Date: 20210429

Docket: T-783-20

Citation: 2021 FC 378

Ottawa, Ontario, April 29, 2021

PRESENT: Mr. Justice Norris

BETWEEN:

PAUL ABOU NASSAR

Applicant

and

MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS

Respondent

JUDGMENT AND REASONS

I. OVERVIEW

[1] On October 28, 2019, the applicant, who was about to depart Canada on a flight from Trudeau International Airport, did not declare that he was carrying currency with a value of $10,000 or more, something he was required to do by subsection 12(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17 (“PCMLTFA”). When this omission came to light after he was questioned by a Canada Border Services Agency (“CBSA”) officer, the applicant agreed to pay a $250.00 penalty immediately pursuant to the Cross-border Currency and Monetary Instruments Reporting Regulations, SOR/2002-412. The balance of the funds were returned to him and he continued on his way.

[2] A month later, the applicant learned that, because of this enforcement action, his membership in the NEXUS trusted traveller program had been cancelled. He requested a review of this decision.

[3] In a decision dated May 27, 2020, a Senior Program Advisor with CBSA’s Recourse Directorate, exercising authority delegated by the Minister of Public Safety and Emergency Preparedness (“the Minister”), concluded that the applicant had contravened the PCMLTFA. The Senior Program Advisor also upheld the cancellation of the applicant’s NEXUS membership. The Senior Program Advisor determined, however, that some mitigation was warranted so he reduced the period during which the applicant was ineligible to re-apply for a NEXUS membership from six years to two years from the date of the enforcement action.

[4] The applicant now applies under section 18.1 of the Federal Courts Act, RSC 1985, c F-7, for judicial review of the decision upholding the cancellation of his NEXUS membership. He contends that the decision should be set aside because it was made in breach of the requirements of procedural fairness and because it is unreasonable.

[5] As I explain in the reasons that follow, while I do not agree that the requirements of procedural fairness were breached, I do agree that the decision is unreasonable. This application must therefore be allowed, the decision set aside, and the matter remitted for reconsideration by a different decision maker.

II. BACKGROUND

A. Section 12 of the PCMLTFA and Related Regulations

[6] The pertinent statutory and regulatory provisions are set out in the Annex to these reasons.

[7] In material part, section 12 of the PCMLTFA requires individuals who are entering or leaving Canada to report currency or monetary instruments in their actual possession or carried in their luggage when its value equals or exceeds the amount prescribed by regulation. Subsection 2(1) of the Cross-border Currency and Monetary Instruments Reporting Regulations sets this amount at $10,000. The regulations also specify the manner in which such reports are to be made when one is entering or leaving Canada as well as the available penalties for failing to make a required report.

B. The Events of October 28, 2019

[8] The applicant was in the departures area of Trudeau International Airport, waiting to board a flight to Vienna, when he was approached by a CBSA officer. The officer, who was assigned to the CBSA’s Cross-Border Currency Reporting team, asked the applicant how much currency he had in his possession. According to the officer, the applicant replied that he had $6,000.00 USD. The officer asked the applicant to accompany him to a place where the currency could be counted. The applicant agreed. Once there, the applicant removed a quantity of US currency from his pocket. When the currency was counted, it was found to amount to $7,736.00 USD. At the exchange rate at the time, this was equivalent to $10,100.12 CAD.

[9] The officer asked the applicant whether he had any other currency with him. The applicant replied that he did not. The officer then asked to look in the applicant’s carry-on bag. While there is a dispute between the officer’s account and the applicant’s as to who actually looked in the bag, there is no dispute that an envelope containing €1450.00 was found in an inside zippered pocket. At the exchange rate at the time, this was equivalent to $2,100.61 CAD. The applicant also had $85.00 in Canadian currency. In total, the value of the currency in the applicant’s possession was $12,285.73.

[10] Being in possession of currency with this total value, the applicant was required to report the funds to the CBSA in a prescribed manner. Because he had not done so, the officer seized the funds under subsection 18(1) of the PCMLTFA. However, as provided for by subsection 18(2) of the same Act, in the absence of any grounds to suspect that the funds were the proceeds of crime or would be used to finance terrorist activities, and after the applicant agreed to pay the applicable penalty of $250.00, the officer returned the balance of the funds to him. The officer also informed the applicant of his right to file an objection to the enforcement action with the CBSA Recourse Directorate. This is provided for by section 25 of the PCMLTFA.

[11] At the time, the applicant was a member of the NEXUS trusted traveller program. The officer seized the applicant’s NEXUS card.

C. The NEXUS Trusted Traveler Program

[12] The NEXUS program is a joint Canada-United States program for pre-approved, low-risk travellers entering Canada or the United States at designated air, land and marine ports of entry. Among other things, membership in the program allows travellers to enter either country quickly and easily by using automated self-serve kiosks in airports and dedicated lanes at land border crossings.

[13] Canada’s part of the program is governed by the Presentation of Persons (2003) Regulations, SOR/2003-323. These regulations were enacted pursuant to section 11.1 of the Customs Act, RSC 1985, c 1 (2^nd Supp), which authorizes the Minister to “issue to any person an authorization to present himself or herself in an alternative manner.” Membership in the NEXUS program is one such authorization. The regulations state the requirements one must meet to become a NEXUS member. For present purposes, the only material requirement is that one must be “of good character” to be eligible for NEXUS membership. See Presentation of Persons (2003) Regulations, paragraph 6.1(a), which incorporates, inter alia, the requirements set out in paragraph 5(1)(b) of the same Regulations.

[14] Under subsection 11.1(2) of the Customs Act, the Minister also has the authority, “subject to the regulations, to amend, suspend, renew, cancel or reinstate an authorization.” Subsection 22(1) of the Presentation of Persons (2003) Regulations provides that the Minister may suspend or cancel an authorization if, among other things, the person “no longer meets the requirements for issuance of the authorization.”

D. The Cancellation of the Applicant’s NEXUS Membership

[15] On November 22, 2019, the CBSA issued a form letter to the applicant informing him that his NEXUS membership had been cancelled. The letter stated that the reason for cancellation was that the applicant no longer satisfied the “eligibility criteria” of the program because he had “contravened customs and/or immigration program legislation.” Specific reference was made to the enforcement action on October 28, 2019. While not stated explicitly in the letter, there is no issue that the requirement the applicant had been found to no longer satisfy was that he be of good character.

