Toronto, Ontario, June 14, 2006
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
and
CANADA(MINISTER OF NATIONAL REVENUE-M.N.R)
REASONS FOR JUDGMENT AND JUDGMENT
[1] This is an application for an order in the nature of mandamus to compel the Respondent, Minister of National Revenue, to make a decision under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, (the Act) S.C. 2000, c.17, section 12(1) in respect of funds seized on the 14th day of April, 2005, ownership of which is claimed by the Applicant Pham.
[2] On the evening of April 14, 2005 Canadian Custom Officials inspected vehicles crossing from the United States into Canada. One such vehicle was that driven by a Ms. Nguyen. Without this Court making a finding on the point it appears that Ms. Nguyen did not disclose to these officials that in the vehicle there was a sum of money in excess of $10,000. The official acting upon some motivation which is not clear in the evidence, searched the vehicle and found concealed in cavities behind the dashboard vent and the dashboard instruments, twenty three bundles containing money totalling $181,600.00 in United States funds. The officials seized this sum of money, suspecting it to be proceeds of crime, under the provisions of sections 12(1), 18(1) and 18(2) of the Act.
[3] Ms Nguyen received a Receipt from the Officials included on which was the following statement:
Right to Request a Minister's Decision
If you, or the lawful owner of the currency or monetary instruments, wish to file a request to review this enforcement action and request a decision of the Minister of National Revenue you must give notice in writing to the officer who took the enforcement action or to an officer at the customs office closest to the place where the enforcement action was taken. This request must be filed within 90 days of the date the enforcement action was taken.
A person who requests a decision of the Minister may, within 90 days after being notified of the 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.
[4] This is the prelude to the correspondence that forms the basis of these proceedings.
[5] On July 11, 2005 the Applicant's solicitor wrote to the Canada Border Services Agency stating:
Please be advised that I am legal counsel for Thanh Thi Nhu PHAM, the lawful owner of the currency which was seized on the 14th day of April, 2005. Please accept this letter as my formal Notice pursuant to section 25 of the Proceeds of Crime (Money laundering) Terrorist Financing Act, requesting a review of the aforementioned seizure, and a decision of the Minister.
For your reference, please find enclosed a copy of the customs seizure receipt, as well as a copy of an authorization signed by my client.
[6] The Agency responded by letter dated July 19, 2005. That letter was in essence simply an acknowledgement of receipt of the letter of July 11, 2005 and asked for some proof that the solicitor was authorized to act on behalf of the Applicant.
[7] The Agency provided a substantive response to the Applicant's solicitor's letter of July 11, 2005 by letter dated July 22, 2005. That response stated:
Unfortunately, your correspondence cannot be accepted as a first-party request for a decision of the Minister. In order to be accepted as a first party, you would have to prove you are the lawful owner of the seized money. As it is very difficult to prove ownership of currency, you may wish to file a third-party claim.
If currency or monetary instruments have been seized as forfeit under Section 18(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, any person, other than the person in whose possession the currency or monetary instruments were seized, who claims an interest in the currency or monetary instruments as owner may, within 90 days after the seizure, apply by notice in writing to the court for an order under Section 33 of the Act.
[8] The Applicant's solicitor responded by letter dated August 19, 2005 stating:
Please be advised that I am still in the process of obtaining evidence establishing ownership of the seized funds.
The current difficulty is, in part, that my client is in Vietnamand has just given birth to a child.
I would therefore request that this matter remain open for an additional 14 days, in the circumstances, in order to provide an opportunity to obtain and submit the requested proof of ownership.
[9] The Applicant's solicitor subsequently wrote a letter dated August 31, 2005 enclosing two affidavits. That letter said:
Further to your letter dated the 22nd day of July, 2005, please find enclosed the following documentation:
1. Affidavit of Thanh Thi Nhu Pham certifying and declaring ownership of the seized funds in question;
2. Affidavit of Truong Mai Hoang Huynh certifying and declaring that Thanh Thi Nhu Pham is the rightful owner of the seized funds in questions.
