



COURT OF APPEAL FOR ONTARIO

CITATION: Canada (Attorney General) v. Georgiou, 2018 ONCA
    320

DATE: 20180329

DOCKET: C63966

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

IN THE MATTER of
    section 9.3 of
the Mutual Legal Assistance in Criminal Matters Act
,
    R.S.C., 1985, c. 30

AND IN THE
    MATTER of an application to amend an Order confirming the filing of a restraint
    order issued by a court of criminal jurisdiction in the United States of America

BETWEEN

The Attorney General of Canada

Applicant

(Respondent)

and

George Georgiou

Respondent

(Appellant)

Maurice J. Neirinck, for the appellant

Jeffrey G. Johnston, for the respondent

Heard: February 26, 2018

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

Hourigan J.A.:

[1]

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

[2]

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

Facts

[3]

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

[4]

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

[5]

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

[6]

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

apply to
    offence-related property.

[7]

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

[8]

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

Decision Below

[9]

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

[10]

However, she held that she did not need to decide that
    issue because in her view, the phrase proceeds of crime in s. 9.3(4)(b) of
    the
Act

was broad enough to encompass the Kelly Order. The
    motion judge found that the RBC funds were proceeds of crime because they had
    been substituted for proceeds of crime by a foreign state under its
    legislation. Therefore, substituting s. 462.33(3) of the
Code
(referred to in s. 9.3(4)(b) of the
Act

and dealing
    with proceeds of crime)

for the section originally cited in Forestell J.s
    order (s. 490.8(3), referred to in s. 9.3(4)(d) of the
Act

and dealing
    with offence-related property) resolved any issue of jurisdiction.

[11]

The motion judge also rejected the appellants
    argument that the order of Forestell J. was issued on the basis of material
    misrepresentations.

[12]

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

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

Analysis

[13]

The respondent argues that the funds in the RBC
    account do not need to be proceeds of crime or offence-related property to be
    subject to restraint under the
Act
. It submits that under s. 9(3)(2), a Canadian court must file the order
    if the preconditions under ss. 9.3(1) and 9.3(3) are met. Because these
    preconditions have been met in this case, it does not matter whether the funds
    are proceeds of crime or offence-related property.

[14]

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


[15]

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

[16]

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

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

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

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

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

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

(4) On being filed,

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

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

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

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

[17]

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

[18]

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

[19]

Further,
    the appellant argues that in interpreting s. 9.3 of the
Act
, the definition
    of proceeds of crime found under s. 462.3(1) of the
Criminal Code

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

[20]

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

[21]

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

[22]

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

[23]

This
    court has adopted this approach to statutory interpretation in the
    transnational law context in its consideration of the proper application of the
Act
:

Canada (Attorney General) v. Ni-Met Resources Inc.
(2005), 195 C.C.C. (3d) 1 (Ont. C.A.), at para. 19;
Canada (Attorney
    General) v. Foster
(2006), 215 C.C.C. (3d) 59 (Ont. C.A.), at para. 57;
Belgium
    v. Suthanthiran
, 2017 ONCA 343, 347 C.C.C. (3d) 120, at para. 62, leave to
    appeal refused: [2017] S.C.C.A. No. 256.

[24]

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

[25]

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

[26]

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

[27]

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

Foster
, at
    para. 55.

[28]

In
    my view, interpreting proceeds of crime in a restrictive manner that only
    accords with the Canadian criminal law definition of this term would frustrate
    rather than support these objectives. Imposing the limits of the
Criminal
    Code

definition on foreign orders would undermine Canadas ability
    to cooperate with other states and prevent the government from honouring its
    treaty obligations.

Disposition

[29]

The
    appeal is dismissed. In accordance with the respondents request, no costs are
    awarded.

Released: G.S. March 29, 2018

C.W.
    Hourigan J.A.

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

I
    agree. Janet Simmons J.A.





[1]

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


