Date: 20050203
Docket: IMM-3860-04
Citation: 2005 FC 169
BETWEEN:
MALIK M. DHANANI
Applicant
and
THE MINISTER OF
CITIZENSHIP AND IMMIGRATION
Respondent
[1] Malik Dhanani is a citizen of Pakistan. While in the United States on a work permit, he pleaded guilty to a fraud charge. After serving a short prison sentence, he voluntarily left the U.S. and came to Canada where he has sought refugee status.
[2] The Immigration officer was of the view that he was inadmissible on the grounds of serious criminality and reported to the Minister. The Minister, agreeing with the report, referred it to the Immigration and Refugee Board. The Board found Mr. Dhanani inadmissible for having committed an offence in the United States which, if committed in Canada, would have constituted an offence under the Criminal Code punishable by a maximum term of imprisonment of at least 10 years. This is the judicial review of that decision.
[3] What Mr. Dhanani did in the United States is not in doubt. The debate is limited to whether the crime committed in the United States would have been a crime in Canada. Mr. Dhanani submits that, based on the record under review, his actions would not have amounted to a crime in Canada at all. In my view, he is right.
[4] This is what he did. In order to buy a convenience store and gas station for US$550,000, he applied for a $435,000 loan, to be guaranteed by the Small Business Administration. In his loan application papers he deliberately misstated his net worth. He said he was worth $350,000 but the truth was more like $320,000. The loan was secured by a mortgage. Although not relevant, the loan was eventually paid in full.
GOVERNING SECTIONS OF IRPA
[5] The case is governed by Divisions 4 and 5 of Part 1 of the Immigration and Refugee Protection Act, SC 2001, c. 27. These Divisions deal with inadmissibility, loss of status and removal. When an Immigration officer is of the opinion that a foreign national, such as Mr. Dhanani, is in Canada but is inadmissible, he or she may prepare a report to the Minister under section 44. If the Minister is of the opinion that the report is well-founded, he may refer it to the Immigration Division of the Immigration and Refugee Board for an admissibility hearing. That is what happened in this case. Section 36(1)(c) provides:
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36. (1) A permanent resident or a foreign national is inadmissible on grounds of serious criminality for
(c) committing an act outside Canada that is an offence in the place where it was committed and that, if committed in Canada, would constitute an offence under an Act of Parliament punishable by a maximum term of imprisonment of at least 10 years. |
36. (1) Emportent interdiction de territoire pour grande criminalité les faits suivants_:
c) commettre, à l'extérieur du Canada, une infraction qui, commise au Canada, constituerait une infraction à une loi fédérale punissable d'un emprisonnement maximal d'au moins dix ans. |
[6] It was found that Mr. Dhanani's activities fell under section 36(1)(c) and he was ordered deported. However, that deportation order is only enforceable once there is a final disposition of his refugee claim.
MR. DHANANI'S AMERICAN CRIME
[7] Mr. Dhanani entered a guilty plea in Texas on a charge pursuant to section 645(a) of the United States Code of having made a false statement for the purposes of obtaining a loan under the Small Business Administration. The maximum penalty was two years imprisonment and a $5,000 fine. He was sentenced to two months in prison, levied a $5,000 fine and given one year probation. He admitted that when he applied for the loan he declared $30,000 of assets he knew he did not have. His net assets were some $320,000, while he indicated that he had $350,000.
[8] According to the pre-sentence report, he applied to the Small Business Administration for it to guarantee a loan through a Texas bank in the amount of $435,000. The loan was to assist in buying a property, in the form of a convenience store/gas station, in the amount of US$550,000. He made a down payment of $115,000, and the loan covered the balance. It would seem that the loan was secured by a mortgage on the property.
[9] Section 645(a) of the U.S. Code provides:
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Whoever makes any statement knowing it to be false, or whoever willfully overvalues any security, for the purpose of obtaining for himself or for any applicant any loan, or extension thereof by renewal, deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, or for the purpose of influencing in any way the action of the Administration, or for the purpose of obtaining money, property, or anything of value, under this chapter, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both. |
THE CANADIAN OFFENCE
[10] The Minister stipulated that the Canadian equivalent is section 362(1)(c)(iii) of the Criminal Code which provides:
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362. (1) Every one commits an offence who ...
(c) knowingly makes or causes to be made, directly or indirectly, a false statement in writing with intent that it should be relied on, with respect to the financial condition or means or ability to pay of himself or any person, firm or corporation that he is interested in or that he acts for, for the purpose of procuring, in any form whatever, whether for his benefit or the benefit of that person, firm or corporation, ... (iii) the making of a loan, ... |
362. (1) commet une infraction quiconque, selon le cas: [...] c) sciemment fait ou fait faire, directement, soit par l'intermédiaire d'un contrat obtenu par un faux semblant, obtient une chose à l'égard de laquelle l'infraction de vol peut être comise ou le fait livrer à une autre personne;
[...]
(iii) soit l'octroi d'un prêt, [...] |
[11] Anyone who commits such an offence is guilty of an indictable offence and liable to a term of imprisonment not exceeding 10 years if the value of what is obtained exceeds $5,000.
