers et autres personnes ou entités qui se
livrent à l’exploitation d’une entreprise ou à l’exercice d’une profession ou
d’activités susceptibles d’être utilisées pour le recyclage des produits de
la criminalité ou pour le financement des activités terroristes,
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(ii) requiring
the reporting of suspicious financial transactions and of cross-border
movements of currency and monetary instruments, and
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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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(iii)
establishing an agency that is responsible for ensuring compliance with Parts
1 and 1.1 and for dealing with reported and other information;
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(iii) constituer
un organisme chargé du contrôle d’application des parties 1 et 1.1 et de
l’examen de renseignements, notamment ceux portés à son attention au titre du
sous-alinéa (ii);
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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;
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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; and
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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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(d) to
enhance Canada’s capacity to take targeted measures to protect its financial
system and to facilitate Canada’s efforts to mitigate the risk that its
financial system could be used as a vehicle for money laundering and the
financing of terrorist activities.
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d) de renforcer la capacité du Canada de
prendre des mesures ciblées pour protéger son système financier et de
faciliter les efforts qu’il déploie pour réduire le risque que ce système
puisse servir de véhicule pour le recyclage des produits de la criminalité et
le financement des activités terroristes.
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[…]
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[. . .]
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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.
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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.
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[…]
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[. . .]
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(3) Currency or
monetary instruments shall be reported under subsection (1)
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(3) Le déclarant
est, selon le cas :
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(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;
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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;
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(b) in the
case of currency or monetary instruments imported into Canada by courier or
as mail, by the exporter of the currency or monetary instruments or, on receiving
notice under subsection 14(2), by the importer;
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b) s’agissant d’espèces ou d’effets
importés par messager ou par courrier, l’exportateur étranger ou, sur
notification aux termes du paragraphe 14(2), l’importateur;
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(c) in the
case of currency or monetary instruments exported from Canada by courier or
as mail, by the exporter of the currency or monetary instruments;
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c) l’exportateur des espèces ou effets
exportés par messager ou par courrier;
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(d) in the
case of currency or monetary instruments, other than those referred to in
paragraph (a) or imported or exported as mail, that are on board a conveyance
arriving in or departing from Canada, by the person in charge of the
conveyance; and
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d) le responsable du moyen de transport
arrivé au Canada ou qui a quitté le pays et à bord duquel se trouvent des
espèces ou effets autres que ceux visés à l’alinéa a) ou importés ou exportés
par courrier;
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(e) in any
other case, by the person on whose behalf the currency or monetary
instruments are imported or exported.
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e) dans les autres cas, la personne pour le
compte de laquelle les espèces ou effets sont importés ou exportés.
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[…]
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[. . .]
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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.
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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.
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(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.
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(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.
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[…]
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[. . .]
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23. Subject to
subsection 18(2) and sections 25 to 31, currency or monetary instruments
seized as forfeit under subsection 18(1) are forfeited to Her Majesty in
right of Canada from the time of the contravention of subsection 12(1) in
respect of which they were seized, and no act or proceeding after the
forfeiture is necessary to effect the forfeiture.
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23. Sous réserve
du paragraphe 18(2) et des articles 25 à 31, les espèces ou effets saisis en
application du paragraphe 18(1) sont confisqués au profit de Sa Majesté du
chef du Canada à compter de la contravention au paragraphe 12(1) qui a motivé
la saisie. La confiscation produit dès lors son plein effet et n’est
assujettie à aucune autre formalité.
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24. 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 24.1 and 25.
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24. La
saisie-confiscation d’espèces ou d’effets effectuée 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 24.1 et 25.
