United States of America v. Gushlak

Ontario Reports

Ontario Superior Court of Justice

Leiper J.

November 23, 2020

154 O.R. (3d) 47 | 2020 ONSC 7172

Case Summary

Constitutional law — Canadian Bill of Rights — Enjoyment of property — Due process — Restitution order imposed on defendant in USA arising from securities fraud — USA obtaining approval from Minister of Justice to commence proceedings to enforce restitution order in Canada — USA moving for summary judgment — Motion granted — Defendant not entitled to notice or opportunity to be heard at ministerial approval stage — Defendant not deprived of due process or fundamental justice — Canadian Bill of Rights, S.C. 1960, c. 44, ss. 1(a), 2(e).

Charter of Rights and Freedoms — Application of Charter — Cruel and unusual treatment or punishment — Restitution order imposed on defendant in USA arising from securities fraud — USA obtaining approval from Minister of Justice to commence proceedings to enforce restitution order in Canada — USA moving for summary judgment — Motion granted — Defendant argued that restitution order was beyond his means and constituted cruel and unusual punishment — Applying Charter to enforcement of restitution order in Canada contrary to principles of sovereign equality and comity of nations — Canadian Charter of Rights and Freedoms, s. 12.

Criminal law — Mutual legal assistance in criminal matters — Restitution order imposed on defendant in USA arising from securities fraud — [page48] USA obtaining approval from Minister of Justice to commence proceedings to enforce restitution order in Canada — USA moving for summary judgment — Motion granted — Restitution order was a "fine" allowing proceedings to be brought under Mutual Legal Assistance in Criminal Matters Act — Canadian law did not prevent Canada from offering assistance — Proceedings commenced within limitation period — Defendant's rights under Bill of Rights and Charter of Rights and Freedoms not violated — No public policy defence at common law — No genuine issue for trial — Canadian Bill of Rights, S.C. 1960, c. 44, ss. 1(a), 2(e) — Canadian Charter of Rights and Freedoms, s. 12 — Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.), s. 9.

Limitations — Foreign judgments — Restitution order imposed on defendant in USA arising from securities fraud — USA obtaining approval from Minister of Justice to commence proceedings to enforce restitution order in Canada — Proceedings commenced more than five years after reasons for judgment for restitution order, but within five years of formal order being entered — Limitation period was five years after fine imposed — Fine was imposed when formal order was entered, so proceedings were in time — Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.), s. 9.

The defendant pleaded guilty before the United States District Court (USDC) to one count of conspiracy to commit securities fraud and one count of conspiracy to commit money laundering. The sentence imposed on the defendant included a restitution order to be entered within 90 days. The sentence order was subsequently postponed because the losses of the victims of the scheme were not yet known. In April 2012 the sentencing judge issued reasons for finding that the defendant owed over $17 million in restitution, calculated to be a "reasonable estimate" of investor loss. In May 2012, the USDC entered a formal restitution order stating that restitution was due and payable immediately. On appeal by the defendant, the sentence and the restitution order were affirmed. In March 2017 the plaintiff, the United States of America, requested approval from the Canadian Minister of Justice for proceedings to enforce the restitution order in Canada. The request was marked "urgent" due to the potential expiry of a statutory limitation period on the fifth anniversary of the entry of the restitution order. The Minister approved the request and the plaintiff issued a statement of claim in the Superior Court of Justice before the anniversary date. The plaintiff moved for an order for summary judgment to recognize and enforce the restitution order.

Held, the motion should be granted.

The proceedings were properly brought under s. 9 of the Mutual Legal Assistance in Criminal Matters Act (the Act). The defendant argued that the restitution order was not a "fine" within the meaning of that section. However, the section defined "fine" to include any pecuniary penalty determined by a court of criminal jurisdiction to represent the value of property or benefit derived from the commission of an offence. A broad, purposive interpretation of "fine" was aligned with Canada's signature on The Treaty Between the Government of Canada and the Government of the United States of America on Mutual Legal Assistance in Criminal Matters (Treaty). The restitution order was made to repay the individual members of the public who were encouraged to purchase stock at an inflated price by virtue of the defendant's criminal activity.

Canadian law did not prevent Canada from offering assistance under the Treaty. The defendant argued that the Criminal Code required the loss or damage to be [page49] "readily ascertainable" and as such Canadian law did not support a restitution order. However, such a reading would have effectively grafted Canadian legislation onto other states' laws related to restitution orders.

The action was not barred by the limitation period in s. 9. Under s. 9, proceedings were to be commenced no more than five years after the fine was imposed. The defendant argued that because the restitution order was made on April 20, 2012 and the civil proceedings were not commenced until May 11, 2017, the five-year limitation period was missed. However, although the memorandum and order of April 20 provided the reasons for making the order, the necessary terms for the entitlement of individual victims to a share in any restitution were not included. The restitution order on its face was signed, entered, and imposed on May 15.

The defendant was not deprived of his rights under the Canadian Bill of Rights. He submitted that the Minister's approval of the plaintiff's request to enforce payment of the restitution order affected his right to enjoyment of property in Canada without due process of law, contrary to s. 1(a) of the Canadian Bill of Rights. A right to notice and the opportunity to be heard at the ministerial approval stage of s. 9 of the Act was incompatible with the Treaty and the Act. As the ministerial approval sought and received under s. 9 did not concern a hearing determining the rights or obligations of individuals, the process did not deprive a person of a right to a fair hearing in accordance with the principles of fundamental justice and thus did not violate s. 2(e) of the Canadian Bill of Rights.