[16] The letter also indicated that the applicant could submit a request for a review of this decision to the CBSA Recourse Directorate. The right to seek a review is provided for by section 23 of the Presentation of Persons (2003) Regulations.

E. The Applicant’s Request for Review

[17] On December 5, 2019, the applicant submitted a request for review to the Recourse Directorate using an online portal. In summary, he provided the following information in support of his request to have his NEXUS membership reinstated:

• He is a well-established businessman in Montreal whose businesses employ over 1500 individuals.

• He travels frequently for business meetings, conferences and exhibitions.

• On October 28, 2019, he was on his way to China for a business trip.

• He did not declare the funds in his possession on October 28, 2019, because he believed he had less than $9,000.00 CAD, “which is the legal limit for not reporting.”

• In addition to the funds he knew he was carrying, there was an envelope in the applicant’s carry-on bag which contained Euros and US dollars equivalent to $3,000.00 CAD.These were funds from a previous trip which the applicant had forgotten to remove from his bag when he returned home.He did not realize the funds were still in his bag on October 28, 2019.The applicant stated: “I attest that this was an honest mistake and oversight on my end and no hiding of information was intended.”

[18] By letter dated December 18, 2019, a Senior Appeals Officer with the Recourse Directorate acknowledged receipt of the applicant’s request. The letter indicated that the CBSA was treating the applicant’s submission as both a request for a decision under section 25 of the PCMLTFA with respect to whether he had contravened subsection 12(1) of that Act, and as a request for a review under section 23 of the Presentation of Persons (2003) Regulations of the decision to cancel his NEXUS membership. Separate file numbers were given to each matter.

[19] The letter summarized the seizing officer’s account of the events on October 28, 2019, as well as the applicant’s submissions. The letter explained that under Canadian law, the applicant was required to report the currency in his possession because its value equalled or exceeded $10,000.00. Failure to do so “could result in seizure, penalties and/or prosecution.” The letter went on to explain that “when travelling abroad, it is ultimately your responsibility to be aware of CBSA reporting requirements and to comply with them.”

[20] Further, the letter explained that the $250.00 penalty assessed by the seizing officer was the lowest available for contravening subsection 12(1) of the PCMLTFA. The letter stated that the decision to proceed in this fashion “was based on the fact that although the currency was not reported, you did not attempt to conceal the said currency found in your handbag and messenger bag. Furthermore, the officer [who seized the funds] did not suspect that the currency was the proceeds of crime and/or link[ed] to terrorist activity and/or money laundering.”

[21] The letter also explained why the applicant’s NEXUS membership had been cancelled as follows:

Regarding the decision to cancel your membership in the NEXUS program, Section 22(1)(a) of the Presentation of Persons (2003) Regulations states that the Minister may cancel an authorization if the person no longer meets the requirements for the issuance of the authorization. One of the eligibility requirements set out in paragraph 5(1)(b) of those same Regulations is that applicants must be of good character. When defining the term “good character” for the purposes of the CBSA’s trusted traveller programs, applicants are assessed as to whether they may pose a risk to the integrity of the programs. In doing so, an evaluation takes place of factors such as whether there has been a serious infraction of the laws of Canada and the U.S. and, in particular, the laws administered by the CBSA, which undermines the confidence of the CBSA that the applicant will comply with all the program requirements. As such, a violation of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and its Regulations, would justify the cancellation of a NEXUS membership.

Under the current policies, a NEXUS member who has an enforcement action on file (a seizure) is ineligible to the NEXUS program for 6 years beginning at the date of the enforcement action.

[22] The letter then went on to explain the penalties and other consequences associated with a contravention of the Cross-border Currency and Monetary Instruments Reporting Regulations, including ineligibility for NEXUS membership for six years from the date of the enforcement action. After describing how individuals in possession of currency exceeding the prescribed amount are required to report this fact to the CBSA before leaving Canada, the officer added the following: “Further, I note that case law holds that proof of intention is not required since the system is one of voluntary reporting and because strict liability attaches to those who fail to report.”

[23] By letter dated January 2, 2020, the Recourse Directorate provided the applicant with a copy of the seizing officer’s Narrative Report concerning the events on October 28, 2019. The letter explained that the report was being provided as it “may assist you in responding more adequately to the allegations made by the enforcement agency.” The applicant was given 30 days to provide any additional information or documentation he believed would assist in making a decision on his appeal.

[24] On January 17, 2020, the applicant provided further submissions in support of his appeal using the online portal. It is unclear from the record whether he had received the December 18, 2019, letter at this point or not. The letter had been sent to him by registered mail but was returned to the Recourse Directorate as “Unclaimed”. It was resent to the applicant by regular mail under a covering letter dated January 15, 2020.

[25] In his further submissions, the applicant reiterated the points summarized above in paragraph 17 and added the following:

• The currency in the envelope in his carry-on bag was “a bit over” $2,000 CAD in value.(This was consistent with the officer’s report of the value of the Euros in the envelope.)

• The other cash the applicant had with him had been withdrawn from his personal HSBC account.

• It was only after the events on October 28, 2019, that the applicant realized he will “always be flagged in the CBSA system and will go through inspection” every time he travels.He stated: “I am a frequent flyer and often travel with my wife and five children. For the past two trips I had to go through a full inspection while my family amongst a one year old and two years old were waiting for me which was very inconvenient.”

[26] In a letter dated January 31, 2020 (received by the Recourse Directorate on February 4, 2020), the applicant provided further additional submissions on his appeal. He also provided some supporting documentation relating to the value of the US cash he had with him. Unlike his previous submissions, which were provided by way of an online portal, the applicant sent these submissions and the enclosures by mail. At this point, the applicant had evidently received the December 18, 2019, letter from the Recourse Directorate because he makes reference to the January 15, 2020, covering letter (as well as the January 2, 2020, letter) in his correspondence.

[27] The applicant stated that he was writing in part to “clarify” his discussion with the CBSA officer on October 28, 2019. He stated the following:

As mentioned in my request for a review, I truly believed that I was carrying less than $Cad 10,000. I said to the officer that I had an equivalent of $Cad 9,000 and that only while looking in my carry-on bag I then realized that I had an envelope forgotten from a previous trip to Europe containing some Euros. I had forgotten to remove it before going to the airport.

