BETWEEN:
AND EMERGENCY PREPAREDNESS (CANADA)
and
Respondent
Heard at Toronto, Ontario, on March 21, 2007.
Judgment delivered at Ottawa, Ontario, on April 5, 2007.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRED IN BY: SEXTON J.A.
EVANS J.A.
Docket: A-313-06
Citation: 2007 FCA 141
CORAM: DÉCARY J.A.
SEXTON J.A.
EVANS J.A.
BETWEEN:
THE MINISTER OF PUBLIC SAFETY
AND EMERGENCY PREPAREDNESS (CANADA)
Appellant
and
THANH THI NHU PHAM
Respondent
REASONS FOR JUDGMENT
[1] This appeal raises issues pertaining to the powers and duties of the Minister of Public Safety and Emergency Preparedness (the Minister) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000, c.17) (the Act).
The Facts
[2] The facts are straightforward. On April 14, 2005, Canadian Customs officials discover a non-reported sum of money totalling $181,600.00 in United States funds in a car driven by a Ms. Nguyen. The officials seize the currency, suspecting it to be proceeds of crime under the provisions of subsections 18(1) and 18(2) of the Act.
[3] Ms. Nguyen is given a Receipt from the officials wherein she is informed that she, or the lawful owner of the currency, is entitled, within 90 days, to “file a request to review this enforcement action and request a decision of the Minister of National Revenue” (A.B. p. 45). This right to request a Minister’s decision is granted by section 25 of the Act. (Even though the Receipt referred to the Minister of National Revenue, the actual Minister involved is the Minister of Public Safety and Emergency Preparedness. The correction was made at some point. Nothing turns on it.)
[4] On July 11, 2005, the solicitor for Ms. Pham, the respondent, writes to the Minister stating that Ms. Pham is the lawful owner of the currency and is requesting pursuant to section 25 of the Act a review of the seizure and a decision of the Minister.
[5] On July 19, 2005, the Canada Border Services Agency (the Agency) acknowledges receipt of the respondent’s solicitor’s letter of July 11, 2005. The letter explains that the ministerial review will be conducted by the Recourse Directorate of the Agency, “which has a mandate to perform a full and impartial review of the enforcement action” (A.B. p. 49). The letter goes on to say that a Mr. Sears has been assigned as adjudicator to the file and that a letter will follow within 45 days which “will contain a full explanation of the reasons for the enforcement action, and will begin the review process”. The letter adds that “upon receiving the letter, you will be given ample opportunity to provide further information with regards to your case”. Appended to the letter is an “information sheet” answering “frequently asked questions” with respect to “appealing an enforcement action” (A.B. p. 51).
[6] On July 22, 2005, the Agency provides a substantive response to the July 11, 2005 letter. The letter reads:
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 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 of the Act.
I am enclosing an information sheet that may be helpful to you. I would like to draw your attention to the time limitation for filing your application with the Court. The seizure occurred April 14, 2005 and, as such, you must file your application with the Superior Court of Justice in the province of Ontario by July 14, 2005.
. . .
With respect to your first party claim, I will hold the file in abeyance for an additional 30 days to allow you to provide documentation to support your ownership of the currency. Should the required evidence not be provided, the first party file, which has been opened, will be administratively closed. (A.B. p. 52-53)
I note that the deadline of July 14, 2005 for a third-party claim under section 32 of the Act had already expired by the time the Agency’s letter was sent to the respondent.
[7] On August 19, 2005, the respondent’s solicitor, in answering the July 22, 2005 letter, states that he is “still in the process of obtaining evidence establishing ownership of the seized funds”, a current difficulty being that his client was in Vietnam and had just given birth to a child. He requests a 14-day time extension (A.B. p. 56).
[8] On August 22, 2005, the respondent’s solicitor sends a copy of an affidavit sworn by Ms. Nguyen in Toronto. The affidavit simply states that Ms. Pham “is the rightful owner of the funds seized from me” and that she (i.e. Ms. Nguyen) has “no claim of ownership in the said funds whatsoever” (A.B. p. 60).
[9] On August 31, 2005, the respondent’s solicitor sends the original affidavit of Ms. Nguyen and an affidavit sworn in Vietnam by Ms. Pham. Ms. Pham’s affidavit simply states that she is “the rightful owner of the funds which were seized from (Ms.) Nguyen” and that to her knowledge, “no other person or entity has any claim of ownership in the said funds whatsoever” (A.B. p. 66). The letter goes on:
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 Minister 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. (A.B. p. 63, 64)
[10] On September 30, 2005, the Adjudicator, in a letter sent to the respondent’s solicitor, closes the file in the following terms:
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. (A.B. p. 70)
[11] The respondent then filed an application for an order in the nature of mandamus to compel the appellant to make a decision within a reasonable time fixed by the Court. In her view, the appellant was required by law to make the decision requested by the respondent pursuant to section 25 of the Act, but he had, instead, refused to process the request and had administratively closed the matter.
