CITATION:
|
DATE: 20070530 |
DOCKET: C45601 |
COURT OF APPEAL FOR ONTARIO |
LABROSSE, SHARPE and ROULEAU JJ.A. |
BETWEEN: |
ATTORNEY GENERAL OF
|
Applicant (Respondent) |
and |
$29,020 IN CANADIAN CURRENCY, EXHAUST FAN, LIGHT BALLAST, LIGHT SOCKET (IN REM) and ROBIN CHATTERJEE |
Respondent (Appellant) |
James Diamond and Messod Boussidan for the appellant |
Robin K. Basu and James McKeachie for the respondent |
Paul Burstein and Louis P. Strezos for the intervener, The Criminal Lawyers’ Association |
Heard: May 15 and 16, 2007 |
On appeal from the judgment of Justice Ernest Loukidelis of the Superior Court of Justice, dated June 6, 2006, with reasons reported at [2006] O.J. No. 2236. |
BY THE COURT: |
[1] The
appellant appeals the judgment of Mr. Justice Loukidelis dated June 6, 2006,
allowing the forfeiture application by the Attorney General of Ontario (AGO)
of the items listed in the style of cause, under the Remedies for Organized
Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28
(“the Civil Remedies Act” or
“the CRA”). The judgment also dismissed the appellant’s constitutional challenge
to the Act as being ultra vires the
[2] On March 27, 2003, the police stopped a vehicle which was missing its front licence plate. The appellant was the only person in the vehicle. Following investigation, the appellant was arrested for breach of recognizance in connection with charges unrelated to this application. The police searched the vehicle incident to the arrest and discovered $29,020 in cash, and a light socket, a light ballast and an exhaust fan, items which are commonly used in indoor marijuana operations. Both the money and the equipment smelled strongly of marijuana, though no marijuana was found. The appellant was not charged with any drug- related offence because the police did not have sufficient information to do so.
[3] Subsequently, the AGO brought an application in rem for forfeiture of the cash and equipment under the Civil Remedies Act and in response the appellant argued that the CRA is ultra vires the province, violates ss. 7, 8, 9 and 11(d) of the Charter and questioned the validity of the particular order made under the CRA. The appellant only claimed a proprietary interest in the cash.
[4] In well-structured reasons, the application judge rejected the constitutional challenge and the Charter violations, and allowed the AGO’s application. For the following reasons, we would dismiss the appeal.
[5] The CRA was enacted in 2001 and took effect in April 2002. It contains five parts. Part I sets out the purpose of the Act. It provides:
The purpose of this Act is to provide civil remedies that will assist in:
(a) compensating persons who suffer pecuniary or non-pecuniary losses as a result of unlawful activities;
(b) preventing persons who engage in unlawful activities and others from keeping property that was acquired as a result of unlawful activities;
(c) preventing property from being used to engage in unlawful activities; and
(d) preventing injury to the public that may result from conspiracies to engage in unlawful activities.
Briefly stated, Part II deals with the preservation, forfeiture and distribution of proceeds of unlawful activity; Part III deals with the preservation and forfeiture of instruments of unlawful activity, as well as compensation to victims; Part IV deals with civil relief for conspiracies that injure the public; and Part V deals with general provisions including the standard of proof, proof of offences and the collection of information.
[6] The appellant argues that the motion judge erred in:
1) finding that the appellant lacked standing to challenge parts of the CRA;
2) his determination of the pith and substance of the CRA;
3) failing to classify the CRA as criminal law;
4) finding that the CRA’s intrusions into the criminal law are incidental to its purpose;
5) finding that the CRA does not violate s. 11(d) of the Charter;
6) finding that the CRA does not violate s. 8 of the Charter; and
7) allowing the application for forfeiture on its merits.
[7] The appellant puts into issue the ruling of the application judge that the appellant lacks standing to challenge certain parts and sections of the CRA.
[8] The application judge noted that it was agreed that the appellant could challenge Part II (forfeiture of proceeds of unlawful activity) and ss. 16 (standard of proof), 17 (proof of offences) and 18 (unlawful possession) of Part V of the CRA, but the AGO argued that the appellant lacked standing to challenge Parts III (forfeiture of instruments of unlawful activity) and IV (conspiracies), or s. 19 of Part V (collection of information).
