US v. Zschiegner

US v. Zschiegner Court Court of Appeal Date 2001-05-08 Citation 2001 NSCA 74 Docket CAC 167107 Judge/Registrar/Adjudicator Freeman, Gerald B. (Honourable Justice) (CA); Roscoe, Elizabeth A. (Honourable Justice) (CA); Cromwell, Thomas A. (Honourable Justice) Document Type Decision Relations Library Sheet - US v. Zschiegner - 2001 NSCA 74 - 2001-05-08 - Library Sheet Decision Content CAC 167107 NOVA SCOTIA COURT OF APPEAL [Cite as: US v. Zschiegner, 2001 NSCA 74] Freeman, Roscoe and Cromwell, JJ.A. BETWEEN: UNITED STATES OF AMERICA Appellant - and - HERBERT ZSCHIEGNER Respondent __________________________________________________________________ REASONS FOR JUDGMENT __________________________________________________________________ Counsel: James C. Martin for the Appellant Norman B. Hill for the Respondent Appeal Heard: March 22, 2001 Judgment Delivered: May 8, 2001 THE COURT: The appeal is allowed with costs of $1,500.00 as per reasons for judgment of Roscoe, J.A.; Freeman and Cromwell, JJ.A., concurring. ROSCOE, J.A.: [1] The United States of America, the appellant, seeks to enforce a restitution order made against Herbert Zschiegner, the respondent, by the United States Federal Court, District of New Jersey, on September 28, 1995, in the amount of $650,000. The assistance of Canada is sought pursuant to the Treaty between the Government of Canada and the Government of the United States of America on Mutual Legal Assistance in Criminal Matters, Can. T.S. 1990 No. 19 (Canada Gazette, Part I, 1990, p. 953), (the Treaty) and the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.) as amended, (the MLA). BACKGROUND [2] The respondent, a resident of New Jersey, pleaded guilty to three counts of knowingly discharging pollutants into the waters of the US, contrary to the Clean Water Act (US Code, Title 33). He was sentenced to 16 months imprisonment, to be followed by probation and ordered to pay restitution in the amount of $650,000 (US) to the Environmental Protection Agency (EPA), which had cleaned the polluted waters and surrounding lands. The respondent and his wife are joint owners of an island known as John Island, situated in Shelburne County, Nova Scotia. The US Department of Justice requested Canada’s assistance in enforcing payment of the order of the US Court through the sale of the respondent’s land in Nova Scotia. On April 21, 1999, the Minister of Justice granted a “Minister’s Approval of Treaty Request” which stated, in part: The United States has requested that Canada enforce a fine. It has made the request under the Treaty between the Government of Canada and the Government of the United States of America on Mutual Legal Assistance in Criminal Matters. ... The United States has jurisdiction over these offences and these offences are covered by the Treaty. ... As described in the Mutual Legal Assistance in Criminal Matters Act, this request is approved. [3] Acting on the basis of this approval, James Martin, legal counsel with the Department of Justice Canada, arranged for a certified copy of the US District Court order to be filed as a judgment pursuant to s. 734.6 of the Criminal Code in the Prothonotary’s Office at the Yarmouth Justice Centre on July 12, 1999. On July 19, 1999, the US order was registered as a judgment in the Shelburne County Registry of Deeds. On August 31, 2000, an execution order was issued by the Prothonotary. [4] Pursuant to the Sale of Land Under Execution Act, R.S.N.S. 1989, c. 409, a sale of the land by public auction was scheduled to be held by the Sheriff of Shelburne County on October 12, 2000, at noon. Mr. Martin sent a copy of the execution order and Notice of Public Auction to the respondent by registered mail on September 7, 2000. As required by the Sale of Land Under Execution Act, the auction was advertised by newspaper publication for five consecutive weeks. [5] On October 6, 2000, counsel for the respondent filed an application to stay the execution order pursuant to Civil Procedure Rule 53.13(1), which was scheduled to be heard in Supreme Court Chambers on October 12, 2000, the date set for the sale. [6] After hearing the submissions of counsel, Justice M. Heather Robertson ordered that the “...enforcement of the Execution Order...” be “...stayed absolutely...” and that the Sheriff cancel the sale scheduled for that day. In her brief decision, the Chambers judge indicated that s. 9(1) of the MLA requires “... that a civil proceeding be instituted by the state or entity and no such civil proceeding has been commenced in this jurisdiction ...” ISSUES [7] The appellant submits that the Chambers judge erred in law in staying the execution order and in the interpretation of s. 9 of the MLA. The respondent, by notice of contention, submits that there were two alternative grounds upon which the Chambers judge could have based the stay, that is, that the term “fine” as defined in the MLA, does not include a restitution order, or, that if the US order is included within the definition of “fine”, that it is not enforceable under s. 734.6 of the Criminal Code. It is convenient to deal with the issues raised by both parties by answering the following questions: 1. Is the restitution order included in the definition of “fine” in s. 9 of the MLA? 2. If so, is it enforceable pursuant to s. 734.6 of the Criminal Code? 3. Is it necessary to commence separate legal proceedings in Nova Scotia to enforce the restitution order? 