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24.1 (1) The
Minister, or any officer delegated by the President for the purposes of this
section, may, within 90 days after a seizure made under subsection 18(1) or
an assessment of a penalty referred to in subsection 18(2),
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24.1 (1) Le
ministre ou l’agent que le président délègue pour l’application du présent
article peut, dans les quatre-vingt-dix jours suivant la saisie effectuée en
vertu du paragraphe 18(1) ou l’établissement de la pénalité réglementaire
visée au paragraphe 18(2) :
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(a) cancel
the seizure, or cancel or refund the penalty, if the Minister is satisfied
that there was no contravention; or
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a) si le ministre est convaincu qu’aucune
infraction n’a été commise, annuler la saisie, ou annuler ou rembourser la
pénalité;
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(b) reduce
the penalty or refund the excess amount of the penalty collected if there was
a contravention but the Minister considers that there was an error with
respect to the penalty assessed or collected, and that the penalty should be
reduced.
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b) s’il y a eu infraction mais que le
ministre est d’avis qu’une erreur a été commise concernant la somme établie
ou versée et que celle-ci doit être réduite, réduire la pénalité ou
rembourser le trop-perçu.
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(2) If an amount
is refunded to a person or entity under paragraph (1)(a), the
person or entity shall be given interest on that amount at the prescribed
rate for the period beginning on the day after the day on which the amount
was paid by that person or entity and ending on the day on which it was
refunded.
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(2) La somme qui
est remboursée à une personne ou entité en vertu de l’alinéa (1)a) est
majorée des intérêts au taux réglementaire, calculés à compter du lendemain
du jour du paiement de la somme par celle-ci jusqu’à celui de son
remboursement.
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[…]
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[. . .]
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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 to the Minister in
writing or by any other means satisfactory to the Minister.
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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 au moyen d’un avis écrit ou de
toute autre manière que celui-ci juge indiquée de décider s’il y a eu
contravention au paragraphe 12(1).
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[…]
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[. . .]
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28. If the
Minister decides that subsection 12(1) was not contravened, the Minister of
Public Works and Government Services shall, on being informed of the
Minister’s decision, return the penalty that was paid, or the currency or
monetary instruments or an amount of money equal to their value at the time
of the seizure, as the case may be.
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28. Si le
ministre décide qu’il n’y a pas eu de contravention au paragraphe 12(1),
le ministre des Travaux publics et des Services gouvernementaux, dès qu’il
est informé de la décision du ministre, restitue la valeur de la pénalité
réglementaire, les espèces ou effets ou la valeur de ceux-ci au moment de la
saisie, selon le cas.
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29. (1) If the
Minister decides that subsection 12(1) was contravened, the Minister may,
subject to the terms and conditions that the Minister may determine,
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29. (1) S’il
décide qu’il y a eu contravention au paragraphe 12(1), le ministre peut, aux
conditions qu’il fixe :
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(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;
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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;
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(b) decide
that any penalty or portion of any penalty that was paid under subsection
18(2) be remitted; or
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b) soit restituer tout ou partie de la
pénalité versée en application du paragraphe 18(2);
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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 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.
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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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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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(2) The total
amount paid under paragraph (1)(a) shall, if the currency or monetary
instruments were sold or otherwise disposed of under the Seized Property
Management Act, not exceed the proceeds of the sale or disposition, if any,
less any costs incurred by Her Majesty in respect of the currency or monetary
instruments.
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(2) En cas de
vente ou autre forme d’aliénation des espèces ou effets en vertu de la Loi
sur l’administration des biens saisis, le montant de la somme versée en vertu
de l’alinéa (1)a) ne peut être supérieur au produit éventuel de la
vente ou de l’aliénation, duquel sont soustraits les frais afférents exposés
par Sa Majesté; à défaut de produit de l’aliénation, aucun paiement n’est
effectué.
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Subsection 462.3(1) of the Criminal Code, R.S.C. 1985, c.
C-46, which defines “proceeds of crime” reads as follows:
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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
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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 :
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(a) the
commission in Canada of a designated offence, or
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a) soit de la perpétration d’une infraction
désignée;
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(b) an act
or omission anywhere that, if it had occurred in Canada, would have constituted
a designated offence.
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b) soit d’un acte ou d’une omission qui, au
Canada, aurait constitué une infraction désignée.
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