Federal Court Decisions

 

Date: 20110630

Docket: T-1632-10

Citation: 2011 FC 798

Ottawa, Ontario, June 30, 2011

PRESENT:     The Honourable Mr. Justice Mosley

 

 

BETWEEN:

	LAMBER SINGH KANG
		Applicant
	and
	THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS
		Respondent

 

           REASONS FOR JUDGMENT AND JUDGMENT

 

[1]               Mr. Kang failed to declare currency in his possession upon his return to Canada from the United Kingdom. The money was found on secondary inspection at the Calgary International Airport and seized.

 

[2]               The applicant seeks judicial review pursuant to section 18.1 of the Federal Courts Act, R.S., 1985, c. F-7, of the amended ministerial decision made on September 14, 2010 by the Appeal Division, Recourse Directorate for the Minister of Public Safety and Emergency Preparedness, concluding that there was a contravention under section 27 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000 c. 17 (“Act”) and that $150 CAD, $517 USD and 6050 GBP shall be held as forfeit under section 29 of the Act.

 

BACKGROUND:

 

[3]               The applicant arrived at Calgary International Airport (“CIA”) on August 1, 2009 from the United Kingdom (“UK”). He was travelling with his mother and sister, all of whom were in the UK to attend the applicant’s cousin’s wedding. On his Customs Declaration card, he answered “no” to the question of whether he was transporting currency or monetary instruments totalling $10, 000 CDN or more.

 

[4]               The applicant’s luggage was x-rayed in secondary examination. The image showed various small patches of dense areas in his suitcase. The Border Services Officer conducted a database check on the applicant and discovered he had two previous enforcement actions for smuggling a controlled substance.

 

[5]               The Officer searched the applicant’s luggage and found two white envelopes. The applicant told the Officer that each envelope contained three thousand GBP. When asked why he did not declare this amount, Mr. Kang said he was a truck driver and that he has crossed the border numerous times with cash. He also said he knew he did not have to declare sums under $10, 000 and told the Officer that the money was for his sister and mother as well as he. A search of the applicant’s mother’s purse revealed an envelope of 3000 GBP. Both the mother and the sister disavowed ownership of the money at the airport.

 

[6]               The Officer asked the applicant a number of questions regarding from where the money came, why he had such large sums of money and his intended use for the funds. The applicant responded that prior to travelling to the UK, he withdrew $10, 000 at Bank of Nova Scotia and $5,000 at a credit union. He explained that the $5,000 was intended to be a wedding gift for his cousin but that his cousin did not want the money. The Officer asked for the name of his cousin but the applicant either did not or could not answer. The applicant also failed to answer the Officer’s follow up questions with respect to whether the applicant’s past enforcement actions were tied to drugs. The applicant became upset, agitated and non-responsive. As the applicant was no longer answering questions, the Officer seized the money. A different officer noted that the applicant also had some American and Canadian funds in his wallet which were later counted by the initial Officer. Pursuant to subsection 18(2) of the Act, no terms of release were offered as it was believed that the funds in GBP were proceeds of crime or were for the use of financing terrorist activities.

 

[7]               By way of letter dated August 2, 2009, Canada Border Services Agency (“CBSA”) advised the applicant that a typing error occurred while entering the seizure receipt. It was explained that the line that states 20, 20 GBP notes (totalling 400 GBP) were seized should have stated 20, 50 GBP notes (totalling 1000 GBP) were seized. A correction was made and a new seizure receipt was issued to reflect that. On August 17, 2009, the applicant requested a ministerial decision pursuant to section 25 of the Act as to whether subsection 12(1) of the Act had been contravened.

 

[8]               On September 28, 2009, CBSA, on behalf of the Minister, provided the applicant with a written Notice of Circumstances of the Seizure pursuant to subsection 26(1) of the Act and invited him to furnish any evidence in the matter, as per subsection 26(2). The applicant provided CBSA with submissions and documentary evidence on October 21, 2009.  In that letter, the applicant submitted that his “failure to declare that he was carrying funds in excess of $10, 000 was a misunderstanding on his part”.  He also submitted that he did not bring funds to the UK from Canada.  He said he borrowed money from relatives in the UK. He attached an affidavit from his uncle, Mr. Kewal Singh, as proof of this statement. Mr. Singh’s affidavit noted that the applicant requested a 5, 000 GBP loan and that two withdrawals were made.

