Court of Appeal for Ontario

Date: March 29, 2018 Docket: C63966

Judges: Strathy C.J.O., Simmons and Hourigan JJ.A.

In the Matter of Section 9.3 of the Mutual Legal Assistance in Criminal Matters Act

In the Matter of an application to amend an Order confirming the filing of a restraint order issued by a court of criminal jurisdiction in the United States of America

Parties

Between

The Attorney General of Canada (Applicant/Respondent)

and

George Georgiou (Respondent/Appellant)

Counsel

Maurice J. Neirinck, for the appellant

Jeffrey G. Johnston, for the respondent

Hearing and Appeal

Heard: February 26, 2018

On appeal from: The order of Justice Anne M. Molloy of the Superior Court of Justice, dated April 24, 2017.

Decision

Hourigan J.A.:

Introduction

[1] This appeal concerns the interpretation of the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.) (the "Act"). At issue is whether the motion judge erred in finding that funds subject to an American court order constituted proceeds of crime and were thereby subject to enforcement under the Act.

[2] In my view, the motion judge correctly concluded that the funds are proceeds of crime under the Act. I would therefore dismiss the appeal.

Facts

[3] In 2010, an American jury convicted the appellant of conspiracy and fraud. He was sentenced to 30 years in prison and ordered to pay both restitution and a forfeiture money judgment in the amount of $26 million USD, representing his interest in the property derived from the proceeds of his offences.

[4] In 2012, American authorities discovered an account in the name of Brent David Emanuel at a branch of the Royal Bank of Canada ("RBC") in Milton, Ontario, containing $9.2 million CAD, believed to belong to the appellant. On September 21, 2012, Justice Kelly of the U.S. District Court for the Eastern District of Pennsylvania issued an order restraining the funds in the RBC account as substitute assets (the "Kelly Order") until further order of that court. It was issued on the basis that the $26 million forfeiture money judgment against the appellant remained outstanding and the property derived from the proceeds of his offences could not be located.

[5] Under the American Federal Rules of Criminal Procedure, a forfeiture order for the proceeds of crime may be extended to include "substitute property" if the property subject to the forfeiture order cannot be located or has been transferred to third parties. Therefore, pursuant to American law, the American government was entitled to seek forfeiture of any assets belonging to the appellant in satisfaction of the forfeiture money judgment.

[6] American authorities then requested Canada's assistance in enforcing the Kelly Order. On September 24, 2012, Forestell J. authorized the Kelly Order to be filed and entered as a judgment of the Ontario Superior Court of Justice pursuant to ss. 9.3(1) and (2) of the Act. Under s. 9.3(4)(d) of the Act, she ordered that the Kelly Order could be enforced as if it were made under s. 490.8(3) of the Criminal Code. Both s. 9.3(4)(d) of the Act and s. 490.8(3) of the Criminal Code apply to "offence-related property".

[7] In September 2016, the appellant moved to set aside Forestell J.'s order, arguing that the court had no jurisdiction to file and enter the Kelly Order under s. 9.3 of the Act because the funds in the RBC account do not constitute offence-related property or proceeds of crime. Rather, he argued that these funds were the proceeds of a legitimate business transaction and were being held by Mr. Emanuel in trust for his mother.

[8] In February 2017, the respondent moved to have the appellant's motion summarily dismissed on the basis that it was frivolous or vexatious. It is the result of that motion that is at issue on this appeal.

Decision Below

[9] The motion judge granted the respondent's motion for summary dismissal. She held that the appellant's motion to set aside Forestell J.'s order "has no chance of success in fact or in law". She noted that s. 9.3(1) of the Act applies to the enforcement of "an order for the restraint or seizure of property situated in Canada" and that it was not, on its face, restricted to orders in respect of proceeds of crime or offence-related property.

[10] However, she held that she did not need to decide that issue because in her view, the phrase "proceeds of crime" in s. 9.3(4)(b) of the Act was broad enough to encompass the Kelly Order. The motion judge found that the RBC funds were proceeds of crime because they had been substituted for proceeds of crime by a foreign state under its legislation. Therefore, substituting s. 462.33(3) of the Criminal Code (referred to in s. 9.3(4)(b) of the Act and dealing with proceeds of crime) for the section originally cited in Forestell J.'s order (s. 490.8(3), referred to in s. 9.3(4)(d) of the Act and dealing with offence-related property) resolved any issue of jurisdiction.