[12] On June 14, 2006, a Federal Court Judge issued an order of mandamus compelling the appellant “to make a decision” (2006 FC 759). Parts of the reasons for judgment read as follows:
[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 Minister, 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.
Relevant Legislation
(N.B. Numerous amendments to the Act were made in S.C. 2006, c. 12. They came into force on February 10, 2007 and do not apply in this appeal)
[13] The statutory provisions material to this case in effect at the relevant time were as follows:
The Scheme of the Act
[14] The provisions of the Act which deal with the review and appeal process are amongst the most convoluted and confusing provisions I have seen in federal statutes. They have been regularly criticized by Federal Court judges, and rightly so. They were recently amended to respond to some of these criticisms. As we shall see, further amendments might well be needed.
[15] As I read these provisions, there are two types of proceedings available when currency has been seized pursuant to subsection 12(1): a first party request and a third party claim.
[16] The first party request is described in sections 25 to 31. It is addressed to the Minister and, eventually, the Federal Court. It is made by the person from whom the currency was seized or by the “lawful owner” of the currency. The object of the proceeding is to have the Minister or the Federal Court determine whether subsection 12(1) has been contravened. If there is a finding of contravention, the Minister will decide whether to return the currency or not, with or without the payment of a penalty, whether to remit any penalty or portion of any penalty that had been paid or, subject to any order made under section 33 or 34, whether to confirm the forfeiture of the currency.
[17] The third party claim is described in sections 32 to 35. It is made before the Superior Court of the Province where the seizure occurred. It is filed by a third party who claims an interest in the currency as owner. The third party will need to satisfy the Superior Court that it has acquired the interest in good faith before the contravention, that it is innocent of any complicity or collusion in the contravention and that it exercised all reasonable care to ensure that any person permitted to obtain possession of the currency would report it in accordance with subsection 12(1). If the third party is successful, it is entitled to a Court order declaring that its interest is not affected by the seizure and declaring the nature and extent of its interest at the time of the contravention. Through a combination of sections 29(1)(c) and 35, the third party will then be given the part of the seized currency which represents its interest in it.
The First Party Process
[18] As the law stood at the time relevant to this appeal, the first party process, even though it was expressly meant to deal only with a contravention to subsection 12(1) – i.e. failure to declare -, implicitly and necessarily dealt also with the seizure and forfeiture under section 18, including the payment of a penalty.
[19] Paragraph 18(3)(a) expressly gives the person from whom the currency was seized “the right to review and appeal set out in sections 25 and 30”. I pause, here, to note the use of the word “and” between “sections 25 and 30”. There is but one review process, which is the request made to the Minister under section 25 for a decision. There is but one appeal process, which is the appeal to the Federal Court by way of an action under section 30.
[20] Section 24 expressly states that “the forfeiture of currency … seized under the Part … is not subject to review … except to the extent and in the manner provided by sections 25 to 30”. The word used, here, between sections 25 and 30 is not “and”, as in paragraph 18(3)(a), but “to”, which clearly shows that examination of the forfeiture is also part of the continuing process set out in sections 25 to 30. The first party request, by the very words of section 24, is the only remedy available under the statute to challenge “the forfeiture of the currency seized”.
[21] Subsection 30(1) gives the person who requested a decision of the Minister under section 25 the right to appeal by way of an action in the Federal Court. It was arguable in that legislative context that the first party process contemplated in reality only one decision, i.e. the decision by the Minister as to whether there was a contravention to subsection 12(1), accompanied, if there was a finding of contravention, by a pronouncement on the validity of the seizure and a review of the penalty imposed. That interpretation was, indeed, put to the Federal Court. The Court eventually rejected it and found that there were two discrete decisions, the section 27 decision and the section 29 decision (see Dokaj v. Canada (Minister of National Revenue), 2005 FC 1437; Tourki v. Canada (Minister of Public Safety and Emergency Preparedness), 2006 FC 50; and Sellathurai v. Canada (Minister of Public Safety and Emergency Preparedness), 2007 FC 208).
[22] Whatever the merit of this interpretation, which, to my knowledge, was never examined by the Federal Court of Appeal, Parliament took no chance and introduced in 2006 a series of amendments which puts an end to that controversy.
[23] A new section, section 24.1, was brought in, which provides a mechanism to deal with the seizure and penalty aspects of the process. Section 24 was amended so as to provide that the forfeiture of currency could only be reviewed “to the extent and in the manner provided by sections 24.1 and 25”. Subsection 30(1) was amended so as to replace “a person who requests a decision of the Minister under section 25” by “a person who requests a decision of the Minister under section 27…”. In other words, a new process was added, which deals with the seizure and the penalty and which is independent from the process set out in sections 25 to 30. It was also made clear that there were two decisions, not one, rendered in the course of the first party process, one of which (the section 27 decision) being appealable by way of an action in the Federal Court, the other (the section 29 decision) being reviewable through the traditional application for judicial review under section 18 of the Federal Courts Act. I pass no comment on the new provisions, except to say that they have perhaps not solved all the problems generated by the original legislation.