 

[9]               In a letter dated November 2, 2009, the Minister requested further proof of Mr. Singh’s account. On January 11, 2010, the applicant submitted Mr. Singh’s transaction history and account book, asserting that the GPB were derived from Mr. Singh. The Minister responded on February 9, 2010, acknowledging the January 11 letter but reiterating that the account book and transaction history did not prove lawful origin of the money or that the British funds were from Mr. Singh’s withdrawals. The Minister again requested proof of lawful origin. No further evidence was submitted. The Minister’s Delegate provided the applicant with her decision by letter dated July 29, 2010 and an amended decision on September 10, 2010. The applicant filed for judicial review on October 7, 2010.

 

[10]           The applicant seeks an order, under paragraph 18.1(3)(b) of the Federal Courts Act, quashing or setting aside the decision of the Minister’s Delegate and referring it back to another decision-maker for redetermination.

DECISION UNDER REVIEW:

 

[11]           In the July 29, 2010 letter the Minister’s Delegate concluded that there was a contravention of the Act or Regulations with respect to $150 CAD, 5150 GBP and $517 USD, all of which was seized. Under the provisions of section 29 of the Act, the amounts seized were held as forfeit. On September 10, 2010, the Minister’s Delegate sent an amended set of reasons. They are identical to the reasons of the July 29th decision but note that the seized amount in GBP was 6050, not 5150. 

 

[12]           Pursuant to section 27 of the Act, the Minister’s Delegate also decided that there was not a contravention with respect to the 3000 GBP seized (the sum found in the applicant’s mother’s purse). As such, and according to section 28, the Minister’s Delegate held that this amount should be returned to the applicant.

 

[13]           Based on the following, the Minister’s Delegate held that there were reasonable grounds to suspect that the funds seized were the proceeds of crime:

-         the applicant did not report the currency in his possession as required by the Act;

-         the applicant was the subject of two previous enforcement actions for smuggling prohibited drugs into Canada;

-         the funds over the reporting threshold were hid in the lining of the applicant’s suitcase;

-         the applicant provided contradictory statements to the officer;

-         the applicant was aware of reporting requirements;

-         the applicant had limited household income;

 

 

ISSUES:

 

[14]           The issues raised on this application are as follows: 

1. Does the Court have jurisdiction in this judicial review to hear arguments on the section 27 decision?
2. Was the Minister’s decision to maintain forfeiture of the currency reasonable?
3. Does the doctrine of functus officio apply to this case in that the amended decision should not be considered?

 

 

RELEVANT STATUTORY PROVISONS:

 

[15]           The objectives of the Act are set out in section 3:

 

 

 

[16]           Subsection 12(1) of the Act set out reporting obligations for brining currency into the country:

 

[17]           The prescribed amount, as referred to above, is set out in section 2 of the Cross-border Currency and Monetary Instruments Reporting Regulations, SOR/2002-412:

 

 

 

[18]           Subsection 18(1) of the Act allows seizure of currency if the officer believes that subsection 12(1) has been contravened:

 

 

[19]           If an individual had currency or monetary instruments under subsection 18(1) seized, that individual has the right, pursuant to section 25, to request a decision of the Minister as to whether subsection 12(1) was contravened:

 

 

 

[20]           Pursuant to subsection 27(1), the Minister must then make a decision with respect to whether subsection 12(1) of the Act was contravened.  (“Section 27 Decision”):

 

 

[21]           If, under section 27, the Minister decides there was not failure to report, pursuant to section 12, the currency or the assessed penalty must be returned, as per section 28.  If the Minister concludes that there was a failure to report, the Minister must then render a second decision, under section 29, as to the appropriate sanction for the infraction (“Section 29 Decision”):

 

 

[22]           A Section 29 Decision is effectively a review of the quantum of the sanction imposed by the Customs official pursuant to subsection 18(2) (i.e., full forfeiture or a penalty ranging from $250 to $5, 000).  Section 29 requires the Minister to either confirm the Customs official’s decision in regards to the sanction or to reduce it to a lesser penalty.