[11] The motion judge also rejected the appellant's argument that the order of Forestell J. was issued on the basis of material misrepresentations.

[12] On June 21, 2017, Brown J.A. of this court granted leave to appeal the order of Molloy J., pursuant to s. 35 of the Act. In granting leave to appeal, Brown J.A. stated the legal issue in this appeal as follows:

Does an Order under the US Federal Rules of Criminal Procedure to restrain "substitute assets" for satisfaction of a forfeiture order constitute an "order for the restraint or seizure of property situated in Canada" within the meaning of s. 9.3(1) of the Act and for an order to restrain the proceeds of crime or offence-related property within the meaning of ss. 9.3(4)(b) and (d) of the Act?

Analysis

[13] The respondent argues that the funds in the RBC account do not need to be proceeds of crime or offence-related property to be subject to restraint under the Act. It submits that under s. 9.3(2), a Canadian court must file the order if the preconditions under ss. 9.3(1) and 9.3(3) are met. Because these preconditions have been met in this case, it does not matter whether the funds are proceeds of crime or offence-related property.

[14] The respondent also submits that the appellant does not have standing to oppose the registration of the Kelly Order, given his position that the funds in issue are not his property.[1]

[15] In my view, it is unnecessary to deal with either of these issues. This appeal can be decided on the narrow question of whether the motion judge erred in finding that the funds qualified as proceeds of crime under s. 9.3(4)(b) of the Act. I turn now to that issue.

[16] The starting point of the analysis is the text of s. 9.3 of the Act, which provides as follows:

9.3 (1) When a written request is presented to the Minister by a state or entity, other than the International Criminal Court referred to in section 9.1, for the enforcement of an order for the restraint or seizure of property situated in Canada issued by a court of criminal jurisdiction of the state or entity, the Minister may authorize the Attorney General of Canada or an attorney general of a province to make arrangements for the enforcement of the order.

(2) On receipt of an authorization, the Attorney General of Canada or an attorney general of a province may file a copy of the order with the superior court of criminal jurisdiction of the province in which the property that is the subject of the order is believed to be located. On being filed, the order shall be entered as a judgment of that court and may be executed anywhere in Canada.

(3) Before filing an order, the Attorney General of Canada or an attorney general of a province must be satisfied that

(a) the person has been charged with an offence within the jurisdiction of the state or entity; and

(b) the offence would be an indictable offence if it were committed in Canada.

(4) On being filed,

(a) an order for the seizure of proceeds of crime may be enforced as if it were a warrant issued under subsection 462.32(1) of the Criminal Code;

(b) an order for the restraint of proceeds of crime may be enforced as if it were an order made under subsection 462.33(3) of the Criminal Code;

(c) an order for the seizure of offence-related property may be enforced as if it were a warrant issued under subsection 487(1) of the Criminal Code or subsection 11(1) of the Controlled Drugs and Substances Act, as the case may be; and

(d) an order for the restraint of offence-related property may be enforced as if it were an order made under subsection 490.8(3) of the Criminal Code or subsection 14(3) of the Controlled Drugs and Substances Act, as the case may be.

[17] The appellant submits that the $9 million at issue in this case is not proceeds of crime or offence-related property. The Kelly Order provided for the restraint of these funds as legitimate non-criminal assets because the American government had been unable to collect against the appellant on a money judgment for the value of the proceeds of crime. Therefore, the appellant argues that the Kelly Order was issued to collect an unpaid money judgment, not to restrain proceeds of any crime.

[18] It is the appellant's submission that ss. 9.3(4)(a) to (d) of the Act stipulate that only filed orders for the seizure or restraint of proceeds of crime and of offence-related property can be enforced pursuant to s. 9.3.

[19] Further, the appellant argues that in interpreting s. 9.3 of the Act, the definition of proceeds of crime found under s. 462.3(1) of the Criminal Code should be applied. That definition refers to property "obtained or derived directly or indirectly" from the commission of an indictable offence. Adopting this definition, the appellant submits, would be consistent with the purpose of the Act. Moreover, he argues that it would be contrary to common sense and public policy for proceeds of crime that can be restrained or seized under the Criminal Code to be narrower than property that can be restrained pursuant to a foreign order under the Act. This would give foreign states a more extensive restraint and seizure power in Canada than the Canadian government.