[9] In dealing with this issue, the application judge, resting his analysis on the decisions of the Supreme Court of Canada in Kitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146 and MacKay v. Manitoba, [1989] 2 S.C.R. 357 concluded that Part IV and s. 19 of Part V of the CRA were not engaged at all on the facts of this case. The appellant has abandoned his claim of standing to challenge Part IV and s. 19 of the CRA on the basis that they have no link to this case.
[10] With respect to Part III, although it was engaged on the facts of the case, the application judge noted that none of the arguments focused on it and that the appellant had not argued against the forfeiture of the exhaust fan, light ballast and light socket. The appellant disavowed any ownership or other interest in these items and no item over which the appellant claims an interest is subject to forfeiture under Part III.
[11] The application judge recognized, on the basis of the decisions in Phillips v. Nova Scotia (Commission of Inquiry into the Westray Mine Tragedy), [1995] 2 S.C.R. 97 and Hy and Zel’s Inc. v. Ontario (Attorney General); Paul Magder Furs Ltd. v. Ontario (Attorney General), [1993] 3 S.C.R. 675, that courts should refrain from deciding constitutional issues that are unnecessary to the resolution of a case or when the parties are not directly affected. Although Parts II and III are similar in some respects, they are not identical. For example, Part II deals with the direct disgorgement of an unlawful gain, whereas a forfeiture under Part III is concerned with instruments of unlawful activity meaning property that is likely to be used for unlawful activity in the future and that does not necessarily involve disgorgement of a gain. Some instruments may be unlawful gains; some may not. The constitutional analysis of the two parts may differ and in fact many of the authorities cited by the appellant deal with instruments of unlawful activity rather than unlawful gain which is at issue in this case. All of the constitutional issues on this appeal can be disposed of without consideration of Part III.
[12] Further, the application judge was satisfied that refusing standing to the appellant would not have the effect of immunizing the challenged provisions, as he was confident that these provisions would be challenged by persons directly affected and, in fact, constitutional challenges to Part III are currently pending.
[13] Finally, the application judge declined to grant standing under his residuary discretion (Canadian Egg Marketing Agency v. Richardson, [1998] 3 S.C.R. 157) because the challenged provisions had not been fully argued on the merits or under the Big M Drug Mart exception (R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295) on the basis that the appellant was not facing criminal charges.
[14] In our view, the application judge was correct in refusing the appellant standing to challenge certain parts of the CRA. We agree with his conclusions that the challenged provisions are not necessary to the resolution of the case, that part of the CRA is not engaged on the facts of the case and that the refusal of standing does not have the effect of immunizing the challenged provisions. We also see no error in the exercise of his discretion.
[15] At the outset of this analysis, it is useful to bear in mind certain factors that are relevant to the determination of this issue.
[16] First, as the application judge noted, provincial legislation is presumptively valid and the party seeking to challenge the constitutionality of a law bears the burden to establish a breach. Professor Hogg explains that a legal consequence of this “presumption of constitutionality” is that in choosing between two competing, plausible characterizations of the law, the court should normally choose the one that would support the law’s validity: Peter W. Hogg, Constitutional Law of Canada, looseleaf (Scarborough: Thomson Carswell, 1992) at s. 15.5(i).
[17] Second,
again as the application judge noted, the Attorney General of Canada has
not intervened in this case. In
[18] Third,
the
[19] Against this backdrop, we turn to the issues.
[20] The application judge correctly noted that the first step in the assessment of a law’s validity under ss. 91 and 92 of the Constitution Act, 1867 requires a determination of the true purpose or “pith and substance” of the law. The application judge examined the purpose clause (Part I) in the CRA, the operative provisions of the CRA and regulations, as well as the extrinsic material surrounding its passage. The application judge rejected the appellant’s submission that the purpose of the CRA is to punish offenders by seizing and forfeiting their property. He found that the true purpose of the legislation is, as set out in Part I of the CRA, to require the disgorgement of financial gains obtained through unlawful activities, to compensate victims of crime, and to suppress the conditions that lead to unlawful activities by removing the financial incentives for engaging in such behaviour.
[21] We agree with the application judge’s assessment of the pith and substance of the CRA. In our view, there is no basis on this record to support the submission that the CRA is a “colourable” attempt to legislate in relation to criminal law. We can see nothing that would justify going behind the purposes stated in Part I of the CRA. There is nothing in the details of the scheme of the CRA or in the manner in which that scheme operates to suggest that the purpose of the CRA is other than those stated purposes. Nor do we see any merit to the appellant’s submission that the true purpose of the CRA is to punish offenders. As addressed later in these reasons, forfeiture proceedings under the CRA do not rest upon or even involve an allegation that a named individual has committed an offence. Forfeiture proceedings do not require or result in a conviction or finding of guilt or wrongdoing by a named party. The CRA is aimed squarely at the question of the forfeiture of property obtained through unlawful activity and its eventual distribution to the victims of crime and others specified in the regulations, not the punishment of offenders.