The restitution order did not violate s. 12 of the Canadian Charter of Rights and Freedoms. The defendant argued that the sentence was disproportionate to his means and ability to pay and as such constituted cruel and unusual punishment. He submitted that the Charter was engaged because part of the sentence was sought to be enforced in Canada. However, although Canada had a role in the necessary link in the chain of causation leading to prosecution and punishment in another country, applying s. 12 of the Charter to the sentence as a whole would have been contrary to principles of sovereign equality and the concept of comity of nations.

There was no public policy defence at common law. Nothing in the record suggested that the restitution order was generated by operation of a law repugnant or contrary to the fundamental morality of the Canadian legal system. Nor was there a suggestion that the USDC or Court of Appeals were corrupt or biased.

Cases Cited

Beals (para. 81), apld

Zschiegner (para. 33); Hryniak (para. 83), consd

Cases referred to

Amaratunga v. Northwest Atlantic Fisheries Organization, [2013] 3 S.C.R. 866, [2013] S.C.J. No. 66, 2013 SCC 66, 365 D.L.R. (4th) 511, 451 N.R. 1, J.E. 2013-2062, 338 N.S.R. (2d) 360, 11 C.C.E.L. (4th) 277, 47 C.P.C. (7th) 227, 235 A.C.W.S. (3d) 513, EYB 2013-229877, 2013EXP-3797, 2013EXPT-2240; Authorson v. Canada (Attorney General), [2003] 2 S.C.R. 40, [2003] S.C.J. No. 40, 2003 SCC 39, 227 D.L.R. (4th) 385, 306 N.R. 335, J.E. 2003-1389, 175 O.A.C. 363, 4 Admin. L.R. (4th) 167, 36 CCPB 29, 109 C.R.R. (2d) 220, 124 A.C.W.S. (3d) 62, 2003 CBPG para. 8051; Beals v. Saldanha (2003), 70 O.R. (3d) 94, [2003] 3 S.C.R. 416, [2003] S.C.J. No. 77, 2003 SCC 72, 234 D.L.R. (4th) 1, 314 N.R. 209, J.E. 2004-127, 182 O.A.C. 201, 39 B.L.R. (3d) 1, 39 C.P.C. (5th) 1, 113 C.R.R. (2d) 189, 127 A.C.W.S. (3d) 648, 2004 CCLG para. 24-646; Belgium v. Suthanthiran, [2017] O.J. No. 2183, 2017 ONCA 343, 347 C.C.C. (3d) 120 [Leave to appeal to S.C.C. refused [2017] S.C.C.A. No. 256, [page50] 2018 1156; Canada v. Schmidt, 1987 48 (SCC), [1987] 1 S.C.R. 500, [1987] S.C.J. No. 24, 39 D.L.R. (4th) 18, 76 N.R. 12, 20 O.A.C. 161, 33 C.C.C. (3d) 193, 58 C.R. (3d) 1, 28 C.R.R. 280, 2 W.C.B. (2d) 299, 1987 CCAN para. 10,007; Canada (Attorney General) v. Georgiou, [2018] O.J. No. 1666, 2018 ONCA 320; Canadian National Railway Co. v. Western Canadian Coal Corp., [2007] F.C.J. No. 511, 2007 FC 371, 63 Admin. L.R. (4th) 283, 309 F.T.R. 286; Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, 366 D.L.R. (4th) 641, 453 N.R. 51, J.E. 2014-162, 314 O.A.C. 1, 21 B.L.R. (5th) 248, 12 C.C.E.L. (4th) 1, 27 C.L.R. (4th) 1, 46 C.P.C. (7th) 217, 95 E.T.R. (3d) 1, 37 R.P.R. (5th) 1, EYB 2014-231951, 2014EXP-319; Kazemi Estate v. Islamic Republic of Iran, [2014] 3 S.C.R. 176, [2014] S.C.J. No. 62, 2014 SCC 62, 375 D.L.R. (4th) 519, 463 N.R. 1, J.E. 2014-1781, 320 C.R.R. (2d) 269, 244 A.C.W.S. (3d) 695, 2014EXP-3112, 83 Admin. L.R. (5th) 1; R. v. Devgan (1999), 1999 2412 (ON CA), 44 O.R. (3d) 161, [1999] O.J. No. 1825, 121 O.A.C. 265, 136 C.C.C. (3d) 238, 26 C.R. (5th) 307, 42 W.C.B. (2d) 444; R. v. Hape, [2007] 2 S.C.R. 292, [2007] S.C.J. No. 26, 2007 SCC 26, 280 D.L.R. (4th) 385, 363 N.R. 1, J.E. 2007-1140, 227 O.A.C. 191, 220 C.C.C. (3d) 161, 47 C.R. (6th) 96, 160 C.R.R. (2d) 1, 73 W.C.B. (2d) 528, EYB 2007-120452, 2007 CCAN para. 10,041; Russian Federation v. Pokidyshev, 1999 3787 (ON CA), [1999] O.J. No. 3292, 178 D.L.R. (4th) 91, 124 O.A.C. 24, 138 C.C.C. (3d) 321, 27 C.R. (5th) 316, 90 A.C.W.S. (3d) 879, 43 W.C.B. (2d) 325; United States of America v. Burns, [2001] 1 S.C.R. 283, [2001] S.C.J. No. 8, 2001 SCC 7, 195 D.L.R. (4th) 1, 265 N.R. 212, [2001] 3 W.W.R. 193, J.E. 2001-458, 148 B.C.A.C. 1, 85 B.C.L.R. (3d) 1, 151 C.C.C. (3d) 97, 39 C.R. (5th) 205, 81 C.R.R. (2d) 1, 48 W.C.B. (2d) 400, REJB 2001-22580, 2001 CCAN para. 10,013; United States of America v. Dynar (1997), 1997 359 (SCC), 33 O.R. (3d) 478, [1997] 2 S.C.R. 462, [1997] S.C.J. No. 64, 147 D.L.R. (4th) 399, 213 N.R. 321, J.E. 97-1400, 101 O.A.C. 321, 115 C.C.C. (3d) 481, 8 C.R. (5th) 79, 44 C.R.R. (2d) 189, 35 W.C.B. (2d) 8, 1997 CCAN para. 10,042; USA v. Gushlak, 12-1919cr, August 29, 2013, U.S. Court of Appeals, Second Circuit; Viscomi v. Ontario (Attorney General), [2014] O.J. No. 5175, 2014 ONCA 765, 116 W.C.B. (2d) 611; Zschiegner v. United States of America, [2001] N.S.J. No. 165, 2001 NSCA 74, 194 N.S.R. (2d) 30, 154 C.C.C. (3d) 547, 40 C.E.L.R. (N.S.) 62, 50 W.C.B. (2d) 33