[24] To return to the specific issue in this appeal, the Minister, apparently not satisfied that there were two discrete decisions, not one, in the first party process, now argues that there is a third discrete decision, and therefore an additional power of inquiry. That third decision would be the section 25 decision. As the argument goes, the Minister, before conducting the requested review, must satisfy himself through a full-fledged inquiry that the applicant is the “lawful owner” of the currency.
[25] That suggestion, in my respectful view, confuses preliminary determinations which must be made at the beginning of the process, with decisions which are made at the end of the process and which deal with the merits of the case. Preliminary determinations may of course be challenged as “decisions” reviewable in the Federal Court, but they must not be equated with actual decisions made once the process has begun. I note in this regard that the word “decide” is used in both sections 27 and 29. Section 25 being an invitation to seek a decision, it makes little sense to put the “decision” made to conduct that inquiry on the same level as the decision (or decisions) ultimately made after the inquiry.
[26] Pressed by the Court at the hearing, counsel for the Minister recognized that the statute contemplated only one inquiry, which was regulated by section 26. He also recognized that in reality that inquiry and the evidence collected in the course of the inquiry were the sole basis for both the section 27 and the section 29 decisions.
[27] To adopt the suggestion of the Minister would mean that a provision (section 25) meant to open the door to a review process at the request of the lawful owner, could be used to close the door right from the start to an applicant on a ground (i.e. that he is not the lawful owner) that the review process was meant to establish. As there is no doubt, in my view, that the section 25 request (at least in the then existing legislative context) led to an inquiry into the seizure and therefore the grounds for the seizure which could be, and were in this case, a suspicion that the currency was proceeds of crime (see subsection 18(2) of the Act), to require an applicant to prove from the start that he is the lawful owner would be akin to disqualifying a racer before the race even starts for a doping test done after the race.
[28] A good illustration of the type of evidence to be adduced in an inquiry made pursuant to a section 25 request, is to be found in Sellathurai (supra). For all practical purposes, the person has to prove lawful ownership of the currency if he wants to avoid the consequences set out in section 29.
[29] By comparison, the person who claims an interest in the currency as owner is entitled, in the third party process set out in sections 32 to 35, to a full hearing before a Superior Court judge who will determine inter alia whether the person acquired the interest in good faith before the contravention. Counsel for the Minister recognized at the hearing that a lawful owner could file either a first party request or a third party claim.
[30] There is no doubt that the Minister, when he receives a request for decision by a person who claims to be the lawful owner of the currency, must satisfy himself that the person is what he says he is. But in the context of the first party process set out in the Act, the burden on an applicant at that early stage cannot but be minimal. As noted by the Judge in paragraph 29 of his reasons, no provision is made as to any evidence to be provided to substantiate a claim to “lawful ownership”, and indeed no mechanism for the collection of substantial evidence is set out. In contrast, provision is made for the submission of evidence after the request for a decision has been made and after the receipt of a report by the President concerning the circumstances of the seizure: see section 26. Further, a person who claims as the person from whom the money was seized, even if also the owner, may make a request for decision without proving the origin of the money.
[31] In the end, I agree with the Judge that it was not improper for the Minister to require Ms. Pham to provide some evidence that she was the lawful owner. It was an error of law, at this stage, for him to attempt to enter into some kind of evidentiary inquiry as to that claim.
[32] Two affidavits were filed, which constitute prima facie evidence that Ms. Pham is the lawful owner. It is not for me to speculate as to what evidence will eventually be needed to satisfy the Minister that there was no contravention to the obligation to declare and that the seizure and penalty should be reviewed. Again as noted by the Judge, there is no suggestion in section 25 or in any other provision of the Act that the Minister, in responding to a request and in conducting a review, is thereby making a determination as to lawful ownership or acquiescing in such claim.
[33] Contrary to the Federal Court, however, I do not think that an order of mandamus is appropriate in the circumstances. The process has been initiated, but it has been terminated prematurely on grounds said to be administrative. I would rather set aside the Minister’s decision to close the file and send the matter back to the Minister for the continuation of the inquiry, the next step being that provided in section 26 of the Act.
Disposition
[34] I would allow the appeal, but for the sole purpose of substituting for the order of mandamus the following one: the application is granted, the decision to close the file is set aside and the matter is remitted to the Minister for the continuation of the inquiry, the next step being that provided in section 26 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
[35] I would grant the respondent her costs in the appeal.
“I agree.
J. Edgar Sexton J.A.”
“I agree.
John M. Evans J.A.”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-313-06
STYLE OF CAUSE: THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS
and THANH THI NHU PHAM
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: March 21, 2007
REASONS FOR JUDGMENT BY: DÉCARY J.A.
APPEARANCES:
|
Mr. Richard Casanova |
FOR THE APPELLANT
|
|
FOR THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Deputy Attorney General of Canada
Steven Tress Toronto, Ontario
|
FOR THE APPELLANT
FOR THE RESPONDENT
|