CHÂTEAU D’IVOIRE STORES INC. Appellant v. THE ATTORNEY GENERAL OF CANADA, 2022 FC 405

Date: 20220324 Docket: T-556-21 Citation: 2022 FC 405 Ottawa, Ontario, March 24, 2022 PRESENT: The Honourable Mr. Justice Pamel BETWEEN: CHÂTEAU D’IVOIRE STORES INC. Appellant and THE ATTORNEY GENERAL OF CANADA Respondent ORDER AND REASONS I. Background and proceedings [ 1 ] The underlying proceeding is a statutory appeal under

section 73.21 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act , SC 2000, c 17 [ Act ]. The parties have filed a series of preliminary motions in relation to this matter. [ 2 ] On September 1, 2020, the Financial Transactions and Reports Analysis Centre of Canada [FINTRAC], which was established under

section 41 of the Act , issued a notice of violation within the meaning of

section 73.14 of the Act [Notice of Violation] against the Appellant, Château d’Ivoire Stores Inc. [Château d’Ivoire], in relation to a series of purported violations of the Act during the period of May 1 to October 31 2018, imposing total administrative monetary penalties [AMP] in the amount of $206,910.00 against the company.

Following representations made by Château d’Ivoire to the Director and Chief Executive Officer of FINTRAC [Director] in accordance with the Notice of Violation, on March 1, 2021, the Director issued the Notice of Decision pursuant to subsection 73.15(2) of the Act confirming the amount of the AMP [Decision]. [ 3 ] On March 31, 2021, Château d’Ivoire filed the underlying appeal in which it sought to set aside the Decision on, inter alia , the grounds that it: a . constitutes a breach of procedural fairness by failing to disclose to Château d’Ivoire the material necessary for it to make its case, by failing to consider Château d’Ivoire’s submissions, and by blindly adopting the initial conclusions of the audit of Château d’Ivoire that had been undertaken by FINTRAC; b . supplements regulatory requirements without a statutory basis to do so; and c . relies on palpable and overriding errors of fact, notably treating the use of a P.O. box on a First Nations reserve as suspicious. [ 4 ] The underlying Notice of Appeal included notification of Château d’Ivoire’s intention to request a certified copy of materials that were in the possession of the Director (including the “compliance file” and all other material relating to FINTRAC’s examination of Château d’Ivoire) [rule 317 request] pursuant to sections 317 and 350 of the Federal Courts Rules , SOR/98-106 [ Rules ], after appropriate measures are taken with the Director and the Registry to secure the confidentiality of the certified record ( Rémillard v Canada (National Revenue) , 2020 FC 1061 ).

With appropriate arrangements having been made, FINTRAC transmitted to the Registry and to Château d’Ivoire, pursuant to

section 318 of the Rules , a certified copy of the material in the possession of the Director [certified tribunal record] identifying the portions of the material that were to be treated by the Registry as confidential pursuant to subsections 55(1) and 73.21(4) of the Act . I should make clear that FINTRAC’s initial response to the rule 317 request dated May 14, 2021, contained not only the entirety of the electronic briefing binder that was before the Director, but also documents that were not part of the binder and, thus, purportedly not before the Director at the time the Decision was issued.

Consequently, FINTRAC filed an amended response to Château d’Ivoire’s rule 317 request on August 31, 2021. [ 5 ] The 24 documents making up the certified tribunal record included the Recommendation Package – a 356-page electronic briefing binder of documents containing, inter alia , an initial draft of the Decision prepared by the Review and Appeals Unit of FINTRAC [RAU], a 16-page memorandum in support of the recommendation prepared by an officer of the RAU, the Notice of Violation, Château d’Ivoire’s contestation and assorted other supporting documents – that was provided to the Director on February 24, 2021, for her review.

Prior to being remitted to the Director, the Recommendation Package was approved by the Deputy Director of Enterprise Policy, Research and Programs [Deputy Director]. [ 6 ] The Director eventually approved and issued the Decision without any amendments to the initial draft that was before her. [ 7 ] Having reviewed the certified tribunal record and having appreciated further the process underlying the issuance of the Decision, on June 9, 2021, Château d’Ivoire made a supplemental request for disclosure under

section 317 of the Rules as follows: copy of all documents, including but not limited to memoranda, correspondence (including emails and internal correspondence within FINTRAC) reports, studies, notes, recommendations, or analysis in the possession of FINTRAC related to or involving, directly or indirectly, the Notice of Violation dated 26 August 2020 and issued to the Appellant or the Decision against the Appellant dated 1 March 2021, including but not limited to the drafting, approval process and signature

thereof. [8] On June 29, 2021, the Attorney General responded to Château d’Ivoire, denying its request for supplementary disclosure on thegrounds that

section 317 of the Rules limits transmission to only the documents that were before the administrative decision-maker at thetime the decision was made and that all documents that were before the Director at the time of the issuance of the Decision had alreadybeen disclosed to Château d’Ivoire as part of the certified tribunal record. [9] Château d’Ivoire sought direction from the Court pursuant to subsection 318(3) of the Rules as to the procedure for makingsubmissions with respect to the Attorney General’s objection to its supplemental request for disclosure.