Statutes referred to

Canadian Bill of Rights, S.C. 1960, c. 44, ss. 1(a), 2(e)

Canadian Charter of Rights and Freedoms, ss. 7, 12

Criminal Code, R.S.C. 1985, c C-46, ss. 734.6, 738(1)(a)

Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.), ss. 8(1) [as am.], 9 [as am.], (2), (3), 9.2

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 20, 59.01

Authorities referred to

Sullivan, R., Sullivan on the Construction of Statutes, 6th ed. (Markham, ON: LexisNexis Canada, 2014)

MOTION by plaintiff for summary judgment to enforce a restitution order.

M. Ruby, for plaintiff.

M. Vermette and V. Jain, for defendant.

R. Lee, for intervenor, Attorney General of Canada.

[page51]

LEIPER J.: —

Overview

[1] The plaintiff, United States of America ("USA"), seeks an order for summary judgment recognizing and enforcing a Restitution Order made against the defendant, Myron Gushlak as part of his sentence in Brooklyn, New York, for securities fraud and money laundering.

[2] Mr. Gushlak opposes the order on the basis that the USA did not bring these proceedings within the five-year limitation period required by s. 9 of the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.) (the "Act").

[3] Mr. Gushlak also submits that s. 9 of the Act does not apply to his Restitution Order because it is not a "fine". In the further alternative, Mr. Gushlak argues that the Act is contrary to the Canadian Bill of Rights, S.C. 1960, c. 44 and/or the Restitution Order made against him is "cruel and unusual punishment" and contrary to s. 12 of the Canadian Charter of Rights and Freedoms (the "Charter").

[4] The Attorney General of Canada intervened and provided submissions concerning the Canadian Bill of Rights and the Charter.

[5] For the reasons below, I find that s. 9 of the Act applies to the Restitution Order. USA instituted its proceedings within the five-year limit prescribed by the Act. I conclude that neither the Minister's approval in this case, nor s. 9 of the Act, are contrary to the Canadian Bill of Rights. Finally, I have concluded that the Restitution Order is not subject to the Charter. I grant the order for summary judgment sought by USA.

The Relevant Legislation: [Section 9](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-30-4th-supp/latest/rsc-1985-c-30-4th-supp.html) of the [Mutual Legal Assistance in Criminal Matters Act](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-30-4th-supp/latest/rsc-1985-c-30-4th-supp.html)

[6] The Act is Canadian domestic legislation enacted to meet Canada's treaty obligations for reciprocal enforcement in international criminal matters. In the case of these obligations with the United States of America, the relevant treaty is The Treaty Between the Government of Canada and the Government of the United States of America on Mutual Legal Assistance in Criminal Matters (the "Treaty"): CTS 1990 No. 19 (Canada Gazette, Part 1, 1990, p. 953).

[7] Section 9[^1] of the Act sets out the process by which other states may access Canadian courts to enforce their pecuniary penalties in Canada. [page52]

[8] In this this case, the key provisions of s. 9 relate to timing and the meaning of "fine".

[9] Subsection 9(2) requires proceedings to be instituted no more than five years after the fine was imposed.

[10] Subsection 9(3) defines "fine" "for the purposes of this section" as follows:

. . . fine includes any pecuniary penalty determined by a court of criminal jurisdiction of a state or entity to represent the value of any property, benefit or advantage, irrespective of its location, obtained or derived directly or indirectly as a result of the commission of an offence.

The Background Facts to the Requested Order

The Guilty Plea, Sentencing and Restitution Order

[11] On July 22, 2003, Mr. Gushlak pled guilty before the United States District Court ("USDC") to one count of conspiracy to commit securities fraud and one count of conspiracy to commit money laundering. His guilty plea was placed under seal, along with a Cooperation Agreement he signed with the United States.

[12] Mr. Gushlak participated in an illegal "pump and dump" scheme designed to increase the price of shares in a U.S. publicly traded company, GlobalNet Inc. He and his associates purchased sufficient stock in GlobalNet to have a controlling interest in the company. Over a two-year period, Mr. Gushlak paid kickbacks to brokers who aggressively sold the stock to customers, causing the share price to rise. The kickback payments were not disclosed to the investing public. Mr. Gushlak sold 1.1 million of his holdings in GlobalNet at increasingly higher prices over a three-day period in March of 2000. After he stopped funding the kickbacks, the brokers ceased pushing the stock, the share price collapsed and the scheme was discovered.