It is submitted that this is in relation to an application which is brought pursuant to Section 25 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, on a First Party basis, a provision which is designed to include a right of application by an owner of seized funds, other than the party from whom those funds were in fact seized.
There is now before you a sworn Affidavit by such a party declaring ownership, as well as a sworn Affidavit from the party from whom those funds were seized, consistently confirming this ownership. In the absence of any evidence to the contrary, I respectfully submit that this is conclusive proof of ownership.
Moreover, no other person or entity has claimed any interest in the funds which were seized, and the limitation period within which any such claim could be made has long since expired.
While I might agree that it may be open to the Minster to challenge your jurisdiction by providing evidence to contradict my client's claim of ownership, no such challenge has yet been made. In the circumstances, therefore, ownership has been proved on a prima facie basis sufficient to invoke your jurisdiction to consider my client's application.
[10] The two affidavits provided were very brief. That of Nguyen said:
I hereby certify and declare that Thanh Thi Nhu PHAM is the rightful owner of the funds which were seized from me by the CanadaBorder and Services Agency on the 14th day of April, 2005, and that I have no claim of ownership in the said funds whatsoever.
[11] That of Pham said:
I hereby certify and declare that I am the rightful owner of the funds which were seized from Chung My Huong NGUYEN by the Canada Border and Services Agency on the 14th day of April, 2005, and that to my knowledge, no other person or entity has any claim of ownership in the said funds whatsoever.
[12] The last relevant piece of correspondence in the Record is the Agency's response to the Applicant's solicitors stating that they were not satisfied with the affidavits and closing the file. That letter dated September 30, 2005, stated:
This correspondence is to acknowledge receipt of your letter (with enclosures), dated August 31, 2005, on the above-noted enforcement action.
In response to your comments and representations, unfortunately, your correspondence cannot be accepted as a first-party request for a decision of the Minister. The evidence you have provided in the form of affidavits is not sufficient to prove that your client is the lawful owner of the currency. We would require evidence to show the origin of the currency, in the form of bank withdrawals etc. Furthermore, we would also require evidence to show the legitimate origin of the currency.
I would also like to mention that you will be required to file a third party claim in order to have your client's interests protected.
In my correspondence to you dated July 22, 2005 I brought to your attention the time limitation for filing your application with the Court.
In view of the aforementioned, as the required evidence was not provided to support your client's ownership of the currency, the first party file will be administratively closed.
I trust that the above is satisfactory.
[13] It is clear that "the above" was not satisfactory to the Applicant as these proceedings for mandamus were instituted.
[14] Section 18(1) of the Federal Courts Act, R.S.C. 1985, c. F-7, provides that this Court may issue a writ of mandamus or relief of like nature against any federal board, commission or tribunal. In this case the Respondent is named as the Minister of National Revenue, who is the Minister named in the "Right to Request a Minister's Decision" identified in the Receipt provided by the Officials aforesaid. This may not be the same person named as "Minister" in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act aforesaid, there is some confusion as to the point. Counsel for the Respondent made no issue of this matter and undertook to provide a letter clarifying the matter and to consent to an addition to or change of Respondents if required.
[15] As stated in "Judicial Review of Administrative Actions in Canada", Brown and Evans, Canvasback Publishing, Toronto, Ontario, loose leaf, at sections 1.3000 and following: mandamus is an order issued to compel the performance of a public legal duty. That remedy may be denied at the court's discretion. Four requirements are necessary for mandamus to issue: (1) a clear legal right; (2) a specific public duty; (3) the official must have no discretion; and (4) there must be a demand and refusal.
[16] The Proceeds of Crime (Money Laundering) and Terrorist Financing Act has been the subject of scrutiny in at least two other proceedings in this Court, that of Dokaj (Dokaj v. Canada(Minister of National Revenue), 2005 FC 1437) and that of Tourki (Tourki v. Canada(Minister of Public Safety and Emergency Preparedness), 2006 FC 50).