[22] The
application judge noted that in the Reference re: Firearms Act (
[23] The CRA does not define or create any offence. It has nothing to do with the identification, charging, prosecution, conviction or punishment of the offender. It does not seek to impose a penalty, fine or other punishment and does not provide for imprisonment. There is no stigma associated with a civil forfeiture of property order sufficient to constitute a punishment.
[24] As the application judge pointed out, this is not a case like R. v. Westendorp, [1983] 1 S.C.R. 43, where the impugned legislation created a specific new prohibition (being on a street for the purpose of prostitution). Rather, the CRA simply provides that where an offence has been committed under another statute, the proceeds or instruments of that offence may be forfeited.
[25] We do not accept the submission of the intervener the Criminal Lawyers’ Association that the forfeiture of ill-gotten gains should be classified as falling exclusively within s. 91(27), the head of federal legislative power in relation to criminal law. The CRA deals with (1) the civil and property law consequences of unlawful activity; (2) the compensation of victims of crime; and (3) the suppression of conditions likely to produce crime. For the following reasons, we conclude that these are all matters that fall within the province’s power to legislate under s. 92(13) in relation to property and civil rights in the province and s. 92(16) in relation to matters of a merely local or private nature in the province.
[26] The civil and property law consequences of unlawful activity fall squarely within provincial power under s. 92(13) in relation to “property and civil rights”. There are well-established, long-standing principles of common law that a wrong-doer cannot profit from his or her own wrong and that there is no title to goods or property illegally obtained. It follows, therefore, that legislative competence to modify or extend these rules of property law falls within provincial legislative competence. Simply put, legislation providing for the property rights to and forfeiture of the proceeds of unlawful activity is legislation in relation to rights of property within the province.
[27] When
classifying the CRA forfeiture scheme, the application judge correctly applied
the Supreme Court of Canada’s decision in Martineau v.
This process thus has little in common with penal proceedings. No one is charged in the context of an ascertained forfeiture. No information is laid against anyone. No one is arrested. No one is summoned to appear before a court of criminal jurisdiction. No criminal record will result from the proceedings.
We do not accept the appellant’s submission that Martineau can be distinguished on the basis that the forfeiture provisions at issue there were linked directly to the enforcement of the Customs Act. We fail to see why or how the fact that the CRA forfeiture provisions are not linked to the enforcement of any particular act renders them any less civil in nature. They are linked to the achievement of the Act’s stated purposes, purposes that are within the province’s constitutional domain.
[28] We note that in Walsh v. Director of the Assets Recovery Agency, [2005] N.I.C.A. 6 at para. 27, the Northern Ireland Court of Appeal came to the same conclusion as Martineau when determining whether civil forfeiture provisions complied with the procedural protections accorded to persons charged with an offence under the European Convention on Human Rights and Fundamental Freedoms:
The appellant is not charged with a crime. Although it must be shown that he was guilty of unlawful conduct in the sense that he has acted contrary to the criminal law, this is not for the purpose of making him amenable as he would be if he had been convicted of crime. He is not liable to imprisonment or fine if the recovery action succeeds. There is no indictment and no verdict. The primary purpose of the legislation is restitutionary rather than penal.
[29] Compensation of victims of crime is also a matter of property and civil rights in the province. In R. v. Zelensky, [1978] 2 S.C.R. 940, the Criminal Code restitutionary provisions were upheld as valid federal legislation, but only because they were tied to the sentencing process. The clear implication of Zelensky is that it is competent for the province to enact legislation providing for a civil process aimed at compensation of victims of crime: Hogg, supra, at s. 18.11(b). We note as well that it has been held that federal legislation relating to the detention of property seized in relation to criminal proceedings “does not preclude recourse to the plenary jurisdiction” of a provincial superior court where the proper “legal substratum” of property rights and remedies can be determined: R. v. Raponi, [2004] 3 S.C.R. 35 at paras. 17 and 33. Parliament itself has made it clear that civil remedies for criminal offences are to be accommodated. See Criminal Code, s. 11: “No civil remedy for an act or omission is suspended or affected by reason that the act or omission is a criminal offence.”
