Docket: T-348-17
Citation:
2017 FC 830
Ottawa, Ontario, September 14, 2017
PRESENT: The
Honourable Mr. Justice Manson
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BETWEEN:
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ISTVAN PESTI
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Applicant
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and
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HER MAJESTY THE
QUEEN IN RIGHT OF CANADA, AS REPRESENTED BY THE CANADA BORDER SERVICES AGENCY
MINISTER OF
PUBLIC SAFETY AND EMERGENCY PREPAREDNESS
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Respondents
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JUDGMENT AND REASONS
I.
Introduction
[1]
This is an application for judicial review,
pursuant to section 18.1 of the Federal Courts Act, RSC 1985, c F-7 [Federal
Courts Act] of a decision by a delegate of the Minister of Public Safety
and Emergency Preparedness, the Appeals Division of the Recourse Directorate of
the Canada Border Services Agency (the “Delegate”), to fine the Applicant
$2,500 pursuant to section 29 of the Proceeds of Crime (Money Laundering)
and Terrorist Financing Act, SC 2000, c 17 [PCMLTFA], for failing to
declare currency over $10,000 in his possession when departing from Canada,
contrary to section 12 of the PCMLTFA.
II.
Background
[2]
The Applicant, Istvan Pesti, is 74 years old and
immigrated to Canada from Hungary and Switzerland 46 years ago. He carried on a
furniture and interior design business in Vancouver before retiring to Kelowna
about 16 years ago. The Applicant and his wife were born in Hungary, and
regularly travel there to visit family and friends.
[3]
On June 14, 2016, the Applicant was approached
by a Border Services Officer (the “Border Officer”) at the Calgary
International Airport as he was preparing to board a flight to Amsterdam. The
Border Officer asked the Applicant how much currency he was carrying, to which
the Applicant responded “$8,000”. The Applicant
subsequently presented an envelope to the Border Officer and stated that it
contained $10,000 and that he did not have any more currency.
[4]
The Applicant’s baggage was searched, revealing
seven envelopes containing currency. The total amount found in the Applicant’s
possession was $17,651.20 CAD and $1,070.00 USD.
[5]
The Border Officer found that the Applicant had
contravened section 12 of the PCMLTFA by failing to declare currency in
his possession over $10,000. The Border Officer seized the currency pursuant to
subsection 18(1) of the PCMLTFA, and refused to return the currency on
the basis that he had reasonable grounds to suspect that it was proceeds of
crime, pursuant to subsection 18(2) of the PCMLTFA.
[6]
On September 12, 2016, the Applicant appealed
the Border Officer’s seizure to the Delegate, requesting that the currency be
returned without penalty. He argued that it was part of his retirement savings
and was for a down-payment on a residence near Budapest. Furthermore, he stated
that this trip started in Kelowna, where security personnel saw and commented
on the currency in his luggage, and were told of his intention to purchase a
home in Hungary. He assumed these comments amounted to a disclosure to the
authorities. Finally, the Applicant stated that he is somewhat intimidated by
authority given his cultural background, as well as an innocent
misunderstanding with border officers two years prior.
[7]
In a further letter dated November 4, 2016, the
Applicant explained that he had never been questioned about currency on
previous departures from Canada. In his mind, the currency issue always related
to arriving in Canada. He was shocked and confused when the Border Officer
began asking him questions, and was scared that being honest with the Border
Officer might result in him not being able to board the plane.
[8]
The Delegate reviewed the Applicant’s appeal and
requested further financial information. Upon receipt and review of the
Applicant’s documents, the Delegate was satisfied that the currency was
legitimately acquired.
[9]
On February 8, 2017, the Delegate ordered the
return of the seized funds less a penalty of $2,500, pursuant to section 29 and
12(1) of the PCMLTFA. The Delegate concluded that notwithstanding the
legitimate source of the funds, the Applicant had contravened section 12 of the
PCMLTFA, by failing to report currency in his possession greater than
$10,000 CAD.