[28] By letter dated February 12, 2020, the Senior Appeals Officer acknowledged receipt of the applicant’s letter (with enclosures). In response to information the applicant had provided concerning the value (in Canadian dollars) of the currency discovered in his possession on October 28, 2019 , the Senior Appeals Officer maintained the position that the total value of the currency was $12,285.73. Regarding the applicant’s reiterated submission that he had simply forgotten about the currency in his carry-on bag, the Senior Appeals Officer stated the following:

It was previously explained in the Notice of Circumstances of Seizure letter sent to you registered mail on December 18, 2019 and thereafter resent by regular mail on January 15, 2020, that in the case where undeclared currency is seized at level 1, for which the terms of release are set at $250.00, the decision to proceed with this level, which is the lowest level available, was based on the fact that although the currency was not reported, you did not attempt to conceal the said currency found in your handbag and messenger bag. Furthermore, the officer did not suspect that the currency was the proceeds of crime and/or link[ed] to terrorist activity and/or money laundering. It is incumbent upon travellers to be aware of the amount of currency in their possession.

[29] The Senior Appeals Officer concluded the letter by assuring the applicant that his representations along with the evidence on file will be considered carefully when a decision is made. The applicant would be notified by registered mail as soon as a decision is rendered.

[30] By letter dated February 17, 2020, the applicant submitted further representations in support of his request for a review. He reiterated that he was a businessman and provided information relating to some of his business affairs.

[31] At the end of March 2020, the Recourse Directorate, like virtually every other workplace in Canada, was forced to make adjustments to its practices because of the COVID-19 pandemic. One of these changes was switching to sending correspondence to individuals with outstanding appeals by email rather than registered mail. Accordingly, on March 30, 2020, a voicemail message was left for the applicant requesting his email address.

[32] A note to file indicates that the applicant returned the call the next day (March 31, 2020) and spoke to someone at the Recourse Directorate. (The record does not disclose who made this note to file or the other notes referred to below. Viewing the record as a whole, however, it is a reasonable inference that they were all made by the Senior Appeals Officer who had been corresponding with the applicant. I will proceed on this basis.) The applicant provided the Senior Appeals Officer with his email address. He also told her that he wanted to “explain the events as they happened.” The note indicates that the officer explained “the process” to the applicant. The applicant said he understood and would await further instructions via email. There is no other evidence in the record concerning this exchange.

[33] On May 14, 2020, and again on May 21, 2020, the Senior Appeals Officer emailed the applicant forms on which he could indicate his consent to corresponding with the Recourse Directorate via email. (The second email was necessary because the consent document sent with the first email had omitted one of the file numbers.)

[34] On May 20, 2020, the applicant left a message for the Senior Appeals Officer stating that he had not received any emails from her as yet.

[35] On May 21, 2020, the Senior Appeals Officer returned the applicant’s call and left a message for him suggesting that he check his junk email folder as she had sent him two emails. (These would be the emails referred to in paragraph 33, above.)

[36] The applicant must have found the Senior Appeals Officer’s emails because, on May 25, 2020, he returned by email the signed agreement indicating his consent to correspond with the Recourse Directorate by email.

[37] The decision denying the applicant’s appeals is set out in a letter dated May 27, 2020, from Martin Belanger, Senior Program Advisor, Recourse Directorate. It was sent to the applicant via email. The reasons for the decision are set out below.

[38] According to another note to file, on May 28, 2020, the applicant spoke to the Senior Appeals Officer with whom he had been dealing. He said he had wanted to submit more documentation, which he thought he would have an opportunity to do after receiving the request for his email address and for his consent to communicate with him via email. While not stated explicitly in the note, it appears that the applicant had just received the decision denying his appeals when he contacted the officer.

[39] The applicant said the additional documentation he had wanted to submit would demonstrate the “legitimacy” of the funds in his possession on October 28, 2019. The officer told the applicant they were aware that the currency was legitimate. The applicant also said he was not aware of all the currency he had with him that day. He added that he travels frequently and is not happy about being pulled over, especially when with his young family. (This is presumably a reference to being referred for secondary inspections.) The applicant told the officer he would be taking the matter to the Federal Court as he wants his name out of the CBSA’s system. Finally, the officer noted her opinion that, “even if [the applicant] had submitted more documentation showing the legitimacy [of the funds], it would not have changed anything.” It is not clear whether this latter point was communicated to the applicant in the call.

III. DECISION UNDER REVIEW

[40] In the letter dated May 27, 2020, the Senior Program Advisor with the Recourse Directorate informed the applicant of the result of the two Ministerial reviews and provided the reasons for these decisions.

A. The Contravention of the PCMLTFA

[41] The Senior Program Advisor concluded under section 27 of the PCMLTFA that there had been a contravention of section 12 of that Act. Further, he concluded that the amount of $250.00 received for the return of the funds would be held as forfeit.

[42] The Senior Program Advisor begins by summarizing the circumstances of the incident of October 28, 2019, as recorded in the documentary evidence on file. He also summarizes the applicant’s representations as well as the supporting documentation the applicant provided.

[43] The Senior Program Advisor explains why he had decided the matter as he did by setting out key points which I would summarize as follows:

• On October 28, 2019, the applicant had in his possession currency whose value equalled or exceeded the prescribed amount of $10,000.00.

• The applicant had explained that he was someone with an excellent reputation who simply forgot about the currency in his carry-on bag.However, the PCMLTFA is contravened when an incorrect declaration is made, even if the error occurred without any intent to mislead or deceive the CBSA.The lack of any intention to circumvent reporting obligations is not relevant to the determination of whether or not the reporting obligation has been contravened.

• The applicant did not declare the currency in his possession, which was a contravention of the Act.

• The prescribed penalty of $250.00 was appropriate.The Senior Program Advisor noted that there was no indication that the funds were concealed, it was “a first instance of non-compliance” on the part of the applicant, and there were no reasons to suspect that the funds were the proceeds of crime.On the other hand, the Senior Program Advisor was not prepared to lower the penalty because its aim is “to encourage compliance during future cross-border movements.”The Senior Program Advisor added: “The requirements of the Act are important as they contribute to Canada’s efforts in detecting and deterring illicit movements of currency and monetary instruments.”