[13] On November 18, 2010, Judge Garaufis of the USDC imposed the following sentence on Mr. Gushlak: [page53]

(a) imprisonment of 72 months for conspiracy to commit money laundering;

(b) a concurrent 60-month term of imprisonment for conspiracy to commit securities fraud;

(c) a fine of US $25 million, payable immediately;

(d) a period of supervised release of three years;

(e) a special assessment of US$200; and

(f) a Restitution Order to be entered within 90 days.

[14] Judge Garaufis postponed the date to enter the Restitution Order to August 5, 2011, because the losses of the victims of the scheme were not yet known. The United States required four attempts to call acceptable expert evidence to establish the restitution amounts to the court's satisfaction. These efforts are summarized in the reasons of the U.S. Court of Appeals which upheld Judge Garaufis' Restitution Order: USA v. Gushlak, 12-1919cr, August 29, 2013, U.S. Court of Appeals, Second Circuit.

[15] On April 20, 2012, Judge Garaufis issued a memorandum containing his reasons for finding that Gushlak owed USA $17,492,817.45[^2] in restitution for the victims of the scheme. The amount was calculated to be a "reasonable estimate" of investor loss based on the expert evidence put before the District Court relating to the impact of the fraud on GlobalNet's stock price.

[16] On May 15, 2012, the USDC entered a formal Restitution Order signed by Judge Garaufis against Mr. Gushlak in the amount of $17,492,817.45. The Restitution Order stated that it was an amendment to, and part of the sentence imposed on Mr. Gushlak on November 18, 2010. It included terms as to payment and listed the victims and amounts to which they were entitled under the order. The Restitution Order stated that "Restitution is due and payable immediately."

[17] In Court of Appeals upheld the Restitution Order of May 15, 2012 and approved the United States' "expert methodology".

The Appeals

[18] Mr. Gushlak appealed his sentence and later, the Restitution Order to the U.S. Court of Appeals for the Second Circuit. [page54] The Court of Appeals affirmed the sentence on September 28, 2012 and the Restitution Order on August 29, 2013.

[19] The Court of Appeals found that the USDC's calculation of loss was a "reasonable estimate grounded in a sound basis for approximation of the full amount of identified victims' losses."

[20] Mr. Gushlak filed further unsuccessful petitions to overturn or have the Restitution Order re-heard. His final petition was dismissed on March 3, 2017.

USA Seeks Approval to Enforce the Restitution Order in Canada

[21] On March 17, 2017, the USA requested approval from the Canadian Minister of Justice for proceedings to enforce the Restitution Order in Canada. The United States Department of Justice marked its request "urgent" due to the potential expiry of a statutory limitation period on May 15, 2017, the fifth anniversary of the entry of the Restitution Order by Judge Garaufis.

[22] The Minister approved the Request on April 12, 2017. On May 11, 2017, USA issued its Statement of Claim in the Ontario Superior Court of Justice.

[23] On June 23, 2017 Mr. Gushlak was served with the Statement of Claim. His counsel delivered a Notice of Intent to Defend on June 29, 2017.

[24] Beginning in June 2017, Mr. Gushlak sought a copy of the USA's request for approval from the Minister of Justice. In April of 2019, USA provided its draft materials in this motion which included a redacted copy of its request. In June of 2019, the USA provided an unredacted copy of the request to Mr. Gushlak.

The Issues on the Motion for Summary Judgment

[25] The issues on the motion are:

(1) Is the Restitution Order a "fine" within the meaning of s. 9 of the Act?

(2) Does Canadian law on the making of Restitution Orders mean that Canada cannot offer assistance under the Treaty?

(3) Was the action instituted more than five years after the "fine" was imposed?

(4) Was Mr. Gushlak deprived of his rights under the Canadian Bill of Rights by virtue of s. 9 of the Act?

(5) Does the Restitution Order violate s. 12 of the Charter?

(6) Is there a public policy defence at common law? [page55]

Issue 1: Is the Restitution Order a "Fine" within the meaning of [s. 9](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-30-4th-supp/latest/rsc-1985-c-30-4th-supp.html) of the [Act](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-30-4th-supp/latest/rsc-1985-c-30-4th-supp.html)?

Does "fine" include restitution orders?

[26] USA argues that the expanded definition of the word "fine" in s. 9(3) of the Act, should be interpreted "broadly and purposively with the aim if fulfilling [Canada's treaty] obligations": Canada (Attorney General) v. Georgiou, [2018] O.J. No. 1666, 2018 ONCA 320, at para. 22. USA also relies on the decision in Zschiegner v. United States of America, [2001] N.S.J. No. 165, 2001 NSCA 74 in which the Nova Scotia Court of Appeal ("NSCA") found that s. 9(3) included the restitution order made in that case.

[27] Mr. Gushlak submits that the Restitution Order made against him is not a fine. He argues that although proceeds of crime would fall within the expanded definition for "fine" found in s. 9(3), he submits that a s. 9 "fine" does not include compensatory-type orders such as the Restitution Order. He distinguishes the Zschiegner case on its facts.