Following a scheduling orderissued by Prothonotary Ring, on August 13, 2021, Château d’Ivoire filed a motion seeking to compel supplementary disclosure undersection 317 of the Rules [Motion for Disclosure]; the Attorney General filed his responding material on August 27, 2021, and Châteaud’Ivoire filed its reply on September 29, 2021. [10] Château d’Ivoire’s reply was spirited and fulsome and, in the opinion of the Attorney General, contained arguments which were"“much more developed . . . than in its Motion”".

Consequently, following a further directive from the Court, the Attorney General fileda motion for leave to file a sur-reply [Motion for Sur-Reply], which contained a copy of the proposed sur-reply submissions. Thisprompted the filing by Château d’Ivoire of a motion for leave to file a sur-sur-reply, if required [Motion for Sur-Sur-Reply], which alsoincluded its proposed sur-sur-reply submissions. Château d’Ivoire also sought to file its responding material to the Attorney General’sMotion for Sur-Reply, which included a copy of the proposed responding submissions.

Although initially within time, because oftechnical issues with its response material, including service thereof, formal filing of Château d’Ivoire’s responding material was initiallyrefused and held in abeyance by the Registry pending determination by this Court of the company’s informal request for an extension oftime – which Château d’Ivoire now required – to file its responding material to the Motion for Sur-Reply in the proper form [InformalRequest].

The Attorney General confirmed that he did not intend to respond to either Château d’Ivoire’s Motion for Sur-Sur-Reply or itsresponse to the Attorney General’s Motion for Sur-Reply, and consented to Château d’Ivoire’s Informal Request. [11] In the meantime, Château d’Ivoire had also made an informal request for permission to file, in support of its reply, an affidavitintroducing a copy of FINTRAC’s “Policy for the Review of Representations on Administrative Monetary Penalties”, produced duringthe cross-examination of the respondent’s affiant on the Motion for Disclosure.

There being no objection to its introduction on the part ofthe Attorney General, on October 6, 2021, Prothonotary Steele directed that the reply affidavit and attached document be accepted forfiling but made no finding as to the document’s probative value or relevance. [12] To summarize, the proceedings for disposition that I have before me include: Château d’Ivoire’s Motion for Disclosure, as well as the Attorney General’s response material and Château d’Ivoire’s reply; the Attorney General’s Motion for Sur-Reply attaching his proposed sur-reply submissions, as well at the Informal Request byChâteau d’Ivoire – a copy of the proposed response submissions by Château d’Ivoire are also before me although they have notyet been formally accepted for filing by the Registry; Château d’Ivoire’s Motion for Sur-Sur-Reply, to which the Attorney General has indicated he does not intend to respond.

II. Analysis A. Château d’Ivoire’s Informal Request [13] Were it not for purely technical reasons, Château d’Ivoire’s responding material to the Attorney General’s Motion for Sur-Replywould have been filed within the time limits provided for in the Rules. There being no opposition on the part of the Attorney General, Iam satisfied that it is in the interest of justice to grant the relief sought by the company. Accordingly, Château d’Ivoire’s motion recordin response to the Attorney General’s Motion for Sur-Reply is to be accepted for filing as of the date of its Informal Request, October 20,2021. B.

The Attorney General’s Motion for Sur-Reply and Château d’Ivoire’s Motion forSur-Sur-Reply [14] The Attorney General makes a very simple point, i.e., that Château d’Ivoire’s arguments in support of its Motion for Disclosurewere more developed in its reply and are considerably longer and more detailed than the arguments that were put forward in its initialsubmissions. Château d’Ivoire submits that its reply is purely responsive to the Attorney General’s response submissions, raises no newissues and raises no new jurisprudence.