[44] The Senior Program Advisor concludes this part of the decision by explaining how the applicant can challenge these determinations.

B. The Cancellation of the Applicant’s NEXUS Membership

[45] The Senior Program Advisor also upheld the cancellation of the applicant’s NEXUS membership. However, given the circumstances of the applicant’s case, he decided to “offer mitigation.” Accordingly, the applicant would be permitted to re-apply to the NEXUS program as of October 28, 2021.

[46] After describing the NEXUS program in general terms, the Senior Program Advisor turns to paragraph 22(1)(a) of the Presentation of Persons (2003) Regulations, which provides that membership in a program such as NEXUS may be cancelled if a person no longer meets the membership requirements. One of the requirements for eligibility in the NEXUS program is that one must be of good character. The Senior Program Advisor explains what this means as follows:

When defining the term “good character” for the purposes of the CBSA’s trusted traveller programs, applicants are assessed as to whether they pose a risk to the integrity of the programs. In doing so, an evaluation takes place of factors such as whether there has been an infraction of the laws of Canada and the U.S. and, in particular, the laws administered by the CBSA, which undermines the confidence of the CBSA that the applicant will comply with all the program requirements.

[47] The Senior Program Advisor then simply notes that the applicant has been found to have been in contravention of section 12 of the PCMLTFA, adding: “The details of the events have been examined above comprehensively.” There is no further analysis of the events of October 28, 2019, or their connection to the issue of the applicant’s character.

[48] The Senior Program Advisor next turns to the consequences that follow from this finding. He states that he has decided, pursuant to subsection 11.1(2) of the Customs Act, to uphold the cancellation of the applicant’s NEXUS membership. However, he has decided to “extend mitigation” to the applicant. The Senior Program Advisor explains these decisions as follows:

Although it is expected that, as [a] NEXUS member, you will be aware of the reporting requirements and possible consequences of PCMLTFA contraventions and the NEXUS program terms and conditions, due to your history of compliance with border legislation, that you admitted that an error was made, that the currency was not concealed, and that membership would facilitate travel in your line of work, I have also decided on a period of ineligibility to NEXUS of 2 years following the PCMLTFA seizure action. This ineligibility period is intended to serve as sufficient deterrent to prevent such an occurrence from taking place again in the future, as well as to maintain the integrity of the program and its legislative intent.

Please note that any future non-compliance may result in the cancellation of your membership for up to 6 years.

[49] I pause here to note that the Senior Program Advisor actually extended a greater degree of mitigation to the applicant than had been recommended in a Case Synopsis and draft reasons for decision that were prepared for the officer’s consideration. The author(s) of these documents had recommended that the applicant should not be permitted to reapply for NEXUS membership until April 28, 2024. This recommendation was based on when, with the passage of time and assuming future compliance, the applicant’s points total in the Integrated Customs Enforcement System (“ICES”) database would be reduced to a certain level. (What that level was expected to be and what would otherwise happen at that point is redacted from the record on this application.) The Case Synopsis and the draft reasons for decision will be discussed further below.

[50] The Senior Program Advisor concludes this part of the decision by explaining how the applicant can challenge these determinations.

IV. STANDARD OF REVIEW

[51] As already noted, the applicant challenges both the process by which the Senior Program Advisor made his decision and the substance of that decision.

[52] With respect to process, there is no dispute in the present case about how a reviewing court should determine whether the requirements of procedural fairness were met. The reviewing court must conduct its own analysis of the process followed by the decision maker and determine whether it was fair having regard to all the relevant circumstances, including those identified in Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817 at paras 21-28: see Canadian Pacific Railway Co v Canada (Attorney General), 2018 FCA 69 at para 54, and Elson v Canada (Attorney General), 2019 FCA 27 at para 31. This is functionally the same as applying the correctness standard of review: see Dunsmuir v New Brunswick, 2008 SCC 9 at paras 34 and 50; Canada (Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para 54; and Canada (Citizenship and Immigration) v Khosa, 2009 SCC 12 at para 43. That being said, invoking a standard of review is somewhat beside the point (Canadian Pacific Railway Co at paras 50-55). This is because, at the end of the day, what matters “is whether or not procedural fairness has been met” (Canadian Association of Refugee Lawyers v Canada (Immigration, Refugees and Citizenship), 2020 FCA 196 at para 35). The burden is on the applicant to demonstrate that it was not.

[53] With respect to the substance of the decision, the parties agree, as do I, that it should be reviewed on a reasonableness standard. In its pre-Vavilov jurisprudence, this Court consistently applied a reasonableness standard to decisions relating to the cancellation of NEXUS membership: see, for example, Sadana v Canada (Public Safety), 2013 FC 1005 at para 10, and Sodhi v Canada (Public Safety and Emergency Preparedness), 2018 FC 145 at para 15. Reasonableness is now the presumptive standard of review for administrative decisions, subject to specific exceptions “only where required by a clear indication of legislative intent or by the rule of law” (Vavilov at para 10). There is no basis for derogating from this presumption here.

[54] Reviewing administrative decisions on a reasonableness standard “aims to give effect to the legislature’s intent to leave certain decisions with an administrative body while fulfilling the constitutional role of judicial review to ensure that exercises of state power are subject to the rule of law” (Vavilov at para 82).

[55] The requirement that an administrative decision be reasonable follows from the fundamental principle that the exercise of public power “must be justified, intelligible and transparent, not in the abstract but to the individuals subject to it” (Vavilov at para 95). Thus, an administrative decision maker has a responsibility “to justify to the affected party, in a manner that is transparent and intelligible, the basis on which it arrived at a particular conclusion” (Vavilov at para 96).

[56] A reasonable decision “is one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker” (Vavilov at para 85). The reviewing court should focus on “the decision actually made by the decision maker, including both the decision maker’s reasoning process and the outcome” (Vavilov at para 83). The court “must develop an understanding of the decision maker’s reasoning process in order to determine whether the decision as a whole is reasonable. To make this determination, the reviewing court asks whether the decision bears the hallmarks of reasonableness — justification, transparency and intelligibility — and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision” (Vavilov at para 99). A decision bearing these qualities is entitled to deference from a reviewing court.