[28] Mr. Gushlak submits that the term "fine" is treated distinctly from "restitution" in the Treaty, other parts of the Act and in the Criminal Code.[^3] As such, he argues that the presumption of consistent expression within statutes, and across statutes, especially statutes or provisions dealing with the same subject matter should apply such that a fine does not include the notion of restitution.[^4]

[29] I find that the use of the word "fine" in s. 9 in the words of the section and given a broad and purposive interpretation, includes more than the narrow term "fine". This is because s. 9(3) reads:

for the purposes of this section, fine includes any pecuniary penalty determined by a court of criminal jurisdiction of a state or entity to represent the value of any property, benefit or advantage, irrespective of its location, obtained or derived directly or indirectly as a result of the commission of an offence.

(Emphasis added)

[30] A broad, purposive interpretation of "fine" is aligned with Canada's signature on the Treaty which includes obligations relating to assistance in relation to "Proceeds of Crime". Article [page56] XVII sets out the agreement by the parties to assist each other "to the extent permitted by their respective laws in proceedings related to the forfeiture of the proceeds of crime, restitution to the victims of crime and the collection of fines imposed as a sentence in a criminal prosecution". Thus, proceeds of crime, restitution and fines are all contemplated domains of assistance. This is an important part of the context when interpreting Canada's domestic legislation to uphold its agreements.

[31] The section does not rely on distinctions made in other sections of the Act or in related legislation such as the Criminal Code. The wording of the section points to a legislative choice to define "fine" differently and more inclusively than in other places. Thus, although portions of the Act do distinguish between notions of "fines" and "reparations" (see s. 9.2 of the Act dealing with orders related to the International Criminal Court), as does the Criminal Code, I find that such provisions do not override the meaning of "fine" in s. 9 of the Act.

[32] The question is whether orders for restitution meet the expanded meaning of "fine" in s. 9(3). The NSCA considered this in the context of a sentence that included a restitution order of $650,000 for remediation of the environment following the conviction of a New Jersey resident on three counts of knowingly discharging pollutants into the waters of the U.S., contrary to the Clean Water Act (US Code, Title 33): Zschiegner v. United States of America, supra.

[33] In Zschiegner, at para. 14, the NSCA determined it should interpret the Act and the Treaty in a "fair and liberal manner so as to favour the fulfilment by Canada of its international obligations and the accomplishment by Parliament of its legislative objectives".

[34] The court considered s. 9(3) and concluded first that a restitution order by a U.S. court easily met the first part of the definition as a [at para. 11] "pecuniary penalty determined by a court of criminal jurisdiction of a state or entity".

[35] I find the same to be true of the Restitution Order made against Mr. Gushlak by the USDC. It is a pecuniary penalty determined by a court of criminal jurisdiction of a state or entity. The second question is whether that penalty represents "the value of any property, benefit or advantage . . . obtained or derived directly or indirectly as a result of the commission of an offence".

[36] The NSCA reasoned that some restitution orders would easily be caught by this phrasing, such as an order of repayment to the state an amount he received by defrauding the state. [At para. 21] "In that case the penalty would directly represent the value of the benefit obtained as a result of the offence" [page57] (emphasis in original). In contrast, the restitution order did not represent a direct benefit obtained by the accused in Zschiegner.

[37] Nevertheless, the NSCA concluded that a fair and liberal interpretation of the meaning of "fine" in s. 9(3) included an order for restitution imposed to pay for environmental remediation. USA had argued that the respondent's conduct did provide him with a direct or indirect benefit or financial advantage, in the form of saving money for proper disposal of waste products from his factory or by not having to personally pay to have the waste water decontaminated: Zschiegner, at paras. 22- 23.

[38] Mr. Gushlak would distinguish Zschiegner on its facts. He argues that Zschiegner involved a restitution order in which an advantage to the defendant could be identified. He argues that in his situation, the Restitution Order of $17,492,817.45, does not represent the value of any benefit or advantage that he obtained or derived because of the commission of the offence. In his submission, the evidence of his benefit is in his affidavit in which he stated that his net profit from the scheme amounted to $5 million. Further, he also submits that unlike in Zschiegner, the amount of the Restitution Order cannot be said to represent costs that he was saved from spending and thus is not included in the meaning of "fine" in s. 9(3). This is particularly so, given that he was fined $25 million and agreed to an order of forfeiture of $500,000.

[39] I conclude that here, as there was in Zschiegner, the accused received an indirect benefit or advantage from the criminal conduct. The Restitution Order was made to repay the individual members of the public who were encouraged to purchase stock at an inflated price by virtue of the criminal activity. The victim losses created the "advantage" by which Mr. Gushlak and his associates were able to fund the scheme, including generating money to pay kickbacks to brokers so that they would tout the stock. The "benefit" or "advantage" to Mr. Gushlak was an advantageous marketplace that fed the rising stock price, paid for kickbacks and benefited Mr. Gushlak directly, if not dollar for dollar, but in a significant order of magnitude. The victim's losses were required to fund this advantageous marketplace and in turn provide Mr. Gushlak with his personal net gains.

[40] In Zschiegner, the accused fouled the environment to avoid paying the costs of clean-up. In a sense, Mr. Gushlak fouled the marketplace to extract profits.

[41] I conclude that the Restitution Order made against Mr. Gushlak is a "fine" within the meaning of s. 9(3) of the Act. [page58]

Issue 2: Does Canadian law on the making of restitution orders mean that Canada cannot offer assistance under the Treaty?

[42] Mr. Gushlak argues the facts in his case could not have supported a restitution order under the Criminal Code because s. 738(1)(a) of the Criminal Code requires the damage or loss to be "readily ascertainable": R. v. Devgan (1999), 1999 2412 (ON CA), 44 O.R. (3d) 161, [1999] O.J. No. 1825 (C.A.), at para. 26.