4. Was the proper enforcement procedure engaged in this case? ANALYSIS [8] The application before the Chambers judge was made pursuant to Rule 53.13, which states: 53.13 (1) Where the court is satisfied that, (a) special circumstances exist that render it inexpedient to enforce an order for the payment or recovery of money; (b) the applicant is for any reason unable to pay any money payable or recoverable under an order; (c) for any other just cause; the court may order the issue or enforcement of an execution order to be stayed, either absolutely or for such period and subject to such conditions as the court thinks just. [9] The Chambers judge did not specify which subsection of Rule 53.13 she relied on to enter a stay, but it appears that it must have been (c), for other cause, that is, that the execution order should not have been issued without having first commenced civil proceedings. [10] As a preliminary point, it is noted that the appeal to this court is an appeal from an order made pursuant to Rule 53.13, not an appeal of an order made pursuant to the MLA. Therefore, the limitation period and the leave requirements contained in s. 35 of the MLA: 35. An appeal lies, with leave, on a question of law alone, to the court of appeal, within the meaning of section 2 of the Criminal Code, from any order or decision of a judge or a court in Canada made under this Act, if the application for leave to appeal is made to a judge of the court of appeal within fifteen days after the order or decision. are not applicable to this appeal. 1. Is the restitution order included in the definition of fine in s. 9 of the MLA? [11] Section 9 of the MLA states: 9. (1) When the Minister approves a request of a state or entity to enforce the payment of a fine imposed in respect of an offence by a court of criminal jurisdiction of the state or entity, a court in Canada has jurisdiction to enforce the payment of the fine, and the fine is recoverable in civil proceedings instituted by the state or entity, as if the fine had been imposed by a court in Canada. (2) No proceedings under subsection (1) shall be instituted more than five years after the fine was imposed. (3) For the purposes of this section, "fine" includes any pecuniary penalty determined by a court of criminal jurisdiction of a state or entity to represent the value of any property, benefit or advantage, irrespective of its location, obtained or derived directly or indirectly as a result of the commission of an offence. [12] The respondent argues that this definition of “fine” does not include the restitution order sought to be enforced in this case. The respondent claims that since the US court had the jurisdiction to impose a fine, and specifically determined not to impose a fine, stating as a reason the defendant’s inability to pay a fine, that the definition in s. 9 of the MLA should not be interpreted to include restitution. In this case, he says the restitution order cannot be considered to be a fine. The difficulty in accepting this submission, in my view, is that the “Statement of Reasons” of the US District Court is simply a printed form that has been filled in with “X” marks and figures, apparently in accordance with sentencing guidelines legislation. There are obviously other documents that are incorporated by reference into the sentencing decision that are not part of the record before us. For example, the form indicates that the court has adopted “... the factual findings and guideline application in the presentence report” and that the guideline range has been downwardly departed from “pursuant to USSG 2Q1.3(b)(3) and b(4), see app. notes 4 and 7". Without knowing the contents of the other documents, or other possible reasons for the restitution order, for example, whether there might have been an agreement or plea bargain, or some other technical or legal reason for the order of restitution as opposed to a fine, it would be inappropriate for this court to draw the inference suggested by the respondent. It is preferable for this court to look at the definition of “fine” in the MLA and determine whether, on its face, the restitution order in this case falls within the definition. [13] The Treaty entered into between Canada and the United States may be used as an interpretive aid to the MLA. In National Corn Growers Assn. v. Canada (Canadian Import Tribunal) (1990), 74 D.L.R. (4th) 449, (S.C.C.), Gonthier, J., in the context of whether a tribunal was wrong to have consulted the General Agreement on Tariffs and Trades when interpreting the Special Import Measures Act, said at p. 482: . . . I share the