[57] The burden is on the applicant to demonstrate that the decision is unreasonable. He must establish that “there are sufficiently serious shortcomings in the decision such that it cannot be said to exhibit the requisite degree of justification, intelligibility and transparency” (Vavilov at para 100).

V. ANALYSIS

A. Introduction – Clarifying the Scope of this Application

[58] As set out above, the Recourse Directorate proceeded on the basis that the applicant had sought a decision with respect to whether he contravened the PCMLTFA as well as a review of the cancellation of his NEXUS membership. The Senior Program Advisor concluded that the applicant had contravened the PCMLTFA. He also upheld the cancellation of the applicant’s NEXUS membership. The applicant had the option of challenging both decisions but each had to be challenged by a different route. The finding that he contravened the PCMLTFA could only be challenged through an appeal by way of an action in this Court: see section 30 of the PCMLTFA. On the other hand, the decision upholding the cancellation of his NEXUS membership could only be challenged by way of an application for judicial review under section 18.1 of the Federal Courts Act. Further, to challenge the penalty assessed for the contravention of the PCMLTFA would also require an application for judicial review under section 18.1 of the Federal Courts Act.

[59] The applicant has only sought judicial review of the decision upholding the cancellation of his NEXUS membership. He did not appeal the finding that he contravened the PCMLTFA, nor did he seek judicial review of the associated penalty. Consequently, this finding must be presumed to be legally and factually sound. As such, it provides important context for the determination upholding the cancellation of the applicant’s NEXUS membership. This will be discussed further below.

[60] The applicant himself did not provide an affidavit in support of this application but it is readily apparent from the background summarized above that his concerns relate not only to the cancellation of his NEXUS membership but also his susceptibility to referral to secondary examination whenever he returns to Canada. A number of his complaints on this application relate to the unfairness and the unreasonableness of this latter state of affairs and the failure of the Senior Program Advisor to address them in his decision. These concerns may be genuine but they cannot be allowed to distort the issues properly before the Court.

[61] The applicant has not challenged either the finding that he contravened the PCMLTFA or the imposition of the $250.00 penalty but he does purport to seek judicial review “of the additional punishments imposed by the Minister above and beyond the applicable penalty imposed under the Currency Reporting Regulations.” According to the applicant, these “additional punishments” are the cancellation of his NEXUS membership and his flagging in the ICES database, which in turn results in referrals for secondary inspection. Without necessarily agreeing with the applicant that the cancellation of his NEXUS membership is a “punishment” for contravening the PCMLTFA, there is no question that it was the result of a decision separate and apart from the finding that he contravened the PCMLTFA. Consequently, the decision upholding the cancellation can be challenged in this Court even though no issue is taken with the finding on which it is based – namely, that the applicant contravened the PCMLTFA.

[62] On the other hand, the flagging of the applicant for secondary inspection is an automatic, collateral consequence of the enforcement action on October 28, 2019: see Chen v Canada (Public Safety and Emergency Preparedness), 2019 FCA 170 at paras 42-45. That action was confirmed by the finding that the applicant contravened the PCMLTFA. Since this finding is not being contested, there is no basis upon which the Court could interfere with the flagging that resulted from the original enforcement action. Simply put, in the absence of an appeal under section 30 of the PCMLTFA, the issue of the applicant’s susceptibility to referral to secondary examination is not before the Court and the applicant’s complaints about these referrals are misplaced.

B. Were the Requirements of Procedural Fairness Breached?

[63] In Baker, the Supreme Court of Canada held that “the purpose of the participatory rights contained within the duty of procedural fairness is to ensure that administrative decisions are made using a fair and open procedure, appropriate to the decision being made and its statutory, institutional, and social context, with an opportunity for those affected by the decision to put forward their views and evidence fully and have them considered by the decision-maker” (at para 22). Further, the values underlying the duty of fairness “relate to the principle that the individual or individuals affected should have the opportunity to present their case fully and fairly, and have decisions affecting their rights, interests, or privileges made using a fair, impartial, and open process, appropriate to the statutory, institutional, and social context of the decision” (at para 28).

[64] The common law duty of procedural fairness is “flexible and variable” (Baker at para 22). Several factors must be considered in determining what is required in the specific context of a given case, including: (1) the nature of the decision being made; (2) the nature of the statutory scheme under which the decision is made; (3) the importance of the decision to the individual(s) affected; (4) the legitimate expectations of the party challenging the decision; and (5) the procedures followed by the decision maker itself and its institutional constraints (Baker at paras 21-28).

[65] There is no dispute in the present case that the requirements of procedural fairness entitled the applicant to know the case he had to meet in seeking a review of the cancellation of his NEXUS membership and that he be given a reasonable opportunity to make his case. With respect to the first requirement, there is no suggestion that the applicant did not know the case he had to meet in challenging the decision to cancel his NEXUS membership. The pre-decision correspondence from the Recourse Directorate summarized above fully set out the applicable legal context of the decision as well as the CBSA’s understanding of the relevant facts. The applicant contends, however, that he was not given a reasonable opportunity to make his case for why his NEXUS membership should not have been cancelled. This is because he was led to believe that he would have an opportunity to present additional submissions and supporting documentation yet the appeal was decided before he could do so.

[66] There are two fundamental problems with the applicant’s position. First, the applicant has not provided any evidence on this application of what additional submissions or supporting documentation he intended to provide before the decision was made. Significantly, he did not provide an affidavit in which he described what he had intended to provide. Second, to the extent that what the applicant had intended to say can be gleaned from the note to file relating to his conversation with the Senior Appeals Officer on May 28, 2020, the matters the applicant raised are immaterial, irrelevant, or had already been articulated in his earlier submissions. Any further information the applicant wished to present concerning the “legitimacy” of the funds in his possession on October 28, 2019, is immaterial because this was not in issue as far as the CBSA was concerned. The applicant’s complaints about being referred to secondary examinations are irrelevant to the merits of the decision to cancel his NEXUS membership. And finally, there is no indication in the notes of this conversation that the applicant had anything new to provide in support of his position that he had made an innocent mistake in overlooking the funds in his carry-on bag.