[17] For the present purposes we must begin with section 12(1) of the Act which places a burden on a person entering Canada to disclose that they have funds exceeding a prescribed amount ($10,000):
| 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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[18] Section 18(1) provides that a customs officer may seize funds if such a declaration has not been properly made:
| 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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[19] Section 25 provides that either the person from whom funds were seized or the lawful owner may request a decision from the Minister as to whether subsection 12(1) was contravened:
| 25. A person from whom currency or monetary instruments were seized under section 18, or the lawful owner of the currency or monetary instruments, may within 90 days after the date of the seizure request a decision of the Minister as to whether subsection 12(1) was contravened, by giving notice in writing to the officer who seized the currency or monetary instruments or to an officer at the customs office closest to the place where the seizure took place. |
25.La personne entre les mains de qui ont été saisis des espèces ou effets en vertu de l'article 18 ou leur propriétaire légitime peut, dans les quatre-vingt-dix jours suivant la saisie, demander au ministre de décider s'il y a eu contravention au paragraphe 12(1) en donnant un avis écrit à l'agent qui les a saisis ou à un agent du bureau de douane le plus proche du lieu de la saisie.
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[20] Section 26 provides that when a section 25 request is made, the President of the Border Services Agency shall provide the requesting person with written notice of the circumstances of the seizure and that person may file evidence:
| 26.(1) If a decision of the Minister is requested under section 25, the President shall without delay serve on the person who requested it written notice of the circumstances of the seizure in respect of which the decision is requested. (2) The person on whom a notice is served under subsection (1) may, within 30 days after the notice is served, furnish any evidence in the matter that they desire to furnish |
26.(1) Le président signifie sans délai par écrit à la personne qui a présenté la demande visée à l'article 25 un avis exposant les circonstances de la saisie à l'origine de la demande
2) Le demandeur dispose de trente jours à compter de la signification de l'avis pour produire tous moyens de preuve à l'appui de ses prétentions. |
[21] Sections 27(1) and (3) provide that the Minister shall make a decision if section 12(1) was contravened, and give reasons:
| 27.(1) Within 90 days after the expiry of the period referred to in subsection 26(2), the Minister shall decide whether subsection 12(1) was contravened. 3) The Minister shall, without delay after making a decision, serve on the person who requested it a written notice of the decision together with the reasons for it. |
27.(1) Dans les quatre-vingt-dix jours qui suivent l'expiration du délai mentionné au paragraphe 26(2), le ministre décide s'il y a eu contravention au paragraphe 12(1). 3) Le ministre signifie sans délai par écrit à la personne qui a fait la demande un avis de la décision, motifs à l'appui. |
[22] Sections 28 and 29 provide for return of the funds if the Minister finds that section 12(1) was not contravened and retention of the funds or penalties and return if it is decided that the section was contravened. Section 30 provides for an appeal from that decision to this Court.
[23] Section 32 of the Act provides that any person who claims an ownership interest in the funds seized may apply to a provincial or territorial superior court for payment to them of the funds. Section 33 provides that the applicant must make out certain evidentiary requirements as to the claim to an ownership interest in the funds:
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32.(1) If currency or monetary instruments have been seized as forfeit under this Part, any person, other than the person in whose possession the currency or monetary instruments were when seized, who claims an interest in the currency or monetary instruments as owner may, within 90 days after the seizure, apply by notice in writing to the court for an order under section 33
(2) A judge of the court to which an application is made under this section shall fix a day, not less than 30 days after the date of the filing of the application, for the hearing. (3) A person who makes an application under this section shall serve notice of the application and of the hearing on the President, or an officer designated by the President for the purpose of this section, not later than 15 days after a day is fixed under subsection (2) for the hearing of the application. (4) The service of a notice under subsection (3) is sufficient if it is sent by registered mail addressed to the President. (5) In this section and sections 33 and 34, "court" means
*** 33.If, on the hearing of an application made under subsection 32(1), the court is satisfied (a) that the applicant acquired the interest in good faith before the contravention in respect of which the seizure was made, (b) that the applicant is innocent of any complicity in the contravention of subsection 12(1) that resulted in the seizure and of any collusion in relation to that contravention, and (c) that the applicant exercised all reasonable care to ensure that any person permitted to obtain possession of the currency or monetary instruments seized would report them in accordance with subsection 12(1), the applicant is entitled to an order declaring that their interest is not affected by the seizure and declaring the nature and extent of their interest at the time of the contravention.