appellants’ view that in circumstances where the domestic legislation is unclear it is reasonable to examine any underlying international agreement. In interpreting legislation which has been enacted with a view towards implementing international obligations, as is the case here, it is reasonable for a tribunal to examine the domestic law in the context of the relevant agreement to clarify any uncertainty. Indeed where the text of the domestic law lends itself to it, one should also strive to expound an interpretation which is consonant with the relevant international obligations. [14] The treaty and the statute should both be interpreted in a fair and liberal manner so as to favour the fulfilment by Canada of its international obligations and the accomplishment by Parliament of its legislative objectives. See Attorney General of Canada v. Cuenca et al. (1995), 100 C.C.C. (3d) 320 (Que.C.A.) and R. v. Hasselwander, [1993] 2 S.C.R. 398 at p. 413. [15] In Re Russian Federation and Pokidyshev et al. (1999), 138 C.C.C. (3d) 321, (Ont.C.A.), Doherty, J.A. described the statutory scheme of the MLA commencing at § 14 as follows: [14] The arguments advanced on appeal turn largely on the interpretation of various sections of the Act. The process of statutory interpretation requires that the court look to the words of the statute, the scheme of the statute as a whole and the purpose and intention of Parliament when it passed the Act: R. v. Gladue (1999), 133 C.C.C.(3d) 385 at 397-98, 171 D.L.R. (4th) 385 (S.C.C.) [15] The purpose of this Act is clear. By 1988, when the Act was proclaimed, international crime had become a major problem. Criminals, especially sophisticated ones, used the limits imposed on police and prosecutors by national borders to facilitate their criminal schemes and avoid detection: United Kingdom v. Ramsden (1996), 108 C.C.C. (3d) 289 (Ont. C.A.) at 294-95, sub nom. United Kingdom v. James and Boyden, leave to appeal to S.C.C. refused May 1, 1997 [reported 114 C.C.C. (3d) vi]. In 1988, Canada had international obligations under various treaties and conventions to assist other states in the investigation and detection of crime, but had no domestic legislation in place to provide the necessary assistance and co-operation. The Act filled that void and must be read with that purpose in mind. [16] The Act addresses various kinds of help that Canada and foreign states can provide to each other in their efforts to combat international crime. This appeal is concerned with Part I of the Act which provides various means by which a foreign state can obtain information from sources in Canada to assist that foreign state in its investigation of criminal activity. [17] The overall scheme of Part I of the Act may be described in these terms. The foreign state seeking Canada's assistance must have a treaty with Canada as defined in the Act (s. 2). Alternatively, the Minister of Foreign Affairs for Canada must have entered into an administrative arrangement with the foreign state providing for assistance in the particular investigation being conducted by the foreign state (s. 6). If a treaty or administrative arrangement is in place, the foreign state may request the assistance of the Canadian authorities. Requests for assistance made by foreign states under the Act must be approved by the Minister of Justice (s. 11(1), s. 17(1)). If the Minister approves the request, a competent Canadian authority (in this case the Attorney General for Ontario) shall, where the request requires a court order for its implementation, make the necessary application to a superior court (s. 11(2), s. 17(2)). If the court grants the order and further orders the material sent to the foreign state, the material can only be sent if the Minister of Justice is satisfied that the foreign state will comply with the terms of the order (s. 16, s. 21). [16] The Treaty with the United States sets out the intention of the contracting states in the preamble as follows: The Government of Canada and the Government of the United States of America, desiring to improve the effectiveness of both countries in the investigation, prosecution and suppression of crime through cooperation and mutual assistance in law enforcement matters, have agreed as follows: . . . [17] The Treaty provides in Article VII that once a request is approved, the courts in the requested state shall have jurisdiction to issue orders necessary to execute the request. Item 2 of Article XVII states: The Parties shall assist each other to the extent permitted by their respective laws in proceedings related to the forfeiture of the proceeds of crime, restitution to the victims of crime, and the collection of fines imposed as a sentence in a criminal prosecution. [18] The Annex to the Treaty contains a list of the categories of offences to be included within its scope and “environmental protection” is a specified category. [19] Therefore, in the context that one of the intentions of the Treaty is to aid in the effectiveness of the suppression of crimes resulting in environmental damage, and another is to assist the US in proceedings related to restitution to victims of crimes, the question here is: does a fair and liberal interpretation of the definition of “fine” in s. 9 of the MLA include the restitution order against the respondent? [20] The definition begins by stating that “...