[67] Drawing these two flaws in the applicant’s position together, I acknowledge that in an earlier conversation on March 31, 2020, the applicant told the Senior Appeals Officer that he wanted to “explain the events as they happened.” At that point, the applicant had already done this three times: in his initial request for a review of the decision submitted on December 5, 2019; in his follow-up submission on January 17, 2020; and in his letter dated January 31, 2020. (The applicant also provided submissions on February 17, 2020, but they addressed other matters.) It is true that the decision was made before the applicant could say anything more in the way of an explanation of “the events as they happened.” However, the applicant has not established that he had anything to say about the crux of his case against the cancellation of his NEXUS membership – that he had made an innocent mistake about the amount of cash he had with him on October 28, 2019 – which he did not have an opportunity to communicate to the CBSA before the decision was made. In short, the applicant has not shown that he had anything new to say about why his NEXUS membership should not have been cancelled. As a result, he has not established that the requirements of procedural fairness were breached when the Recourse Directorate made the decision on the record that was before it.

[68] Finally, in his written submissions the applicant raised a number of objections to the procedure followed in determining that he had contravened the PCMLTFA. These were not pursued in oral argument. In any event, in the absence of an appeal under section 30 of the PCMLTFA, they are an impermissible collateral attack on that determination and are irrelevant to the issues that are before the Court.

C. Is the Decision Unreasonable?

[69] The Senior Program Advisor upheld the cancellation of the applicant’s NEXUS membership on the basis that his contravention of the PCMLTFA meant that he was not of good character, a requirement for membership in the program. The applicant’s principal submission under this heading is that there was no reasonable basis for the decision maker to uphold the cancellation of his NEXUS membership given that he accepted that the applicant made an honest mistake in failing to report the currency. While I see the issue as being more nuanced than this, I nevertheless agree with the applicant that the decision is unreasonable. This is because the determination that the applicant’s contravention of the PCMLTFA meant that he was not of good character lacks transparency, intelligibility and justification.

[70] The applicant requests not only that the decision be set aside but also that the matter be returned to the Recourse Directorate with directions to find that he is of good character and to reinstate his NEXUS membership. As will become clear in what follows, I am not satisfied that this is the only reasonable outcome. Consequently, the appropriate remedy is to refer the matter back to the Recourse Directorate so that it may be reconsidered: see Vavilov at paras 139-142.

[71] The Presentation of Persons (2003) Regulations state that, among other things, to be eligible for membership in a trusted traveller program like NEXUS, one must be “of good character.” This term is not defined in the regulations or any related statute. In his decision, the Senior Program Advisor articulates a certain understanding of what being of good character means in this context. To repeat for ease of reference, he states:

When defining the term “good character” for the purposes of the CBSA’s trusted traveller programs, applicants are assessed as to whether they pose a risk to the integrity of the programs. In doing so, an evaluation takes place of factors such as whether there has been an infraction of the laws of Canada and the U.S. and, in particular, the laws administered by the CBSA, which undermines the confidence of the CBSA that the applicant will comply with all the program requirements.

[72] What I take this to mean is that by requiring applicants for membership in a trusted traveller program like NEXUS to be of good character, the Presentation of Persons (2003) Regulations aim to screen out those who would pose a risk to the integrity of the program by abusing the privileges extended to them under the program. Simply put, someone must be trustworthy to be entitled to the privilege of membership in the program. Thus, to accept an applicant into the program, the CBSA (acting on behalf of the Minister) must be confident that the person will comply with all the program requirements, including presumably that they would comply with the laws governing travellers. This is a forward-looking determination, although the person’s past behaviour will be an important consideration. One potential reason the CBSA might lack the necessary confidence is if, in the past, the person contravened a law of Canada or the United States, in particular a law that the CBSA itself administers. This is not an automatic disqualification, however. As the Senior Program Advisor explains in the decision, a good character determination involves an evaluation of many factors that relate to whether the CBSA can have the requisite confidence in the person or not. Simply having contravened a law is not sufficient in and of itself to demonstrate that a person is not of good character. The contravention must be such that it “undermines the confidence of the CBSA that the applicant will comply with all the program requirements.” While the Senior Program Advisor does not put it exactly this way, I would suggest that this is fundamentally a judgment-call on the part of the CBSA which must be made having regard to all of the circumstances of a given case.

[73] The applicant takes issue with aspects of the Senior Program Advisor’s understanding of the good character requirement generally but it is not necessary to address this here. In my view, accepting for the sake of argument that the decision maker’s general understanding of the good character requirement is a reasonable one, the fundamental flaw in his decision is that he treats the applicant’s having contravened the PCMLTFA as a sufficient reason in and of itself to find that the applicant is not of good character. Crucially, apart from noting the fact that the applicant contravened the PCMLTFA, there is no explanation for why this caused the decision maker to lose confidence that the applicant would comply with all the requirements of the NEXUS program in the future. Perhaps if the applicant had intentionally failed to disclose the funds or had attempted to conceal the funds or if the funds were linked to money laundering or terrorist financing, no further explanation for why he was not trustworthy would be required. But this is not what the decision maker found. Rather, as articulated in the part of the decision dealing with the contravention of the PCMLTFA, the Senior Program Advisor did not dispute that it was an honest mistake on the applicant’s part, that the funds were legitimate, or that it was an isolated incident. In these circumstances, some explanation of why one honest mistake caused the decision maker to lose confidence that the applicant would comply with the requirements of the program in the future was required.

[74] The respondent submits that any contravention of the PCMLTFA is a serious matter that justifies caution on the part of the CBSA and so there was no need for the Senior Program Advisor to spell this out explicitly in his decision.

[75] I do not agree.

[76] It is indisputable that the objectives of the PCMLTFA, including implementing “specific measures to detect and deter money laundering and the financing of terrorist activities and to facilitate the investigation and prosecution of money laundering offences and terrorist activity financing offences,” are of the utmost public importance: see section 3 of the PCMLTFA; see also Zeid v Canada (Public Safety and Emergency Preparedness), 2008 FC 539 at para 55. Thus, there is a sense in which any contravention of the requirements of that Act (and related regulations) is a serious matter. Nevertheless, not all such contraventions are of equal gravity; some are more serious than others. The assessment of the seriousness of a given contravention depends on the sorts of circumstances identified by the Senior Program Advisor in his decision, including whether the contravention was intentional or the result of an honest mistake, whether it was an isolated incident or part of a pattern of conduct, and whether there was any discernible connection between the funds in question and money laundering or the financing of terrorist activities. These factors are also relevant to an assessment of the risk of non-compliance in the future.