[12] It is obvious that the U.S. offence is much broader in scope than the Canadian offence. Although Mr. Dhanani dissected the two sections in more detail than I have to, in the United States the false statement could be oral. In Canada, it must be in writing. In the United States it must be made "for the purpose of obtaining ... any loan". In Canada, it must be made "with intent that it should be relied on, with respect to the financial condition...". It is not necessary for me to decide whether "for the purpose" and "with intent that it should be relied on" are one and the same or not. However, the U.S. misrepresentation might not be limited to one's financial condition or means or ability to repay. One might, as Mr. Dhanani is alleged to have done in respect of his Texas application for a liquor license, misrepresent one's citizenship.
[13] Nevertheless, the written text of section 645 of the U.S. Code covers the narrower, more limited, text of section 362(1)(c)(iii) of the Criminal Code.
[14] The real difference is in the case law. Mr. Dhanani takes the position that in the United States it is not necessary to establish that the lender relied upon the fraudulent misrepresentation, while in Canada the false representation must be "operative", that is to say there must be a causal relationship between the misrepresentation and the loan. It is submitted that there is no evidence in the record to establish the element of operability.
THE DECISION UNDER REVIEW
[15] The Board accepted in evidence the United States Code, the pre-sentence report, and various American cases. Section 173 of IRPA provides the Immigration Division of the Board is not bound by legal or technical rules of evidence and may base its decision on evidence it considers credible or trustworthy.
[16] There was nothing untoward in establishing this record, even though foreign law would have to be proved before a Canadian court in a more formal manner. The Board member found as a fact, based on the decision of U.S. v. Condon 132 F (3d) 653 11th Circ., 1998, United States Court of Appeals, that no jury instruction was necessary on a section 645(a) USC offence on materiality because it was not an element of the offence charged. As far as I am concerned, "materiality", "operability" and "detrimental reliance" mean one and the same.
[17] The Board member also seems to have accepted that "operability" had to be established in order to obtain a Canadian conviction. In her opinion, there were reasonable grounds to believe that the bank relied on the information provided in Mr. Dhanani's false statement. This, in my view, is the only point to this review. She said:
As to the question of operability, I find there are reasonable grounds to believe that the bank relied on the information provided in Mr. Dhanani's false statement which was part and parcel of the supporting documentation for the loan application. Mr. Dhanani falsified the information knowingly and fraudulently, which is sufficient for me to find there are reasonable grounds to believe he did so with the intent that the information be relied on. The bank did grant the loan of $435,000 and parted with the money. According to the pre-sentence report, the bank, according to certain guidelines, ran the risk of sustaining a loss estimated at $252,905.39, although I understand that Mr. Dhanani subsequently reimbursed the bank. According to the pre-sentence report, he was remorseful that he falsified the information, and did so in order to obtain the loan.
EQUIVALENCY OF CRIMINAL OFFENCES
[18] In Hill v. Canada (Minister of Employment and Immigration) (1987), 73 N.R. 315 (C.A.), (1987), 1 Imm. L.R. (2d) 1, Urie J.A. described how equivalency could be determined.
... - [F]irst, by a comparison of the precise wording in each statute both through documents and, if available, through the evidence of an expert or experts in the foreign law and determining therefrom the essential ingredients of the respective offences. Two, by examining the evidence adduced before the adjudicator, both oral and documentary, to ascertain whether or not that evidence was sufficient to establish that the essential ingredients of the offence in Canada had been proven in the foreign proceedings, whether precisely described in the initiating documents or in the statutory provisions in the same words or not. Third, by a combination of one and two.
[19] The Board followed Urie J.A.'s analysis perfectly.
[20] There are a number of cases which deal with equivalency of criminal offences committed in Canada, or elsewhere. Most were decided under section 19 of the Immigration Act, R.S.C. 1985, c. I-2, now repealed. Nuances had developed in the technical dissection of foreign and Canadian offences into "elements" and "defences". In 1997, the Federal Court of Appeal answered questions certified by the Trial Division which clarified the concept of equivalency. In Li v. Canada (Minister of Citizenship and Immigration), [1997] 1 F.C. 235, Strayer J.A. declared the law as follows at paragraphs 17 and 18:
17. Nor in my view does a proper interpretation of subparagraph 19(2)(a.1)(i) of the Immigration Act require such a technical dissection of foreign and Canadian offences into "elements" and "defences". The institutional setting must be kept in mind. Such determinations of equivalency must be made by an adjudicator in a quasi-judicial proceeding. It is hardly to be expected that he or she is to make such fine distinctions in Canadian, much less foreign, criminal law. The purpose of the provision is obviously to exclude from Canada persons who have done things abroad, for which they have been convicted there, which Canada regards by its laws as constituting serious misconduct. This purpose would not, for example, be served by a rule that two offences are not equivalent because the requirement of a particular intent in the foreign law is treated as an element of the offence, whereas in Canadian law its lack is treated as a defence.