[20] The appellant submits that the appropriate procedure would have been to instead commence civil proceedings to collect the Kelly Order pursuant to ss. 9(1) to (3) of the Act, but that did not occur.

[21] I would not give effect to any of these submissions, for the following reasons.

[22] First, domestic legislation that has been enacted to implement Canada's international obligations should be interpreted broadly and purposively with the aim of fulfilling those obligations: National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324, at 1371. Thus, where a court is faced with two possible interpretations of a statute implementing Canada's international obligations, the interpretation that allows Canada to fulfill those obligations will be preferred: R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292, at para. 53; R. v. Appulonappa, 2015 SCC 59, [2015] 3 S.C.R. 754, at para. 40.

[23] This court has adopted this approach to statutory interpretation in the transnational law context in its consideration of the proper application of the Act: Canada (Attorney General) v. Ni-Met Resources Inc., 195 C.C.C. (3d) 1, at para. 19; Canada (Attorney General) v. Foster, 215 C.C.C. (3d) 59, at para. 57; Belgium v. Suthanthiran, 2017 ONCA 343, 347 C.C.C. (3d) 120, at para. 62, leave to appeal refused: [2017] S.C.C.A. No. 256.

[24] Second, in the transnational law context, due regard must be had to differences in foreign legal concepts. For example, in France v. Diab, 2014 ONCA 374, 120 O.R. (3d) 174, leave to appeal refused: [2014] S.C.C.A. No. 317, this court adopted a broad and purposive interpretation of the requirement that a person who is being extradited is "sought for the purpose of prosecution" by the foreign state under the Extradition Act, S.C. 1999, c. 18. This court held that the test for whether a person is sought for prosecution is whether the authorities in the foreign state have taken a step that can fairly be described as the commencement of a prosecution in that state. It did not require a strictly Canadian understanding of the concept, which would require formal charges to be laid: see paras. 165-177.

[25] In the present case, the phrase "proceeds of crime" should be interpreted in a manner that respects differences in legal systems. Rule 32.2(e)(1)(B) of the American Federal Rules of Criminal Procedure permits the American government to enter an order of forfeiture or to amend an existing order of forfeiture to include property that is "substitute property that qualifies for forfeiture under an applicable statute". Pursuant to 21 U.S.C. § 853(p), as incorporated by 28 U.S.C. § 2461(c), where, inter alia, property of a defendant cannot be located or has been transferred to a third party, a court shall order the forfeiture of substitute property. The effect of these provisions is that the American government is entitled as a matter of law in such circumstances to seek the forfeiture of any assets belonging to a defendant in satisfaction of the forfeiture money judgment.

[26] This is a policy choice made by the American government, and as its treaty partner, Canada should respect that choice. It would violate the principle of comity and Canada's treaty obligations for Canada to insist that it will only assist a treaty partner where the foreign criminal law provision mirrors the domestic Canadian criminal law.

[27] Third, a broad definition of proceeds of crime accords with the purposes of the Act. At its essence, the Act has a dual purpose. It provides for assistance to other states in furtherance of Canada's treaty obligations and it ensures that those states will in turn provide Canada with assistance when necessary to investigate crimes in which Canada has an interest: Foster, at para. 55.

[28] In my view, interpreting proceeds of crime in a restrictive manner that only accords with the Canadian criminal law definition of this term would frustrate rather than support these objectives. Imposing the limits of the Criminal Code definition on foreign orders would undermine Canada's ability to cooperate with other states and prevent the government from honouring its treaty obligations.

Disposition

[29] The appeal is dismissed. In accordance with the respondent's request, no costs are awarded.

Released: March 29, 2018

"C.W. Hourigan J.A."

"I agree. G.R. Strathy C.J.O."

"I agree. Janet Simmons J.A."

Footnote

[1] While the appellant maintains that the $9 million was not his property as his mother was the sole beneficial owner of that money, he has not relied on this in his legal submissions on appeal and does not ask this court to determine whether the $9 million in fact belonged to him. He submitted in oral argument that he has standing regardless of whether the $9 million is his, since he is subject to the order for substitute property.