[77] In the present case, having weighed these factors, the Senior Program Advisor evidently determined that the applicant’s contravention fell towards the less serious end of the scale. This assessment is consistent with his view of the circumstances of the contravention as discussed in detail in the first part of the decision. His favourable assessment of these factors was presumably why the Senior Program Advisor decided to “extend mitigation” to the applicant in deciding that he should only have to wait for two years before he could apply for NEXUS membership again. However, having made this determination, it was incumbent on the decision maker to explain why the contravention nevertheless justified cancellation of the applicant’s NEXUS membership because it demonstrated that the applicant lacked good character. Specifically, it was incumbent on the decision maker to explain why an isolated, honest mistake by the applicant had caused him to lose confidence that the applicant would comply with the program requirements in the future.

[78] The need for such an explanation in this case is even more apparent when one considers a small but important change the Senior Program Advisor made to the test for determining good character. In his decision, the Senior Program Advisor explained that, to determine whether someone is of good character, “an evaluation takes place of factors such as whether there has been an infraction of the laws of Canada and the U.S. and, in particular, the laws administered by the CBSA, which undermines the confidence of the CBSA that the applicant will comply with all the program requirements.” In contrast, as articulated by the Senior Appeals Officer in her letter to the applicant dated December 18, 2019, the determination of whether someone is of good character involves an evaluation of factors “such as whether there has been a serious infraction of the laws of Canada and the U.S. and, in particular, the laws administered by the CBSA, which undermines the confidence of the CBSA that the applicant will comply with all the program requirements” [emphasis added]. This is a narrower test for ineligibility than the Senior Program Advisor applied. (The same narrower test is also articulated in the Case Synopsis as well as the draft reasons for decision.) It is not necessary to determine whether the broader test applied by the Senior Program Advisor is reasonable or not. For present purposes, what is important is that its breadth makes it even more important for there to be an explanation for why even a contravention of a law that is not serious demonstrates that a person is not of good character.

[79] The fact that he had made an honest mistake was a central concern raised by the applicant in his submissions to the Recourse Directorate. The Senior Program Advisor engaged fully with this issue in explaining why the circumstances relied on by the applicant did not absolve him of responsibility for having contravened the PCMLTFA. However, that analysis does not assist in supporting the reasonableness of the decision to uphold the cancellation of the NEXUS membership. This is because the circumstances of the contravention (including that it was the result of an honest mistake) take on an entirely different significance with respect to the question of good character than they had with respect to whether a contravention had occurred. While they were irrelevant to whether there was a contravention, they are highly relevant to the assessment of the applicant’s character and his trustworthiness generally. The Senior Program Advisor explained clearly why those circumstances did not absolve the applicant of responsibility for contravening the PCMLTFA but the link he drew between the contravention and the question of the applicant’s character was not supported by any analysis at all. It was entirely conclusory.

[80] The Senior Program Advisor’s failure to meaningfully grapple with this issue calls into question whether he was actually alert and sensitive to the matter before him (cf. Vavilov at para 128). There could well be a reasonable explanation for why the applicant’s conduct caused the decision maker to lose confidence that he would comply with the requirements of the program in the future but it is not my role to speculate as to what it might be. The lack of any explanation on this critical issue leaves the decision lacking transparency, intelligibility and justification.

[81] This is not necessarily the end of the matter. As the Supreme Court of Canada emphasized in Vavilov, an administrative decision must be read against the backdrop of the legal and factual context in which it was made. The decision must be read with sensitivity to its institutional setting as well as the history of the proceeding and the record as a whole: see Vavilov at paras 91-95. Doing so can help the reviewing court to understand the reasoning process followed by a decision maker in arriving at his or her conclusion, a key consideration in reasonableness review (cf. Vavilov at paras 84-85). Thus, while it is not open to a reviewing court to rewrite an administrative decision maker’s reasons in order to cure every deficiency (cf. Vavilov at para 96), a court may, within certain limits, consider whether there are ways to fill an inferential gap in order to demonstrate that the decision is not unreasonable despite how it might appear if viewed in isolation. See, generally, Delta Air Lines v Lukács, 2018 SCC 2 at paras 22-28, and Vavilov at paras 96-98.

[82] Having regard to the legal and factual context of the decision at issue here, two potential ways to fill the critical gap in the Senior Program Advisor’s reasoning suggest themselves. One is to consider the Case Synopsis and the draft reasons for decision that were prepared for the decision maker’s consideration. The other is to consider that the decision maker may be presumed to have experience and expertise in making assessments like the one at issue here. As I will explain, neither of these considerations is capable of filling the gap in the decision maker’s reasoning without exceeding the proper limits of judicial review.

[83] Looking first at the Case Synopsis and the draft reasons for decision, after explaining the good character requirement in largely the same terms as the Senior Program Advisor does in his decision (apart from the difference discussed above), the Case Synopsis continues as follows:

Upon review of the circumstances of enforcement action 3961-19-2647, it has been confirmed that the claimant committed a contravention of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its Regulations, which is administered by the CBSA. Claimant has been a member [of the NEXUS program] since 2009. While the claimant maintains that when the agent asked him to show the $9,000, he opened the inside zipper of his handbag and only then he realized he also had an envelope containing some Euros and USD equivalent to $Cad 3,000 left from his previous trip that he forgot to remove from his bag which he usually keep [sic] at home in a safe. He attested that this was an honest mistake and oversight on his end and no hiding of information was intended and requested his NEXUS card be returned.

The circumstances of this non-compliance tends [sic] to undermine the CBSA’s confidence that the claimant will comply with all program requirements. In order to uphold the integrity of the NEXUS program and the need to ensure domestic and international confidence in the NEXUS program, since enforcement action 3961-19-2647 remains on record, it is my opinion that applying discretion with respect to the cancellation of claimant’s NEXUS membership would not be appropriate.