Château d’Ivoire further submits that the length of its reply is due to the introduction of materialfrom the cross-examination of the Attorney General’s affiant. [15] From my perspective, this whole issue is a tempest in a teapot. The Attorney General seeks leave to submit a letter response in sur-reply limited to the following: . . . the Respondent would like to file with the Court the decision 1185740 Ontario Ltd. v. Canada (Minister of NationalRevenue), (FC) which is attached to this letter.

In this decision, Justice Nadon (then at the Federal Court)stated that the only documents which had to be produced pursuant to Rule 317 were the memoranda that were before theMinister who had rendered the decision under review, and not the numerous documents sought by the Applicant which werein the possession of the Minister’s delegates: [11] It is therefore my view that, as the “Board” in this case is the Minister, Mr. Dhaliwal, the applicant is

entitled only to those documents that were before the Minister when he made his decision. On the evidencebefore me, those documents were the memoranda of the Deputy Minister and the documents referred to in thosememoranda. All of these documents have been provided to the applicant. Thus, the other documents of whichthe applicant seeks production under point A. do not fall within the purview of Rule 317(1). This part of Justice Nadon’s decision was confirmed by the Federal Court of Appeal in 1185740 Ontario Ltd. v. Canada(Minister of National Revenue), (FCA) which is also attached to this letter.

It clearly shows that, contraryto what the Appellant asserts, at paragraphs 8 and 10 of its Reply, the Director’s decision under appeal doesn’t encompassthe “entire body of work that leads to the decision”. [16] In essence, the Attorney General is simply seeking to submit related case law which is clearly relevant to the issues raised in theMotion for Disclosure.

In objecting to the Motion for Sur-Reply, Château d’Ivoire argues that all the Attorney General is seeking to do isget a second kick at the can considering that the company has purportedly not made any new arguments or introduced new arguments oradditional case law in its reply.

That, of course, is arguable given Château d’Ivoire’s submission in reply, however, given the verylimited scope of the Attorney General’s sur-reply submissions, which I consider relevant and of assistance to the Court in disposing of theMotion for Disclosure, I consider it in the interest of justice to grant the relief sought. [17] As to Château d’Ivoire’s Motion for Sur-Sur-Reply, the company is simply addressing in its sur-sur-reply submissions the case lawintroduced by the Attorney General in his sur-reply submissions. I, therefore, find it only fair to also allow this motion.

As stated, theAttorney General makes no representations opposing the relief sought by Château d’Ivoire. [18] Accordingly, the Attorney General’s written submissions in sur-reply will be deemed to have been filed on October 8, 2021, andChâteau d’Ivoire’s written submissions in sur-sur-reply will be deemed to have been filed on October 20, 2021. C.

Château d’Ivoire’s Motion for Disclosure [19] The amended version of FINTRAC’s disclosure filed on August 31, 2021, includes the following documents that were in theelectronic briefing binder provided to the Director for her decision: a. the recommendation and proposed notice of decision prepared by a staff member of FINTRAC identified as “RAU” (lateridentified as being “John Dent” during the cross-examination of Mr.

Richard); b. the Notice of Violation; c. the representations made by Château d’Ivoire in response to the Notice of Violation; d. the notification dated November 30, 2018, for the compliance examination scheduled for January 23, 2019; e. the letter dated April 17, 2019, communicating to Château d’Ivoire the findings resulting from FINTRAC’s complianceexamination performed on January 23, 2019; f. the letter dated May 19, 2017, communicating to Château d’Ivoire the findings resulting from FINTRAC’s complianceexamination performed on March 28 and 29, 2017; g. Château d’Ivoire’s compliance regime dated June 2017; h.

Château d’Ivoire’s invoices; i. an independent external report titled “FINTRAC’s Administrative Monetary Penalties Program Review” written by theHonourable John M. Evans and dated May 30, 2018; j.

FINTRAC’s administrative monetary penalties policy; k. the Guide on harm done assessment for compliance program violations; l. the Guide on harm done assessment for large cash transaction reports, electronic funds transfer reports, and casino disbursementreports violations; m. the Guide on harm done assessment for suspicious transaction reports violations. [20] The position of Château d’Ivoire may be summarized as follows: a.