 

[23]           Subsection 30(1) provides for the process for appealing a decision under section 27 in Federal Court:

 

 

 

ANALYSIS:

 

            Standard of Review

 

[24]           Due to the existence of a strong privative clause in section 24 of the Act, decisions under section 29 must be reviewed by this Court against a standard of reasonableness: Dag v. Canada (Minister of Public Safety and Emergency Preparedness), 2008 FCA 95, 70 Admin. L.R. (4^th) 214 at para. 4; Sellathurai v. Canada, 2008 FCA 255, [2009] 2 F.C.R. 576 at para. 25. The Minister’s Delegate is afforded deference in deciding cases that deal with Section 29 decisions.  See: Qasem v. Canada (Minister of National Revenue - M.N.R.), 2008 FCA 300. 

 

Does the Court have jurisdiction on this judicial review to hear arguments on the section 27 decision?

 

[25]           As outlined in the legislative framework, above, contesting the decision made by the Minister, pursuant to section 27 of the Act, is done by way of appeal in the Federal Court. The respondent is correct to note that this is a different process than a judicial review of a Section 29 Decision:   Dokaj v. Minister of National Revenue, 2005 FC 1437, [2006] F.C.R. 152. The sole issue in Dokaj was whether the Federal Court has jurisdiction, pursuant to section 30 of the Act, to review a Section 29 Decision. The Minister took the position that the Court’s jurisdiction under section 30 is limited to considering the Section 27 Decision.

 

[26]           At paragraph 35 of Dokaj, Justice Carolyn Layden-Stevenson clarified the difference between a Section 27 Decision and a Section 29 Decision:

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.

 

[27]           Justice Layden-Stevenson elaborated on the distinction at paragraphs 37 and 38:

[…] It necessarily follows that the references to "a decision" and "the decision" in subsection 30(1) refer to the Minister's determination under section 27 of the Act. In my view, it cannot reasonably be construed in any other way. Consequently, the Federal Court's jurisdiction, pursuant to section 30 of the Act, is limited to reviewing the decision under section 27 of the Act. That decision is with respect to whether or not there was a contravention of the Act under subsection 12(1).

 

While other ministerial decisions taken in the context of a seizure under the Act, such

as a decision under section 29, may be the subject of judicial review applications initiated under section 18 of the Federal Courts Act, R.S.C., 1985, c. F-7, they cannot be the subject of a statutory appeal brought pursuant to section 30 of the Act. Section 24 of the Act constitutes a strong privative clause that insulates, but does not immunize, decisions (other than those under section 27) from judicial review. Indeed the Minister takes the position that judicial review of such decisions is available and the existence and ambit of the privative clause is to be assessed in the consideration of the factors comprising the pragmatic and functional analysis (see: Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982).

 

 

[28]           This conclusion was followed by the Federal Court of Appeal in Tourki v. Canada (Minister of Public Safety & Emergency Preparedness), 2007 FCA 186, 284 D.L.R. (4^th) 356 at paragraphs 16-18 and applies herein.  See also: Sidhu v. Canada (Public Safety and Emergency Preparedness), 2010 FC 911, 92 Imm. L.R. (3d) 67 at paras. 33-34.

 

[29]           It is true that the various reports and decisions issued by the Minister were unclear, and even contradictory, in terms of how much was seized and in what denominations. However, based on the law and jurisprudence, it is clear that this Court does not have jurisdiction to hear these arguments on judicial review. This bench is charged only with reviewing the Section 29 Decision. That is, a review of the penalty and forfeiture. As was explained at paragraph 34 in Sellathurai, above: “the starting point for the exercise of the Minister's discretion is that the forfeited currency, which is now in the hands of the Minister of Public Works pursuant to section 22, is, for all legal purposes, property of the Crown”. 

 

[30]           Had the applicant wished to challenge the Section 27 Decision, he should have initiated an appeal in Federal Court pursuant to section 30 of the Act, within the stipulated timeframe. He cannot do so in these proceedings.

 

Was the Minister’s decision to maintain forfeiture of the currency reasonable?