“fine” includes any pecuniary penalty determined by a court of criminal jurisdiction of a state ...”. The order of the US court against the respondent readily falls within that segment of the definition. The amount ordered to be paid by the respondent is a pecuniary penalty and it was determined by a court of criminal jurisdiction. [21] The next part is somewhat problematic: “... to represent the value of any property, benefit or advantage, ... obtained or derived directly or indirectly as a result of the commission of an offence.” Some restitution orders would easily be caught by this phrasing, for example, an order requiring a defendant to pay to a state the amount he pocketed by defrauding the state. In that case, the penalty would directly represent the value of the benefit obtained as a result of the offence. Ordinarily in Canadian law, that order would not be considered to be a fine. Obviously, the definition is intended to be more inclusive. The order to pay the EPA $650,000 does not appear, on its face, to directly represent the value of a benefit obtained by the respondent as a result of the offence. As alleged by the appellant, it is more probably directly representative of the costs, or a portion of the costs, of cleaning up the contamination caused by the respondent. [22] The appellant submits that the respondent’s conduct provided him with either a direct or indirect benefit or financial advantage since he presumably saved money by not properly disposing of the waste products from his factory or by not having to personally pay to have the property decontaminated. The respondent replies that this is a strained interpretation of the section and that if Parliament had intended to include restitution orders it simply would have said: “ “fine” includes a restitution order”. It is submitted that the reason it did not is that orders for restitution are usually payable to individual victims of crime, not states or entities. [23] I agree with the appellant’s submissions that the s. 9 definition is broad enough to include the restitution order made in this case. Employing a liberal interpretation of s. 9(3), the order to pay the EPA can be characterized as a pecuniary penalty which indirectly represents the value of a benefit or advantage obtained by the respondent as a result of the commission of the environmental offences under the US Code. While Parliament could have easily included the word “restitution”, it likewise could have simply used the word “fine” in s. 9(1) and (2) without the broader inclusive definition in s. 9(3); or Parliament could have opted for a definition as contained in s. 716 of the Criminal Code: "fine" includes a pecuniary penalty or other sum of money, but does not include restitution. [24] I also accept the appellant’s explanation that the MLA was enacted not only to authorize assistance to the US and other countries with a similar legal system and language, but also countries such as Thailand, Peru, Korea and Israel, which have signed mutual assistance treaties with Canada, and as a result the definition of “fine” was specifically intended to include other varieties of criminal monetary penalties with which we may not be familiar. [25] I would answer the first question affirmatively - the order against the respondent is a “fine” as defined in s. 9 of the MLA. `` 2. Is the fine enforceable pursuant to s. 734.6 of the Criminal Code? [26] The effect of finding the restitution order in this case is included in the definition of “fine” in s. 9 of the MLA, is that the US order “... is recoverable in civil proceedings instituted by the state or entity, as if the fine had been imposed by a court in Canada.” [27] A fine imposed by a court in Canada is enforceable in civil proceedings pursuant to s. 734.6 of the Criminal Code, which provides: 734.6 (1) Where (a) an offender is in default of payment of a fine, or (b) a forfeiture imposed by law is not paid as required by the order imposing it, then, in addition to any other method provided by law for recovering the fine or forfeiture, (c) the Attorney General of the province to whom the proceeds of the fine or forfeiture belong, or (d) the Attorney General of Canada, where the proceeds of the fine or forfeiture belong to Her Majesty in right of Canada, may, by filing the order, enter as a judgment the amount of the fine or forfeiture, and costs, if any, in any civil court in Canada that has jurisdiction to enter a judgment for that amount. (2) An order that is entered as a judgment under this section is enforceable in the same manner as if it were a judgment obtained by the Attorney General of the province or the Attorney General of Canada, as the case may be, in civil