The Decision (the draft of which “appears to have been rubber-stamped by the Director”) was prepared by an unidentified RAUofficer (later identified in cross-examination) who was delegated the task of essentially producing the Decision. Accordingly, therespondent must disclose all the material before not just the Director, but everyone in the chain of the decision-making process,including the RAU officer as well as the Deputy Director; and b. The Director delegated her decision-making authority to a staff member of FINTRAC, and as “the Director did not make theDecision alone, if at all”, disclosure under

section 317 of the Rules cannot be limited to only the material before her – the staffmember was also a “decision-maker” for the purposes of the application of

section 317 of the Rules. [21] Other than trying to distinguish the Federal Court of Appeal’s decision in Violator no. 10 v Canada (Attorney General), 2018 FCA150 [Violator no. 10], Château d’Ivoire provided no serious support for its arguments in its initial written arguments. In its reply, Châteaud’Ivoire expanded on its initial submissions and made additional arguments in answer to the Attorney General’s response material:

a. The Attorney General’s objection to disclosure "“casts FINTRAC staff as the unrestrained arbiters of what documents this Courtcan use to supervise the Decision”" , thus serving "“only to eviscerate R317 and shield the Respondent from this Court’soversight”"; b. The underlying documents used to produce the Notice of Violation were clearly relevant yet did not form part of theRecommendation Package submitted to the Director for her decision; c. Somehow the Attorney General misportrays the decision-making process leading to the issuance of the Notice of Decision by theDirector; d.

When staff to whom decision-making authority has been delegated undertake work on behalf of a superior in whom the statutoryduty is vested, "“it is as if the superior did it themselves”", and consequently, the material before the staff member is to be includedin the “entire body of work” that leads to the issuance of the decision and is thus subject to disclosure – the division of labourthrough delegation for administrative convenience cannot inhibit the operation of

section 317 of the Rules; and e. Not all the relevant material has been produced. [22] Again, Château d’Ivoire provides very little direct legal support for its position, relying primarily on distinguishing the case lawsubmitted by the Attorney General in support of his refusal of Château d’Ivoire’s supplemental request for disclosure. [23] I must confess to being somewhat intrigued by Château d’Ivoire’s argument.

It would be rather Kafkaesque for an administrativedecision-maker to be able to shield the material relevant to an application for judicial review or a statutory appeal by delegating decision-making authority to staff who would then simply place limited material before the decision-maker with a draft decision, ready to besigned without question.

But there is no evidence to suggest that that is what happened in this case, and suggesting it does not make it so. [24] First of all, there is nothing improper with the Director relying on her staff, in an administrative context, in undertaking the initialreview and preparation of a file for her review and final determination.

As was stated by the Federal Court of Appeal in Violator no. 10:"“decision-makers are not required to personally perform all of the tasks conferred upon them by the legislation, and . . . they maydelegate to administrative staff certain tasks upon which informed decision-making necessarily depends, such as the gathering andanalyzing of evidence”" (Violator no. 10 at para 41).

Indeed, requiring the decision-maker to perform all tasks personally would causechaos, be inefficient and lead to interminable delays (Violator no. 10 at para 42; see also The Queen v Harrison, (SCC),[1977] 1 SCR 238; Armstrong v Canada (Commissioner of the Royal Canadian Mounted Police), (FC), [1994] 2 FC356 (TD), aff’d (FCA), [1998] 2 FC 666 (FCA)). [25] There is also no evidence that the Director delegated decision-making authority to the RAU staff.

The fact that staff membersprepared a memorandum and recommendations for the Director based upon their review of the file and included a draft Notice ofDecision for the Director to consider does not necessarily lead to the conclusion that the Director divested herself of final decision-making authority. Nor does this show, as asserted by Château d’Ivoire, that FINTRAC was given carte blanche to avoid an effectivereview of the Decision by isolating the sign-off from the substantive work required to render the Decision.

In fact, the material beforethe Director made it clear that if she did disagree with the recommendations or the drafting of the Notice of Decision, she should advisethe RAU so that the necessary modifications to the Notice of Decision can be made. The cross-examination of the Attorney General’switness only clarified the role of the FINTRAC staff member in preparing the electronic briefing binder and drafting the decision for theDirector.

Considering that a decision-maker is allowed to rely on staff in such a context to draft the reasons for decision to the extent thatthe decision-maker retains final approval, as was the case here, I find that, in the end, the Decision was rendered by the Director and nota staff member of FINTRAC (Violator no. 10 at para 43; Galipeau v Canada (Attorney General), 2015 FC 984 at paras 46-47; Baker vCanada (Minister of Citizenship and Immigration), (SCC), [1999] 2 SCR 817 at para 44).

Contrary to the assertions ofChâteau d’Ivoire, there is no basis for concluding that the Director did not personally review the file with which she was provided or thatthe conclusions reached in her decision were not her own. [26] The case law makes it clear that the disclosure of documents under

section 317 of the Rules is limited in scope and

section 350 ofthe Rules does not require a heightened standard of disclosure under sections 317 and 318 in the context of statutory appeals (Athletes 4Athletes Foundation v Canada (National Revenue), 2020 FCA 41 at para 22).