18. I believe that it would be most consistent with the purposes of the statute, and not inconsistent with the jurisprudence of this Court, to conclude that what equivalency of offences requires is essentially the similarity of definitions of offences. A definition is similar if it involves similar criteria for establishing that an offence has occurred, whether those criteria are manifested in "elements" (in the narrow sense) or "defences" in the two sets of laws. In my view the definition of an offence involves the elements and defences particular to that offence, or perhaps to that class of offences. [See Note 19 below] For the purpose of subparagraph 19(2)(a.1)(i) of the Immigration Act it is not necessary to compare all the general principles of criminal responsibility in the two systems: what is being examined is the comparability of offences, not the comparability of possible convictions in the two countries.
STANDARD OF REVIEW
[21] The standard of review is laid out in section 33 of IRPA:
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The facts that constitute inadmissibility under sections 34 to 37 include facts arising from omissions and, unless otherwise provided, include facts for which there are reasonable grounds to believe that they have occurred, are occurring or may occur. |
Les faits - actes ou omissions - mentionnés aux articles 34 à 37 sont, sauf disposition contraire, appréciés sur la base de motifs raisonnables de croire qu'ils sont survenus, surviennent ou peuvent survenir. |
[22] I approach section 33 of IRPA with Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226 and Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, in mind. The state of the Canadian Criminal Code is a matter of law. The standard of review is correctness. Findings of fact are not disturbed unless patently unreasonable. It is not necessary, as it turns out, to decide in this case, but section 33 may well subject fact finding to the stricter reasonableness simpliciter review. What we are really dealing with here is a mixed question of fact and law, the application of the Criminal Code to actions carried out in Texas. These questions are subject to a reasonableness simpliciter review.
[23] There can be no doubt the Board was correct in finding that in Canada the victim had to place detrimental reliance on the fraudulent misrepresentation. In Re William Staggs (1912), 20 C.C.C. 310 (Alta. S.C.), Walsh J. held:
... Now the charge as alleged against this man is what is commonly known as obtaining money by false pretences and it is a material ingredient in that offence according to the law of Canada that the person who has been wronged must have parted with his money in reliance upon the truth of the representations made to him by the accused. I do not think it is sufficient in this jurisdiction, at any rate to simply prove that the false representation was made and that the person making it got money from the person to whom it was made. I think the connecting link must be forged between these two ingredients by shewing it was upon the strength of the representation thus falsely made that the person wronged was induced to part with his money.
[24] The Board's finding that "operability" or detrimental reliance was not an essential element of the American offence was reasonable.
[25] However, it was unreasonable for the Board to infer that the false representation was operable. No documentation was obtained from the Small Business Administration. Its taste for risk was not analysed. The Board was right in assuming Mr. Dhanani intended the representation to be acted upon, but that does not mean that it was.
[26] The fact that the loan was made does not prove reliance. The fact he was remorseful is neither here nor there.
[27] The Board looked at the pre-sentence report and said "the bank, according to certain guidelines ran the risk of sustaining a loss estimated at $242,905.39 ".
[28] If there is a link between the representation and the loan, the only place in which it can be found in the record is in the guidelines. One might assume that if Mr. Dhanani had not puffed up his assets by $30,000, the loss would still have been about $222,000. The $252,905.39 was the balance owing at the time of the pre-sentence report. No further payment was voluntarily expected because Mr. Dhanani was deportable and had not made arrangements to sell the business; rather, he was considering leasing it. The rather surprising conclusion:
14. ... Therefore, the SBA expects to sustain a loss of $252,905.39. It is reasonable to believe the defendant will not honor his loan contract once he has leased the company and been deported. The only way the SBA can expect to recover the full loss amount is through the sale of the business.
15. The defendant reported he plans to lease or sell the business in order to pay full restitution. If the defendant sells the business prior to sentencing, the guideline calculations will be amended accordingly.
[29] There is nothing whatever in the record to even suggest the Small Business Administration as a secured creditor would not have guaranteed the loan anyway. Therefore, there is no basis for concluding the acts committed outside Canada by Mr. Dhanani would have, if committed in Canada, constituted an offence punishable by a maximum term of imprisonment of at least 10 years. Consequently, I will be allowing the application and ordering that the matter be referred back to the Immigration Division of the Immigration and Refugee Board for a re-hearing before a different Member.
[30] The respondent has until 9 February 2005 to propose a certified question pursuant to section 74 of IRPA, by writing to the Montreal Registry. The applicant has until 15 February 2005 to reply in the same manner.
"Sean Harrington"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: IMM-3860-04
STYLE OF CAUSE: MALIK M. DHANANI
AND
THE MINISTER OF CITIZENSHIP
AND IMMIGRATION
PLACE OF HEARING: MONTREAL, QUEBEC
DATE OF HEARING: JANUARY 25, 2005
REASONS FOR ORDER
AND ORDER : HARRINGTON J.
DATED: FEBRUARY 3, 2005
APPEARANCES:
Herbert M. Brownstein
Steven Slimovitch FOR APPLICANT
Sherry Rafai Far FOR RESPONDENT
SOLICITORS OF RECORD:
Brownstein, Brownstein & Assoc.
Montreal, Quebec FOR APPLICANT
John H. Sims, Q.C.
Deputy Attorney General of Canada FOR RESPONDENT