[10]
In its reasons, the Delegate noted the Applicant’s
assumption that he had disclosed the currency to security personnel at the
Kelowna airport. It does not mention the Applicant having felt intimidated and
confused when confronted by the Border Officer. The Delegate concluded:
In view of the foregoing, although the
currency seizure has been maintained, the level of infraction has been reduced
to Level 2, as a false statement was made with respect to the currency. During
the review, it was noted that you did not report the currency and declared having
$8,000 when questioned by the officer. When requested by the officer to show
the currency, you presented one envelope stating that it contained $10,000.00
and having no further currency. However, the examination of your baggage
revealed seven envelopes containing further currency. Accordingly, you were
offered more than one opportunity to report the entire amount of currency in
your possession, failed to do so and were found to be in possession of further
currency.
[11]
On March 9, 2017, pursuant to section 18.1 of
the Federal Courts Act, the Applicant submitted an application for
judicial review of Delegate’s decision.
A.
Preliminary matters
[12]
While it is unclear from the Applicant’s
submissions what issues he seeks to have resolved, it appears that he takes
issue with the amount of the penalty and the decision that there was a failure
to report currency in contravention of the PCMLTFA.
[13]
The Applicant submits that the penalty should be
reduced to zero dollars ($0.00), on the grounds that the Border Officer and the
Delegate failed to consider all the relevant facts relating to the seizure of
currency.
[14]
The Applicant’s affidavit states that he is
seeking an order to set aside the decision of the Delegate and to refer it back
for determination in accordance with the Court’s directions, as well as other
relief as counsel may advise and the Court permit. In this regard, the
Applicant states that the grounds for the application are:
a. I last over $5,000 this small
mistake!
b. This is to strong of penalty, I
don’t commit any crime!
c. The report what the CBS officer
send to Ottawa, was fabricate information!
d. The CBS officer ignore my
request, to phone my BANK in West Kelowna, were the funds was legimate!
e. I wer belief that, when in
Kelowna airport, the security personal commented, I have to much funds in my
baggage, they report me to Gagary airport, to inspect my funds. This is
upsetting to me what happen in Gagary airport, CBS officer was abuse his
“authority”!
f. I asking to the court, to waiver
the penalty, I have a penalty from the airline, what also don’t fear penalty.
g. I did not no the rule, I regret
watt happen, and I deeply sorry for et, I hope the Cort essept my excuse.
[sic]
[15]
The Respondent argues that, to the extent the
Applicant takes issue with the Delegate’s finding that section 12 of the PCMLTFA
was contravened, the application should be dismissed.
[16]
I agree with the Respondent. If a person wishes
to challenge a finding that section 12 of the PCMLTFA was contravened,
section 25 provides an appeal to the Minister and section 27 requires the
Minister to make a decision. If a person wishes to appeal the Minister’s
decision under section 27, he or she must apply to the Federal Court for
judicial review pursuant to section 30 of the PCMLTFA, not section 18.1
of the Federal Courts Act (Dobrovolny v Canada (Public Safety and
Emergency Preparedness), 2011 FC 526 at paras 17-19).
[17]
I also agree with the Respondent that a decision
made under section 29 of the PCMLTFA, involving or penalty imposed by
the Minister once a contravention of section 12 has been found, is appealable
by way of judicial review under section 18.1 of the Federal Courts Act (Tourki
v Canada (Minister of Public Safety and Emergency Preparedness), 2007 FCA
186 [Tourki] at para 18).
[18]
As this is an application for judicial review
pursuant to section 18.1 of the Federal Courts Act, only the section 29
penalty decision of $2,500 is properly before the Court for review.
III.
Standard of Review
[19]
The standard of review is reasonableness for
decisions made under section 29 of the PCMLTFA (Sellathurai v Canada
(Minister of Public Safety and Emergency Preparedness), 2008 FCA 255 at
para 25; Dag v Canada (Minister of Public Safety and Emergency Preparedness),
2008 FCA 95 at para 4).
IV.