(iii) Suppression of conditions likely to favour the commission of crime
[30] It
is well established that the suppression of conditions likely to favour the
commission of crimes falls within provincial competence: see Bedard v.
Dawson, [1923] S.C.R. 681 at 684 per Duff J.; Attorney General for
[31] The application judge accepted that the CRA may intrude into some areas that can normally be in the domain of the criminal law, namely, promoting public peace, order, security, health and morality. The application judge found, however, that while the CRA does so, these intrusions are merely incidental to the statute’s valid provincial purposes and do not render the CRA ultra vires. We agree with this analysis
[32] In our view, to the extent that the CRA incidentally affects matters traditionally inhabited by the criminal law, it does so well within the bounds of what Dickson C.J.C. described in General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641 at 669 as the “overlap of legislation [that] is to be expected and accommodated in a federal state.” See also the Firearms Reference, supra, at para 26:
Laws mainly in relation to the jurisdiction of one level of government may overflow into, or have “incidental effects” upon, the jurisdiction of the other level of government. It is a matter of balance and of federalism: no one level of government is isolated from the other, nor can it usurp the functions of the other.
[33] The matter of proceeds of crime may have a federal criminal law “aspect”. However, it does not constitute a “watertight compartment” into which provincial legislation, approaching the issue from a valid provincial “aspect”, cannot intrude. It is, to use the language of Dickson C.J.C. in Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), [1987] 2 S.C.R. 59 at 65, a “legislative subject matter that can be said to have a ‘double aspect’, so that viewed in one light the subject falls within the legislative competence of Parliament and, viewed in another light, within the legislative competence of a provincial legislature”. There are several examples of provincial legislation that deal with the civil consequences of criminal acts: see Absconding Debtors Act, R.S.O. 1990, c. A.2; Fraudulent Conveyances Act, R.S.O. 1990, c. F.29; Insurance Act, R.S.O. 1990, c. I.8, ss. 233 and 385; Land Titles Act, R.S.O. 1990, c. L.5, ss. 155-157.
[34] We have already identified the provincial “aspects” that ground the CRA within the grant of legislative power to the province under s. 92: disgorgement of ill-gotten gains, compensation for victims of crime and the suppression of conditions likely to produce crime.
[35] The Criminal Lawyers’ Association submits that the CRA creates new civil consequences for unlawful acts. This, they argue, will complicate plea bargaining by accused persons as it will often be impossible for the accused to know what civil consequences may flow from such a plea. While this may be true, uncertainty as to the civil consequences of a guilty plea has always existed. Although the CRA has created a new mechanism which, in some cases, will expose an accused to additional civil consequences, this is within the province’s sphere of authority and does not frustrate any federal criminal law purpose.
[36] We note finally that no issue arises on the facts of this case as to any conflict between the CRA and federal legislation such as the Criminal Code’s forfeiture provisions. Accordingly, we leave for another day the question of the application and operation of the federal paramountcy doctrine to resolve any such conflicts.
[37] Accordingly, we dismiss all grounds of appeal relating to the application judge’s analysis of the challenge to the CRA as ultra vires the province.
[38] Before the application judge, the appellant argued that the CRA violates ss. 7, 8, 9 and 11(d) of the Charter. The appellant has abandoned the challenge to ss. 7 and 9. The intervener submits that s. 8 is not violated and does not address s. 11(d).
[39] The appellant argues that the CRA violates the presumption of innocence guaranteed by s. 11 because, under the CRA, the finding that an offence has been committed is made on a balance of probabilities. He further contends that the CRA places a reverse onus on a person by having to establish that he or she is the legitimate owner of the property.
[40] Section 11 applies to “any person charged with an offence”. In R. v. Wigglesworth, [1987] 2 S.C.R. 541, Wilson J. established that s. 11 would apply either if the nature of the proceedings was criminal or quasi-criminal, or if the proceedings would result in true penal consequences. The proceedings brought under the CRA do not fit either description.
[41] First, proceedings brought under the CRA are not criminal in nature. The Supreme Court established in R. v. Shubley, [1990] 1 S.C.R. 3, that it is not the nature of the underlying act that must be considered, but the nature of the proceedings. This is because an act can give rise to multiple legal consequences. As noted above, in Martineau, supra, the Supreme Court held that forfeiture proceedings under the Customs Act were not criminal in nature.