[43] As a result, he submits that because the Treaty refers to assistance in proceedings related to restitution to victims and inserts the caveat that such assistance is to the extent permitted by [the Parties'] respective laws, this demands an analysis of whether such an order for restitution would have been available under Canadian legislation.

[44] I disagree. Such a reading of the Treaty would effectively graft Canadian legislative requirements onto other states' laws related to restitution orders that Canada is obliged to give due regard to differences in law applied in other states: Canada (Attorney General) v. Georgiou, supra, at paras. 24-26. As Hourigan J.A. put it in Georgiou: "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."

[45] Mr. Gushlak was not prosecuted in Canada. The order was made pursuant to American legislation, the Mandatory Victims Restitution Act of 1996. Mr. Gushlak appealed the making of the Restitution Order and in a carefully reasoned opinion, the Court of Appeals upheld the Restitution Order.

Issue 3: Was the action instituted more than five years after the "fine" was imposed?

[46] Mr. Gushlak argues that the USA missed the five-year limitation period provide by s. 9 of the Act because the Restitution Order was made on April 20, 2012 and the civil proceedings were not initiated until May 11, 2017. s. 9(2) of the Act requires these proceedings to be instituted no more than five years "after the fine was imposed".

[47] The final Restitution Order was entered and dated May 15, 2012. It included the names and amounts of each victim for the purposes of payment of restitution amounts. Prior to its entry, Judge Garaufis issued reasons for the order in a memorandum and order dated April 20, 2012 describing his findings on the quantum of losses and ordering payment of $17,492,817.45. [page59]

[48] USA submits that the Restitution Order of May 15, 2012 governs the timing under s. 9. The request to the Minister was predicated on this formal document. No enforcement proceedings in the U.S. began until after entry of the Restitution Order.

[49] Mr. Gushlak submits that it was clear that he was ordered to pay $17,492,817.45 on April 20, 2012. By commencing its action on May 11, 2017, USA did not comply with the five-year limitation period in s. 9(2) of the Act. He submits that the principle found in rule 59.01 of the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194 should be applied to this question. Rule 59.01 provides that "[a]n order is effective from the date on which it is made, unless it provides otherwise".

[50] I disagree. The memorandum and order of April 20, 2012 provided the reasons for making the order. However, it did not include necessary terms for the entitlement of individual victims to a share in any restitution received. It was not styled as a formal order. The "Restitution Order" was signed and entered on May 15, 2012. It provided that it was "effective immediately". This was the order from which Mr. Gushlak appealed. The Court of Appeals referenced the Restitution Order of May 15, 2012. I conclude that the Restitution Order on its face, was "imposed" on May 15, 2012.

[51] Given the finding that the Restitution Order was imposed on May 15, 2012, USA had five years, until May 15, 2017, to institute these proceedings. It issued its Statement of Claim on May 11, 2017. I conclude that these proceedings were brought in compliance with the period prescribed by s. 9(2) of the Act.

Issue 4: Was Mr. Gushlak deprived of his rights under the Canadian Bill of Rights by virtue of [s. 9](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-30-4th-supp/latest/rsc-1985-c-30-4th-supp.html) of the [Act](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-30-4th-supp/latest/rsc-1985-c-30-4th-supp.html)?

Section 1(a): Deprivation of property and the due process of law

[52] Mr. Gushlak argues two breaches of the Canadian Bill of Rights. The first is that s. 9 of the Act infringes s. 1(a) of the Canadian Bill of Rights. Section 1(a) protects the enjoyment of property, the deprivation of which must occur through the due process of law. Mr. Gushlak submits that he Minister's approval of the USA's request to enforce the payment of the Restitution Order made against Mr. Gushlak under s. 9 of the Act affects Mr. Gushlak's right to enjoyment of property in Canada.

[53] Mr. Gushlak complains that the Minister approved USA's request without giving him notice of the request to the Minister and not according him an opportunity to respond, dispute or make submissions to the Minister concerning the exercise of the Minister's discretion. He argues that s. 1(a) of the Canadian Bill of Rights [page60] required that he be given the "due process of law". I disagree.

[54] Procedural fairness is variable. Its application is context-specific: Canadian National Railway Co. v. Western Canadian Coal Corp., [2007] F.C.J. No. 511, 2007 FC 371, at para. 33. In the context of a multi-stage process, such as the enforcement of fines from other states under the Treaty the nature of the procedural rights at the different stages of the process must be considered to determine whether the requirements of due process have been fulfilled.

[55] A right to notice and the opportunity to be heard at the ministerial approval stage of s. 9 of the Act is incompatible with the Treaty and the Act. The Treaty explicitly excludes any "right on the part of a private party . . . to impede the execution of a request". At that stage of the multi-step process, the focus is on the agreements between the two states. The Minister's function between these two proceedings was to determine whether the U.S. request complied with the Treaty. As Doherty J.A. put it, the Minister's function under the Act is to be "the guardian of Canadian sovereignty interests": Russian Federation v. Pokidyshev, 1999 3787 (ON CA), [1999] O.J. No. 3292, 178 D.L.R. (4th) 91 (C.A.), at para. 18.

[56] Mr. Gushlak also argues that there are no defined criteria for the exercise of the Minister's discretion to approve Treaty requests under s. 9 of the Act. The Act and the Treaty do include certain criteria. The request must be in writing, unless urgent, there are certain specified pieces of information which must be included, and confidentiality is required by art. VI of the Treaty.