Issue
[20]
The issue is whether the decision of the
Delegate to fine the Applicant $2,500 for a contravention of section 12 of the PCMLTFA
was reasonable.
V.
Analysis
[21]
While the Applicant’s submissions do not clearly
set out the grounds on which the Court should find the Delegate’s decision was
unreasonable, he appears to argue that the penalty was too harsh and he did not
know the rule. In his submissions to the Delegate, the Applicant argued that he
was scared and confused, intimidated by authority and assumed he had disclosed
the currency to security personnel at the Kelowna airport.
[22]
In his affidavit, the Applicant also takes issue
with facts contained in the Border Officer’s report. This issue was not raised
in the Applicant’s submissions to the Delegate and therefore is not properly
before the Court.
[23]
The Respondent submits that the Applicant was in
blatant contravention of section 12 of the PCMLTFA and was fined the
amount prescribed by the Cross-border Currency and Monetary Instruments
Reporting Regulations, SOR/2002-412 [Regulations]; therefore, the
Delegate reasonably exercised its discretion to impose this penalty.
[24]
Section 29 of the PCMLTFA gives the
Minister discretion to impose penalties for failing to comply
with section 12. The Applicant does not dispute that he failed to comply with
section 12. The Minister refused to waive or lower the corresponding penalty in
the basis that there are compelling policy reasons not to do so.
[25]
In Canada (Public Safety and Emergency
Preparedness) v Huang, 2014 FCA 228 [Huang] at paragraphs 55
and 56, the Federal Court of Appeal summarized several principles
regarding the Minister’s exercise of discretion pursuant to section 29 of the PCMLTFA.
Since a contravention of section 12 is a precondition for review under
section 29, the starting point is that the forfeited currency is already
property of the Crown. 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 showing that the funds are not proceeds of crime.
[26]
Upon finding that the funds are not proceeds of
crime, the Minister has discretion to retain a portion of the funds as a
penalty for contravening section 12 (Huang, at para 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.
[27]
In its decision, the Delegate reasonably found
that the Applicant had made a false statement with respect to the currency.
[28]
As well, in a letter dated November 4, 2016, to
the CBSA, the Applicant’s lawyer states that the Applicant knew that his answer
that he had $8000 was false, but was scared to admit he had $15,000-$20,000 as
it might result in him not being able to leave on the plane.
[29]
Moreover, it was reasonable for the Delegate, in
exercising the discretion under section 29, to retain $2,500 as a penalty
pursuant to the prescribed amount in subparagraph 18(b)(i) of the Regulations,
despite the Applicant’s fear of authority, confusion when confronted by the
Border Officer, and assumption that his comments to security personnel at the
Kelowna constituted a disclosure.
[30]
One of the objectives of the PCMLTFA is
to detect and deter money laundering and financing of terrorist activities by
requiring the reporting of cross-border movements of currency (PCMLTFA, at
3(a)(ii)). The reporting requirement under section 12 is the cornerstone of the
system established for monitoring cross-border movements (Tourki, at
para 23).
[31]
As well, strict liability attaches to those who
fail to report (Zeid v Canada (Public Safety and Emergency Preparedness), 2008
FC 539 at para 55):
The reporting regime is a key tool to combat
money laundering and the financing of terrorist activities. Lack of knowledge
would not only be difficult to verify, but it could easily undermine the policy
underlying the PCMLTFA. If the PCMLTFA is to be effective, severe
sanctions must be visited upon all those who fail to report in accordance with
section 12, irrespective of their circumstances.
[32]
The penalty imposed on the Applicant was not “too harsh”; it was the minimum amount prescribed
under the Regulations, and reasonable given the Applicant’s clear
contravention of the PCMLTFA and knowingly-made false statements. The
Minister’s exercise of discretion was reasonable.
[33]
For those reasons, it was open to the Delegate
to reject the Applicant’s request to lower the penalty, and to impose the
prescribed penalty for making a false statement. While I have some sympathy for
the Applicant concerning the amount of the penalty, it is not unreasonable.
[34]
This application is dismissed.
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