[42] Second, proceedings brought under the CRA do not result in “true penal consequences”, defined in Wigglesworth at 561 as “imprisonment or a fine which by its magnitude would appear to be imposed for the purpose of redressing the wrong done to society at large”. It is clear that an application for forfeiture cannot result in imprisonment. Nor is it tantamount to a fine. In Martineau, supra, at para. 62, Fish J. stated that civil forfeiture unlike a fine, does not take into account principles of sentencing. He further noted, at para. 63, that forfeiture proceedings are in rem, meaning that “the guilt or innocence of the owner of the forfeited property is irrelevant.” The same can be said of proceedings brought under the CRA. In the present case, forfeiture of the property was not dependent on a finding that the appellant had engaged in unlawful activity; the AGO only had to establish that the property represented the proceeds or instruments of unlawful activity.
[43] Finally, as noted above, a successful application for forfeiture under the CRA does not carry the stigma associated with a criminal conviction.
[44] Therefore, the appellant is not a “person charged with an offence” and s. 11 of the Charter does not apply.
[45] We agree with the submission of the Criminal Lawyers’ Association and the respondent that, on the facts of this case, no section 8 issue arises and that the issue of whether s. 8 is engaged in certain circumstances is best left to be determined in another case.
(a) The merits
[46] In our view, the totality of the evidence in support of the application was overwhelming:
· the appellant’s vehicle was missing a front plate; he explained that he had lost it in an accident, yet there were no holes or mounts to indicate that a plate had ever been mounted;
· his licence was under suspension and he was in breach of recognizance;
· he said the cash belonged to his sister; then he did not know where it came from; he did not know to whom it belonged; he did not know how such a large amount of cash had gone into his vehicle; and the money was his savings that he was transporting from his girlfriend’s house in Ottawa;
· he was an unemployed student and could not produce documentation as to the source of the cash;
· he had won part of the cash at the casino, but did not consent to the release of the casino records;
· the equipment seized is often used in indoor marijuana grow operations;
· drug dealings are a cash business;
· he was driving a car with cash and marijuana growing equipment;
· the appellant, his car and the equipment all smelled of marijuana;
· the mix of denominations of the cash is consistent with the money being the proceeds of trafficking;
· the equipment was not his, but he declined to give the name of its owner.
[47] Numerous factors, enumerated above, seriously undermined the credibility of the appellant.
[48] In allowing the forfeiture application, the application judge accepted the uncontradicted evidence of the police that the light socket, light ballast and exhaust fan are all items commonly used in marijuana grow operations, and therefore fall within the definition of instruments of unlawful activity.
[49] With respect to the cash, the application judge properly found that the onus of proving that the money constituted proceeds of unlawful activity rested with the Crown. On the facts before him, the application judge found that the appellant’s explanations as to how he acquired the money were not credible. The application judge rejected those explanations and was satisfied, on a balance of probabilities, that the money constituted proceeds of unlawful activity, that activity being the dealing in or growing of marijuana.
[50] The appellant argues that the application judge then improperly shifted the onus of proof onto the appellant to show that he was the “legitimate owner” pursuant to the CRA. We disagree. The finding that the money constituted proceeds of unlawful activity necessarily involved rejecting the appellant’s explanation as to how he allegedly became the “legitimate owner.” It was open to the trial judge to prefer the evidence of the police officers over the evidence of the appellant and to find that the explanations regarding the origin of the cash were not credible.
[51] No palpable and overriding error on the part of the application judge has been identified.
[52] The appellant failed to raise this issue at the hearing of the application after having been made aware of the potential for conflicts in the evidence by counsel for the AGO, who invited counsel for the appellant in September 2005 to consider whether there should be a trial of issues. At that time, the appellant’s counsel was already aware of this Court’s decision in Personal Service Coffee Corp. v. Beer (2005), 256 D.L.R. (4th) 466, on which he was counsel and upon which he now relies in arguing for a trial of an issue.
[53] In the rather unusual circumstances of this case, it is our view that the appellant gave up any right to raise this issue. He made a tactical decision to proceed with the application on the merits and he is stuck with this decision. To use the vernacular, he should not be allowed a second kick at the can.
[54] For the reasons stated above, the appeal is dismissed. The application judge found that this was a test case and that, as a result, there should be no order as to costs. We are of a similar view and make no order as to costs.
“J.M. Labrosse J.A.”
“Robert J. Sharpe J.A.”
“Paul Rouleau J.A.”
RELEASED: May 30, 2007