proceedings. [28] The respondent appears to agree that if the US order had been a fine, not a restitution order, that s. 734.6 could be used to enforce the payment of it, but argues that since the US order is a restitution order, s. 741(1) of the Criminal Code, is the applicable section: 741. (1) Where an amount that is ordered to be paid under section 738 or 739 is not paid forthwith, the person to whom the amount was ordered to be paid may, by filing the order, enter as a judgment the amount ordered to be paid in any civil court in Canada that has jurisdiction to enter a judgment for that amount, and that judgment is enforceable against the offender in the same manner as if it were a judgment rendered against the offender in that court in civil proceedings. [29] The difference between the two sections is that pursuant to the former section, the Attorney General, after filing the order may enforce it as if it were a judgment in a civil proceeding, whereas in the latter, the person to whom the restitution is payable may obtain the judgment. The respondent submits that the EPA cannot take advantage of s. 741(1) because firstly, it does not have the benefit of the MLA since it is not a state or entity as defined in that Act, and secondly, the MLA does not apply to restitution orders. [30] The secondary argument of the respondent has been settled by the resolution of the first issue herein; the order in this case is a “fine”, as that term is defined in the MLA. With respect to the argument that the EPA is not a state or entity, I would agree that it would probably not be included within the definition in s. 2 of the MLA: “state or entity" means (a) a state, a province, state or political subdivision of the state, or a colony, dependency, possession, protectorate, condominium, trust territory or any territory falling under the jurisdiction of the state, that is a party to an agreement with Canada, or (b) an international criminal court or tribunal, the name of which appears in the schedule. However, the request for assistance pursuant to the Treaty in this case, according to the Minister’s approval of the request, was from the United States, and there is no evidence to the contrary. Assuming, without deciding, that a court may review the approval by the Minister of a request to enforce a fine pursuant to s. 9, to determine if the request was made by an appropriate state or entity, there is no basis to do so here. [31] I agree with the appellant’s contention that once it has been determined that the order of the US court is included within the definition of “fine”, s.734.6 of the Criminal Code applies. Section 9 of the MLA indicates that the foreign order is enforceable as if the fine had been imposed by a Canadian court. Clearly, that leads to the conclusion that Parliament intended that the s.734.6 procedure be utilized to enforce the payment of the fine. 3. Is it necessary to commence separate legal proceedings in Nova Scotia to enforce the payment of the US order? [32] The Chambers judge stated in her decision: . . . I believe that s. 9(1) of the Mutual Legal Assistance in Criminal Matters Act requires that a civil proceeding be instituted by the state or entity and no such civil proceeding has been commenced in this jurisdiction ... [33] Again, for convenience, the section is as follows: 9. (1) When the Minister approves a request of a state or entity to enforce the payment of a fine imposed in respect of an offence by a court of criminal jurisdiction of the state or entity, a court in Canada has jurisdiction to enforce the payment of the fine, and the fine is recoverable in civil proceedings instituted by the state or entity, as if the fine had been imposed by a court in Canada. [34] The Chambers judge did not make any explicit ruling that the US order is a fine as defined in the MLA. If she has implied that the order sought to be enforced is a fine, and that separate legal proceedings are required to enforce the payment of it, both counsel submit on the appeal that this is incorrect. The respondent would agree with the statement of the Chambers judge if she has assumed or implied that the order is not a fine as defined by s. 9 of the MLA, and therefore, as a restitution order payable to the EPA, not a state or entity as defined in the Act, it cannot be enforced without separate civil proceedings. [35] Having found that the order is a fine as defined in the MLA, and that s.734.6 of the Criminal Code is applicable, I would also conclude that no separate civil proceedings are required. Section 734.6 unambiguously states that the Attorney General may enforce an order for the payment of the fine by simply filing the order with a civil court having jurisdiction for that amount. Once filed, the order for the payment of the fine becomes a judgment enforceable in the same manner as a judgment in a civil proceeding. Nothing in that section suggests that a separate legal proceeding, commenced by an originating notice and statement of claim, is necessary. I would answer the third question in the negative. 