[57] Article VII of the Treaty provides that the Minister must "promptly execute the request", subject to discretionary grounds for refusal found in art. V.

[58] Under the terms of the Treaty, the Minister may refuse to approve the request:

-- to the extent that it is not made in conformity with the Treaty.

-- if the Minister determines that its execution would be contrary to Canada's public interest.

[59] Further, s. 8(1) of the Act provides that the Minister may not approve a treaty request unless the Treaty provides for assistance with respect to the subject-matter of the request.

[60] The Attorney General for Canada submits that notice and an opportunity to be heard at the ministerial approval stage are incompatible with the confidential nature of approvals sought under the Act. I agree. As the Court of Appeal noted in a different context, the mutual legal assistance regime "is intended to be an [page61] expeditious means of discharging Canada's treaty obligations": R. v. Viscomi, [2014] O.J. No. 5175, 2014 ONCA 765, at para. 14.

[61] The due process provisions found in s. 1(a) of the Canadian Bill of Rights have been interpreted by the Supreme Court of Canada to apply "only in the context of an adjudication of that person's rights and obligations before a court or tribunal": Authorson v. Canada, [2003] 2 S.C.R. 40, [2003] S.C.J. No. 40, 2003 SCC 39, at para. 42. I agree with the Attorney General for Canada's submission that here the ministerial approval was not an adjudication of the Defendant's rights. The defendant's rights were adjudicated during the criminal proceedings in the U.S. Mr. Gushlak had notice, right to the assistance of counsel, a right to present evidence and be heard and rights of appeal.

[62] In its reasons for dismissing Mr. Gushlak's appeal from the Restitution Order, the Court of Appeals concluded that "the restitution proceedings satisfied Gushlak's rights under the Due Process Clause of the Fifth Amendment". Three subsequent petitions made by Mr. Gushlak to appeal or otherwise review the Restitution Order were dismissed.

[63] The second set of court proceedings at which Mr. Gushlak's property interests are engaged, and which precede any orders affecting his enjoyment of property in Canada, are those in these proceedings. As with the proceedings before the USDC, Mr. Gushlak has procedural rights, which include notice, assistance of counsel, the right to participate and call evidence and rights of appeal.

[64] I have taken into account the due process provided to Mr. Gushlak at the two judicial stages before and after the ministerial approval stage, and the nature of the ministerial approval as a "guardian" of Canada's sovereignty interests rather than as an adjudicator determining Mr. Gushlak's individual rights and obligations. I conclude that the fact that Mr. Gushlak was not given notice or the opportunity to participate at the ministerial approval stage did not violate his rights to due process under s. 1(a) of the Canadian Bill of Rights.

Does Ss. 9 of the [Act](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-30-4th-supp/latest/rsc-1985-c-30-4th-supp.html) infringe s.2(e) of the Canadian Bill of Rights?

[65] Section 2(e) of the Canadian Bill of Rights guarantees that "no law of Canada shall be construed or applied so as to [. . .] (e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations".

[66] Mr. Gushlak submits that s. 9 infringes s. 2(e) of the Canadian Bill of Rights because it fails to provide protections in [page62] a "proceeding" in which the Minister is exercising a statutory power of decision. Mr. Gushlak argues that the Minister's approval is a necessary step to permit a fine to be enforceable in Canada. By failing to provide for notice and the right to answer the case at the ministerial approval stage, s. 9 fails to provide basic procedural protections to persons affected by the Minister's exercise of discretion.

[67] For the reasons above I have determined that the role of the Minister is not to hold a hearing at the time of the approval into the rights and obligations of an individual, but to carry out a state-to-state function in the context of the Treaty and in accordance with the Act.

[68] The Act has been described as a "complete code" for the conduct of mutual legal assistance proceedings, including proceedings under s. 9 and the rights afforded to the relevant parties as part of these proceedings: Belgium v. Suthanthiran, [2017] O.J. No. 2017 ONCA 343, at para. 45, leave to appeal to S.C.C. refused [2017] S.C.C.A. No. 256, 2018 1156 at para. 9.

[69] Neither the Treaty nor the Act provides for a hearing before the Minister, and the Minister did not hold one. The Supreme Court of Canada has held that s. 2(e) offers protection "only if and when a hearing is held": Kazemi Estate v. Islamic Republic of Iran, [2014] 3 S.C.R. 176, [2014] S.C.J. No. 62, 2014 SCC 62, at para. 120; Amaratunga v. Northwest Atlantic Fisheries Organization, [2013] 3 S.C.R. 866, [2013] S.C.J. No. 66, 2013 SCC 66, at para. 61.

[70] The Canadian Bill of Rights "does not create a self-standing right to a fair hearing where the law does not otherwise allow for an adjudicative process": Kazemi Estate, at para. 116.

[71] Having found that the ministerial approval sought and received under s. 9 of the Act does not concern a hearing which determines the rights or obligations of individuals, I conclude that the process does not deprive a person of a right to a fair hearing in accordance with the principles of fundamental justice and thus, does not violate s. 2(3) of the Canadian Bill of Rights.

Issue 5: Does the Restitution Order violate [s. 12](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html) of the [Charter](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html)?