The requesting party is only entitled to be sent the relevantmaterial that was before the decision-maker when the decision was made (Slansky v Canada (Attorney General), 2013 FCA 199 at para275; Access Information Agency Inc. v Canada (Attorney General), 2007 FCA 224 at para 7; 1185740 Ontario Ltd v Canada (Minister ofNational Revenue), [1999] FCJ No 1432 (FCA) (QL) at para 3); relevance alone is not enough. [27] In its underlying appeal, Château d’Ivoire is claiming breach of procedural fairness on the part of the Director.

I accept that section317 of the Rules may be broadened by the Court in situations where a breach of procedural fairness is alleged, however, for the Court toexercise its discretion to do so, the party claiming a breach of this nature must establish the relevance of the documents it is seeking tohave disclosed to the purported breach of procedural fairness (Gagliano v Canada (Commission of Inquiry into the Sponsorship Programand Advertising Activities), 2006 FC 720 at paras 51 and 52).

The broad and expansive nature of the supplemental request for disclosurefails to provide the level of specificity required for the Court to consider exercising its discretion to allow for disclosure in this case(Maax Bath Inc v Almag Aluminum Inc, 2009 FCA 204 at paras 11, 12 and 15; Right to Life Association of Toronto and Area v Canada(Employment, Workforce and Labour), (FC) at paras 56-60). [28] Finally, Château d’Ivoire argues that not all relevant documents were disclosed by the Attorney General, but rather only the relevantdocuments that the RAU staff had specifically chosen to include in the electronic briefing binder provided to the Director.

There is nodoubt that the RAU staff had more documents than had been included in the electronic briefing binder to the Director – the fact thatFINTRAC modified its response to Château d’Ivoire’s rule 317 request establishes that. However, as stated earlier, relevance alone is notenough to compel disclosure under

section 317 of the Rules, even assuming that the documents that did not form part of the electronicbriefing binder provided to the Director were relevant to the Decision. The material must be relevant and in the possession of the Directorto be captured by

section 317 of the Rules. The whole purpose of having staff conduct the initial review and assessment is to ensure anefficient use of the Director’s time. It follows that not all documents reviewed by the staff would be deemed necessary to be inserted in

the binder supporting the recommendation. The evidence is that if the Director, having reviewed the file, requested additional information, such would be provided. In any event, Château d’Ivoire has failed to establish in what way the documents captured by FINTRAC’s first response to the rule 317 request of May 14, 2021, but retraced with the amended response of August 31, 2021, would be relevant to the grounds set out in the underlying Notice of Appeal.

Again, simply saying that relevant documents have not been produced does not make it so. [ 29 ] Under the circumstances, I would dismiss the Motion for Disclosure. ORDER in T-556-21 THIS COURT ORDERS that : 1 . Château d’Ivoire’s informal request for an extension of time to file a motion record in response to the Attorney General’s motion to file a sur-reply is granted and the company’s responding motion record is deemed to be filed on October 20, 2021; 2 .

The Attorney General’s motion for leave to file sur-reply submissions is granted and his letter submission in sur-reply filed as Annex A of his motion record is deemed to be filed on October 8, 2021; 3 . Château d’Ivoire’s motion for leave to file sur-sur-reply submissions is granted and the company’s written representations filed as Annex A of its motion record are deemed to be filed on October 20, 2021; 4 . The Motion for Disclosure pursuant to

section 317 is dismissed; 5 . On the whole, costs for all matters are fixed at $2,500 all inclusive, payable by Château d’Ivoire to the Attorney General. “Peter G. Pamel” Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-556-21 STYLE OF CAUSE: CHÂTEAU D’IVOIRE STORES INC. v THE ATTORNEY GENERAL OF CANADA MOTION IN WRITING CONSIDERED AT OTTAWA, ONTARIO PURSUANT TO

SECTION 369 OF THE FEDERAL COURTS RULES ORDER AND REASONS: PAMEL J. DATED: march 24, 2022 APPEARANCES : Guy Du Pont, Ad. E. Léon H. Moubayed Matthias Heilke For The AppELLANT Benoît de Champlain Isabelle Mathieu-Millaire For The Respondent SOLICITORS OF RECORD :

Davies Ward Phillips & Vineberg LLP Montreal, Quebec For The AppELLANT Attorney General of Canada Ottawa, Ontario For The Respondent