4. Was the proper enforcement procedure engaged in this case? [36] As noted above, after having the US court order registered as a judgment in the Registry of Deeds in Shelburne County and then waiting one year because of the requirements of the Sale of Land Under Execution Act, (the Act) counsel had an execution order issued by the Prothonotary pursuant to Civil Procedure Rule 53.01. I would agree that to that point the procedure followed was proper. However, counsel maintained that although he gave notice of the sale by public auction by registered mail to the respondent as a courtesy, he did not consider that notice was required by the Act or Rules. Whether notice to the respondent is required is the aspect of the procedure that requires clarification. [37] Rule 53.02 states: (1) Unless the court otherwise orders, an execution order in Form 53.02A shall direct any sheriff within the effective period of the execution order or within such further time as the court orders, (a) to seize, accept as a receiver, hold and sell at public auction any property in which the judgment debtor has an interest, including any debt, rent, legacy, share, bond, debenture or other security, currency, wages, or other demand, due or accruing due at any time while the order is valid, whether in the possession or custody of the judgment debtor or other person and not exempt by law from seizure, as will satisfy in whole or in part the amount of the claim which the judgment creditor seeks to recover from the judgment debtor as stated in the execution order, and to disburse the proceeds thereof as provided by law; (b) to serve a true copy of the execution order on the judgment debtor or other person in possession of the property at the time of the seizure; . . . (e) where real property is seized under an execution order, to sell the real property as provided by the Sale of Land under Execution Act. [emphasis added] [38] The Act directs that the sale be conducted and advertised as follows: 11 (1) Where a judgment has been registered for one year the sheriff, on receipt of an execution issued on the judgment, without appraisement, shall proceed to sell the land bound thereby, or the portion thereof so directed to be sold. (2) The judgment creditor shall cause to be inserted by five consecutive weekly insertions preceding the day of sale, in one newspaper which is published, or if none is published, or if only one paper is published, and the proprietor thereof refuses to insert it at a reasonable rate, to be determined by the sheriff of the county in which the land to be sold is situate, such reasonable rate not to exceed the rates charged by the Royal Gazette for similar advertisements, in one which circulates, in the county in which the land is situated an advertisement containing a description of the land directed to be sold, stating that such land is to be sold under execution at the suit of the plaintiff or defendant, as the case may be, and the time and place fixed for such sale and having appended thereto the names of the sheriff and the solicitor of the judgment creditor. (3) Copies of the advertisement shall be posted up in the most public places of the city, town or settlement in which the land lies, and mailed, postage prepaid and registered, to each subsequent registered encumbrancer against said land, for at least twenty days before the time appointed for the sale. (4) At the time and place so fixed, the sheriff shall sell the land so advertised at public auction to the highest bidder. [39] Although the Act does not specifically require that notice by personal service of the sale be given to the judgment debtor, Rule 53.02, provides that before land can be sold under execution in accordance with the Act, it must be “seized” and if the land is either in the possession of the owner or vacant, unoccupied land, the owner must be served with a copy of the execution order at the time of seizure. If the land is in the possession of a person other than the owner, that person should be served with the execution order. If the land in this case is unoccupied, the respondent should have been served with a copy of the execution order. If necessary, an application may be made to the Supreme Court for an order for substituted service. CONCLUSION [40] The appeal should be allowed with costs to the appellant in the amount of $1,500.00. The US order is included in the definition of “fine” in s. 9 of the Mutual Legal Assistance in Criminal Matters Act. Payment of the order is enforceable pursuant to s. 734.6 of the Criminal Code. The stay of the execution order imposed by the Chambers judge should be set aside. A new execution order should be issued, the earlier one having expired further to Rule 53.03(1), and the sale of land under execution may thereafter proceed, after notice to the respondent as required by Rule 53.02 and publication of notice of public auction as required by the Sale of Land Under Execution Act. Roscoe, J.A. Concurred in: Freeman, J.A. Cromwell, J.A.