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32.(1) En cas de saisie-confiscation effectuée en vertu de la présente partie, toute personne, autre que le saisi, qui revendique sur les espèces ou effets un droit en qualité de propriétaire peut, dans les quatre-vingt-dix jours suivant la saisie, requérir par avis écrit le tribunal de rendre l'ordonnance visée à l'article 33.
(2) Le juge du tribunal saisi conformément au présent article fixe à une date postérieure d'au moins trente jours à celle de la requête l'audition de celle-ci. (3) Dans les quinze jours suivant la date ainsi fixée, le requérant signifie au président, ou à l'agent que celui-ci désigne pour l'application du présent article, un avis de la requête et de l'audition.
(4) Il suffit, pour que l'avis prévu au paragraphe (3) soit considéré comme signifié, qu'il soit envoyé en recommandé au président. (5) Au présent article et aux articles 33 et 34, « tribunal » s'entend :
*** 33.Après l'audition de la requête visée au paragraphe 32(1), le requérant est en droit d'obtenir une ordonnance disposant que la saisie ne porte pas atteinte à son droit et précisant la nature et l'étendue de celui-ci au moment de la contravention si le tribunal constate qu'il remplit les conditions suivantes : a) il a acquis son droit de bonne foi avant la contravention; b) il est innocent de toute complicité relativement à la contravention qui a entraîné la saisie ou de toute collusion à l'égard de la contravention; c) il a pris des précautions suffisantes concernant toute personne admise à la possession des espèces ou effets saisis pour que ceux-ci soient déclarés conformément au paragraphe 12(1).
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[24] The issuehere is whether the Minister had any authority to demand evidence as to a claim to lawful ownership of the funds from a person making a request under section 25 of the Act, and, if so, were the demands and actions of the Minister in the present case consistent with the requirements of procedural fairness.
[25] Justices Layden-Stevenson and Harrington of this Court in the Dokaj and Tourki cases, aforesaid, have made careful analyses of several provisions of the Act at issue. Both judges made it clear that the Act contemplates a number of discrete proceedings and that they should not be conflated. Justice Layden-Stevenson in Dokaj at paragraph 35 said:
The decisions of the Minister pursuant to sections 27 and 29 are discrete decisions. One deals with contravention; the other deals with penalty and forfeit. Section 27 stipulates that the Minister shall decide whether subsection 12(1), i.e. the requirement to report, was contravened. The wording is unequivocal and leaves no room for doubt. Section 29 provides that, in circumstances where the Minister determines that there was a failure to report, the Minister is to review the quantum of the sanction imposed by the customs official under subsection 18(2), i.e. full forfeiture or a penalty ranging from $250 to $5,000. The Minister will either confirm the customs official's determination with respect to sanction or reduce it to some lesser penalty.
[26] Justice Harrington in Tourki at paragraph 34 said:
The Act contemplates various judicial proceedings, some in the Federal Court at large, some before its Chief Justice or judges specially designated by him, some before the Federal Court of Appeal, and some before courts administered by the provinces. There has been no effort to limit proceedings to a specific forum. I must conclude that Section 30 means exactly what it says. The result is that this action is limited to a determination as to whether Mr. Tourki failed to report to Customs as required by Section 12.