 

[31]            The applicant submits that based on the evidence on record, there is no way to ascertain exactly how much currency of what denomination was in his actual possession alone when he entered Canada because it was split between himself and his mother and because of the errors made by the officials in counting the totals. He submits that this should be considered by the Minister’s Delegate when jurisdiction is exercised under section 29 of the Act to grant or to deny relief from forfeiture.

 

[32]           The applicant says the Minister cannot argue that it was merely correcting a clerical error in the July 29, 2010 decision when the evidence on record shows multiple inconsistencies regarding the amount and denomination of the currency and about who possessed such currency. In addition, the applicant posits that the July 29, 2010 decision was a “final decision” and that the Minister was, thereafter, functus.

 

[33]           The applicant further argues that the decision was not reasonable because it holds the applicant to an impossible standard of proof with respect to establishing the lawful origin of the currency. The applicant submitted bank account information, passbooks, a letter from his cousin and a sworn affidavit from his uncle. It would be unreasonable, in the applicant’s view, to expect more than this.

 

[34]           Under section 29 of the Act, the Minister must decide if he will “exercise his discretion to grant relief from forfeiture, either by returning the funds themselves or by returning the statutory penalty paid to secure the release of the funds”. The Minister must determine whether the seized funds are the proceeds of crime. If the currency could be shown to have a legitimate source it cannot be proceeds of crime.

 

 

 

[35]           Here, the Minister decided that it had reasonable grounds to suspect the currency seized from Mr. Kang was proceeds of crime and concluded that the amounts seized in the applicant’s possession should be held as forfeit. This was based on the fact that the applicant:

 

-         did not report the currency in his possession as required by the Act;

-         was subject to two previous enforcement actions for smuggling prohibited drugs into Canada;

-         hid the currency over the reporting threshold within the lining of his suitcase;

-         provided contradictory statements to the officer;

-         was aware of the reporting requirements;

-         had a limited household income; and

-         demonstrated physical and verbal indicators during the secondary examination.

 

 

[36]           When stopped and searched at the CIA, the applicant told the officers that he withdrew the money from two Canadian financial institutions: (1) the Bank of Nova Scotia, under his company name JJG Trucking; and (2) Khalsa Credit Union. He said he brought the money to the UK as a gift to his cousin for his wedding. He claimed he was returning with the funds because his cousin did not want it. When asked for his cousin’s name, he could not recall it. 

 

[37]           In later correspondence with CBSA, and after having been asked to provide documentary evidence to support the lawful origin of the seized currency, the applicant stated that he made an error in advising the officer that he brought the money with him when he left Canada. He attributed the error to his being nervous. What he characterizes as an error was, of course, an explanation which he could not back up with evidence of withdrawals from the financial institutions in question.

 

[38]           The applicant then said that the money was given to him from his family in the UK, namely his cousin, Mr. Andip Singh, and his uncle, Mr. Kewal Singh. He submitted a letter from his cousin and a sworn affidavit from Mr. Singh.  Both attached banking information. However, neither his uncle nor his cousin’s information show how their withdrawals were transferred to the applicant.

 

[39]           As such, the Minister found that the affidavit and the letter did not establish lawful origin of the currency or prove that the money the applicant had in his possession was from these sources.  When CBSA asked for further information regarding the applicant’s family’s information, necessary to establish the lawful origin of the currency, the applicant provided no follow up evidence.

 

[40]           I do not accept the applicant’s argument that he is being held to an impossible standard of proof. The evidence submitted by the applicant does not establish the lawful origin of the funds. Although the bank withdrawals of the applicant’s uncle and cousin were amounts that could, theoretically, provide for loans to the applicant, there is nothing in the record, apart from their statements, to link those sums of money to that which was ultimately seized at the airport in Calgary. Evidence that cannot establish the lawful origin of the funds cannot be used as proof of such: Dupre v. Canada (Minister of Public Safety & Emergency Preparedness), 2007 FC 1177 at para. 31; Sidhu, above, at para. 41.

 

[41]           The lack of proof, the contradictory stories which cast doubt on the applicant’s credibility and the prior enforcement actions for smuggling controlled substances, taken together, make it reasonable that the Minister could not be persuaded that the currency did not come from proceeds of crime. It follows that the Minister’s decision to hold the currency as forfeit was reasonable.