On this basis, it is recommended that the decision to cancel the claimant’s NEXUS membership should be upheld. However, I recommend also remitting the NEXUS membership once the ICES points return to [redacted], as of April 28, 2024, which should serve as enough deterrent for future declarations.

[84] The draft reasons for decision (dated May 19, 2020), offers a similar analysis. After describing the circumstances of the October 28 2019, seizure and noting that the applicant maintained that the failure to report the currency was the result of an honest mistake and oversight on his part and that he never intended to hide information, the draft reasons state:

The non-report of the currency cannot be overlooked when determining good character. The circumstances of this non-compliance tends to undermine CBSA’s confidence that you will comply with all program requirements. In order to uphold the integrity of the NEXUS program and the need to ensure domestic and international confidence in the NEXUS program, since the enforcement action 3961-19-2647 remains on record, the cancellation of your NEXUS membership is deemed to be appropriate. However, you may reapply as of April 28, 2024, which should serve as an adequate deterrent for any future declarations.

[85] While the reasoning in these two documents is somewhat more explicit than that of the Senior Program Advisor in his decision, it still does not assist in demonstrating that the decision is reasonable. I say this for two reasons. First, part of the rationale offered for maintaining the cancellation of the applicant’s NEXUS membership is that it would undermine confidence in the integrity of the NEXUS program if the applicant retained his membership in the program while the enforcement action remained on his record. However, the Senior Program Advisor did not adopt this rationale in his decision, no doubt because it has nothing to do with the applicant’s character. Second, while a link is made between the non-compliance and the issue of the applicant’s character, the reasoning in the two documents has the same critical gap as the Senior Program Advisor’s decision: there is no explanation for why the circumstances of the applicant’s non-compliance tend to undermine the CBSA’s confidence that, in the future, he will comply with all program requirements.

[86] Before leaving this consideration, I must stress that it should not be presumed that, as a general rule, draft reasons can or should be used to fill gaps in the reasons that were actually delivered by the decision maker. Particularly when, as is the case here, the decision maker has made substantive changes to the draft in the final decision, it would arguably be inappropriate to ground the reasonableness of the decision in reasons the decision maker did not adopt as his or her own. That being said, in the present case, even taking a liberal approach to the draft reasons as part of the context within which the decision was made, they do not support the reasonableness of the decision.

[87] Turning to the second consideration identified above, presumably the Senior Program Advisor as well as other CBSA officials who were part of the decision-making process have experience and expertise in the assessment of good character based on a person’s past compliance (or lack thereof) with laws administered by the CBSA (cf. Vavilov at para 93). Why, then, could this not provide the missing basis for why the Senior Program Advisor reached the conclusion he did?

[88] There are two problems with this approach. One is that this experience and expertise is not demonstrated in the reasons, as Vavilov requires. An explanation of the link between the applicant’s conduct and the question of his good character would be one way of demonstrating this experience and expertise but this is precisely what is missing from the decision.

[89] The other problem is that even if this experience and expertise suggested that the past behaviour of travellers is a reliable predictor of future behaviour, this still begs the fundamental question. While past behaviour can be a reliable predictor of future behaviour, this is not always the case. People can and will change their behaviour in response to any number of different factors. All of the circumstances must be considered when determining how probative past behaviour is for how someone will behave in the future.

[90] In the present case, after everything that has happened as a result of the mistake he made on October 28, 2019, one might expect the applicant to be much more careful in the future. There may still be a reasonable basis for the Senior Program Advisor to lack confidence that, in the future, the applicant would comply with all the requirements of the program but it was incumbent on him to explain what this was. The Senior Program Advisor had to explain why, despite the fact that it would be reasonable to expect the applicant to be much more careful about complying with the PCMLTFA and other laws relating to travellers in the future, he nevertheless lacked confidence that the applicant would do so. He had to provide at least some explanation of how he linked the applicant’s past behaviour to his future behaviour through the assessment of his character. There may be an explanation that provides a reasonable basis for the Senior Program Advisor’s conclusion but he did not provide it. Once again, it is not the Court’s role to speculate as to what it might be.

[91] In summary, one must read the Senior Program Advisor’s decision with sensitivity to the legal and institutional context in which it was made and in light of the record. Even doing so, the officer’s chain of analysis contains a fundamental gap. There is no explanation for why the applicant’s contravention of the PCMLTFA meant he was no longer of good character as this requirement is understood by the CBSA. This gap in the decision maker’s reasoning leaves the decision to uphold the cancellation of the applicant’s NEXUS membership lacking in transparency, intelligibility and justification.

VI. CONCLUSION

[92] For these reasons, the application for judicial review of the decision upholding the cancellation of the applicant’s membership in the NEXUS trusted traveller program is allowed with costs. The decision is set aside and the matter is remitted for reconsideration by a different decision maker.

JUDGMENT IN T-783-20

THIS COURT’S JUDGMENT is that

1. The application for judicial review is allowed with costs.

2. The decision dated May 27, 2020, upholding the cancellation of the applicant’s membership in the NEXUS trusted traveller program is set aside and the matter is remitted for reconsideration by a different decision maker.

“John Norris”

Annex

Proceeds of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17 – sections 3, 12(1)(2)(3)(4), 18(1)(2), 25, 28, 29, 30(1)

Cross-border Currency and Monetary Instruments Reporting Regulations, SOR/2002-412 – sections 2, 18(a)

Customs Act, RSC 1985, c 1 (2^nd Supp) – sections 11.1(1)(2)(3), 11.2(1)(2)

Presentation of Persons (2003) Regulations, SOR/2003-323 – sections 5, 6.1, 22, 23

 

FEDERAL COURT

SOLICITORS OF RECORD

DOCKET:	T-783-20
STYLE OF CAUSE:	PAUL ABOU NASSAR v MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS

HEARING HELD BY VIDEOCONFERENCE ON JANUARY 18, 2021 FROM OTTAWA, ONTARIO (COURT) AND TORONTO, ONTARIO (PARTIES)

JUDGMENT AND REASONS:	NORRIS J.
DATED:	April 29, 2021

APPEARANCES:

Cyndee Todgham Cherniak	For The Applicant
Derek Edwards	For The Respondent

SOLICITORS OF RECORD:

Lexsage Professional Corporation Toronto, Ontario	For The Applicant
Attorney General of Canada Toronto, Ontario	For The Respondent