[72] Mr. Gushlak argues that the Restitution Order imposed against him is a grossly disproportionate sentence which offends his right to be free from cruel and unusual punishment as guaranteed by s. 12 of the Charter. He argues that the U.S. sentence which included a fine of $25 million, the Restitution Order of $17,492,817.45, a Forfeiture Order and a prison sentence, was disproportionate to his means and ability to pay, failed to take into account the totality of the sentence, including the six-year [page63] prison term, and was disproportionate to the sentence imposed on his co-conspirator, Howard Appel.

[73] Mr. Gushlak submits that the question of whether his sentence was grossly disproportionate raises a genuine issue requiring a trial and cannot be determined on the evidentiary record filed on this motion. He submits that USA has not discharged its evidentiary burden of proving that there is no genuine issue requiring a trial for the resolution of this issue. The s. 12 Charter analysis will require a hearing into factors such as whether the punishment is necessary to achieve a valid penal purpose, the effects of the punishment on the actual or a hypothetical offender, whether the punishment is founded on recognized sentencing principles, and whether there are valid alternatives to the punishment.

[74] Mr. Gushlak submits that s. 12 of the Charter is engaged because USA seeks to enforce a part of his sentence in Canada. He submits that if the overall sentence is "cruel and unusual", Canadian courts cannot enforce any part of it, especially because Mr. Gushlak has completed his term of imprisonment.

[75] I disagree. The USA is enforcing a sentence rendered in the United States. The Supreme Court of Canada has determined that the Charter does not have extraterritorial effect. It does not apply to how proceedings in another country are conducted: United States of America v. Burns, [2001] 1 S.C.R. 283, [2001] S.C.J. No. 8, 2001 SCC 7, at para. 51; Canada v. Schmidt, 1987 48 (SCC), [1987] 1 S.C.R. 500, [1987] S.C.J. No. 24, at p. 518 S.C.R.; United States of America v. Dynar (1997), 1997 359 (SCC), 33 O.R. (3d) 478, [1997] 2 S.C.R. 462, [1997] S.C.J. No. 64, at para. 123.

[76] Further, even though Charter jurisprudence extends s. 7 Charter protections to extradition where Canada arrests and surrenders a person in custody to a foreign state to face prosecution and sentencing, in those circumstances, s. 12 of the Charter is not engaged. This is the case despite Canada's role as a "necessary link in the chain of causation" which leads to prosecution and punishment in another country: Burns, at para. 54.

[77] It is not the function of this court to apply s. 12 of the Charter to a sentence imposed by the USDC and upheld by the U.S. appeal court.

[78] Applying s. 12 of the Charter to the U.S. sentence as a whole would be contrary to principles of sovereign equality and the concept of comity of nations. Unless there are clear violations of international law and fundamental human rights (which are not alleged here), states must show deference to actions taken on each other's territory. The actions taken in the United States in imposing the Restitution Order on the defendant are entitled to deference and should be treated "in a manner respectful of the [page64] spirit of international co-operation and the comity of nations" R. v. Hape, [2007] 2 S.C.R. 292, [2007] S.C.J. No. 26, 2007 SCC 26, at para. 52.

Issue 6: Is There a public policy defence at common law?

[79] Mr. Gushlak's pleading raises a defence of public policy which applies where there is a conflict between Canadian concepts of justice and those of another state which are grounded in repugnant laws that Canada should decline to enforce or recognize. See: Beals v. Saldanha (2003), 70 O.R. (3d) 94, [2003] 3 S.C.R. 416, [2003] S.C.J. No. 77, 2003 SCC 72, at para. 71.

[80] The United States submits that a public policy defence is not available in this case. In Beals, the Supreme Court of Canada discussed the defence of public policy which prevents the enforcement of a foreign judgment which is contrary to Canadian concepts of justice. The public policy defence turns on whether the foreign law is contrary to Canadian views of basic morality or where the tribunal has been biased or corrupt.

[81] There is nothing in the record to suggest that the Restitution Order was generated by operation of a law that is "repugnant" or "contrary to the fundamental morality of the Canadian legal system": Beals at para. 72. Nor has there been any suggestion that the USDC or Court of Appeals were "corrupt" or "biased".

[82] I conclude that there is no genuine issue for trial on the question of a public policy defence against the enforcement in Canada of the Restitution Order.

Conclusion

[83] Given my findings on the interpretation of s. 9 of the Act, the application of the Canadian Bill of Rights, s. 12 of the Charter, and the pleaded public policy defence, I have considered Rule 20 and the principles in Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7. I find that the record is sufficient to determine there is no genuine issue requiring a trial.

[84] I grant USA's motion for summary judgment. The Restitution Order will be enforced as an order of this court.

Motion granted.

[^1]: The complete text: 9(1) When the Minister approves a request of a state or entity to enforce the payment of a fine imposed in respect of an offence by a court of criminal jurisdiction of the state or entity, a court in Canada has jurisdiction to enforce the payment of the fine, and the fine is recoverable in civil proceedings instituted by the state or entity, as if the fine had been imposed by a court in Canada. (2) No proceedings under subsection (1) shall be instituted more than five years after the fine was imposed. (3) For the purposes of this section, fine includes any pecuniary penalty determined by a court of criminal jurisdiction of a state or entity to represent the value of any property, benefit or advantage, irrespective of its location, obtained or derived directly or indirectly as a result of the commission of an offence.

[^2]: All amounts shown are in US dollars unless indicated otherwise.

[^3]: R.S.C. 1985, c C-46, s. 734.6.

[^4]: R. Sullivan, Sullivan on the Construction of Statutes, 6th ed. (Markham, ON: LexisNexis Canada, 2014), at pp. 217, 416-19.

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