 

Does the doctrine of functus officio apply to this case in that the amended decision should not be considered?

 

 

[42]           The doctrine of functus officio was enunciated by the Supreme Court of Canada in Chandler v. Alberta Association of Architects, [1989] 2 S.C.R. 848 at para. 20:

As a general rule, once such a tribunal has reached a final decision in respect to the matter that is before it in accordance with its enabling statute, that decision cannot be revisited because the tribunal has changed its mind, made an error within jurisdiction or because there has been a change of circumstances. It can only do so if authorized by statute or if there has been a slip or error within the exceptions enunciated in Paper Machinery Ltd. v. J. O. Ross Engineering Corp.

 

 

[43]           The exceptions in Paper Machinery Ltd. v. J.O. Ross Engineering Corp., [1934] S.C.R. 186 are: “(1) where there has been a slip in drawing it up, or (2) where there has been error in expressing the manifest intention of the court”. 

 

[44]           In Kurukkal v. Canada (Minister of Citizenship and Immigration), 2009 FC 695, [2010] 3 F.C.R. 195, set aside on other grounds at 2010 FCA 230, 8 Admin. L.R. (5th) 271, it was held that the doctrine of functus officio may not strictly apply in non-adjudicative administrative proceedings. 

 

[45]           It is not clear from the evidence on record, nor from any of the correspondence sent to the applicant, how the Minister arrived at an amended finding that 6050 GBP had been seized. The applicant is right to note the number of inconsistencies and confusing documents submitted by the respondent Minister with respect to what amounts were exactly seized. The applicant speculates that the revised number was generated when it became apparent that with the return of the 3000 GBP attributed to the possession of the mother, the total found in the possession of the applicant fell short of the statutory threshold.

 

[46]           I note that the amount found in the mother’s purse was returned because possession under the Act is personal not constructive. It refers to actual possession by the person arriving in Canada.  It was thus immaterial that she had disavowed possession of the funds at the airport. However, the amount in question is not a relevant factor in an application to review the exercise of the Minister’s discretion. The time to question that would have been on an appeal under section 27.

 

[47]           There is insufficient evidence before me to support an inference that the amount stated in the July 29 decision was anything other than a slip in drawing up the decision. It did not bind the manifest intention of the adjudicator and thus falls within the exceptions cited in Paper Machinery Ltd., above.

 

[48]           Even if I were to find that the Minister was functus after the issuance of the July decision, the applicant is out of time to bring an application for judicial review of that determination. The applicant did not file his notice of application for judicial review on time and has not brought an application for an extension of time. He filed on October 7, 2010, 28 days after the amended decision, dated September 10, 2010, and 71 days after the original decision.

 

[49]           In the result, this application will be dismissed. Considering the number of errors made by the Minister’s officials in handling and counting the funds in question, I will exercise my discretion not to award costs to the successful party.

 

 

JUDGMENT

 

THIS COURT’S JUDGMENT is that the application is dismissed. The parties will bear their own costs.

 

 

“Richard G. Mosley”

FEDERAL COURT

 

SOLICITORS OF RECORD

 

 

DOCKET:                                          T-1632-10

 

STYLE OF CAUSE:                          LAMBER SINGH KANG

 

                                                            and

 

                                                            THE MINISTER OF PUBLIC SAFETY

                                                            AND EMERGENCY PREPAREDNESS

 

 

PLACE OF HEARING:                    Calgary, Alberta

 

DATE OF HEARING:                      April 14, 2011

 

REASONS FOR JUDGMENT

AND JUDGMENT:                          MOSLEY J.

 

DATED:                                             June 29, 2011

 

 

 

APPEARANCES:

 

Raj Sharma Harsanyi	FOR THE APPLICANT
Brad Bedard	FOR THE RESPONDENT

 

SOLICITORS OF RECORD:

 

RAJ SHARMA Sharma Harsanyi Barristers & Solicitors Calgary, Alberta	FOR THE APPLICANT
MYLES J. KIRVAN Deputy Attorney General of Canada Edmonton, Alberta	FOR THE RESPONDENT