[27] Justice Harrington at paragraph 40 of Tourki also provided some background to the law respecting forfeiture:
It should be noted that Parliament in enacting the Act was far more lenient than past Parliaments or the Imperial Parliament of yesteryear. In the past, if a Customs Act or an Excise Act was violated, there was forfeiture, plain and simple. The forfeiture, like the arrest of maritime property in an admiralty action, and the determination of a person's status, is a proceeding in rem. Fault, complicity or mens rea on the part of the owner of the property forfeited is not a necessary component. Forfeiture as a deterrent to the importation of prohibited goods, or goods on which duty has not been paid, goes back centuries. For instance, the Customs Act which was before the Court in Croft v. Dunphy, [1933] A.C. 156 (JCPC), [1933] 1 D.L.R. 225, provided that if dutiable or prohibited goods were found on a vessel "hovering in territorial waters of Canada... such vessel with her apparel, rigging, tackle, furniture, store, and cargo shall be seized and forfeited."
[28] Thus, approaching section 25 of the Act it is evident that it provides to the person from whom the funds were seized, or the lawful owner, a right to request that the Minister make a decision as to whether section 12(1), the obligation to declare funds, was contravened. The effect of that decision is confiscation of the funds or their return. That section does not say to whom the funds are to be returned. Sections 32 and 33 are wholly separate proceedings providing to a person claiming ownership of the funds a direct remedy to seek payment of the funds to them.
[29] Section 25 does not require the Minister to make any inquiry as to whether a person seeking a decision be in fact a "lawful owner". No provision is made as to any evidence to be provided to substantiate a claim to "lawful ownership". There is no suggestion in that or any other provision of the Act that the Minster, in responding to such request, has somehow made a determination as to lawful ownership or has acquiesced in such claim.
[30] It was not improper for the Minister to require that the Applicant or Applicant's solicitor provide some substantiation for a claim to "lawful ownership" such as an affidavit or even a simple signed statement to that effect. However it was wholly unreasonable, at this stage, for the Minister to attempt to enter into some kind of evidentiary inquiry as to that claim. It was even more improper, and against any concept of procedural fairness, for the Minister's officials to ask for further evidence, never previously demanded, in the same letter where they said that, lacking such evidence, the file was closed. This was high handed in the extreme. Again, at most, the Minister, at the section 25 stage, should be satisfied by a simple signed statement or affidavit in which a claim to lawful ownership is made.
[31] Sections 25 and 27 simply requires the Minister, at the request of someone claiming to be the lawful owner, to do something namely, to decide if section 12(1) was contravened. There is a clear duty to act, it is a specific public duty, there is no provision for discretion and, in this case the evidence shows a clear demand and refusal. The necessary criteria for mandamus have been met.
[32] Section 29 is a separate matter and is not at issue in these proceedings. That section provides for a discretion in the Minister, it states that the Minister "may" determine what to do with the funds. It does not say to whom they are to be paid out if at all. Without prejudging the issue, it appears that it would be appropriate for the Minister to seek sufficient evidence so as to prove at least at a civil burden, ownership of the funds. But section 29 is not at issue here, only section 25. Section 25 provides no discretion. Mandamus requiring the Minister to proceed in accordance with sections 26 and 27 will issue.
[33] The Applicant is entitled to its costs to be assessed at the middle of Column III.
JUDGMENT
UPON APPLICATION made to this Court on Tuesday, the 13th day of June 2006, for mandamus to compel the Respondent to make a decision pursuant to sections 25, 26 and 27 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17 pursuant to a request made on behalf of the Applicant by letter dated July 11, 2005;
AND UPON reviewing the Records filed herein and hearing Counsel for the parties;
AND FOR the Reasons delivered herewith;
THIS COURT ADJUDGES that:
1. Mandamus is hereby issued compelling the Respondent, including such other Minister as Counsel for the Respondent may advise, to make a decision as requested aforesaid;
2. Costs are awarded to the Applicant to be assessed at the middle of Column III.
"Roger T. Hughes"
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1956-05
STYLE OF CAUSE: THANH THI NHU PHAM v. MINISTER OF NATIONAL REVENUE (CANADA)
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: June 13, 2006
REASONS FOR JUDGMENT
APPEARANCES:
| Steven Tress |
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Richard Casanova |
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SOLICITORS OF RECORD:
| Steven Tress Toronto |
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| John H. Sims, Q.C.
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FOR ATTORNEY GENERAL OF CANADA |