R. v. Lu, 2021 ONCJ 563

CITATION: R. v. Lu, 2021 ONCJ 563

COURT FILE No.: St. Catharines

DATE: 2021.11.06

ONTARIO COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

— AND —

JAN JUAN LU

HUI ZHANG

(ex parte)

Before Justice Fergus ODonnell

Reasons on an application for interlocutory sale of seized property, released on 6 November, 2021

Myfanwy Smith for the Crown

Fergus ODonnell J.:

Overview

1. This was an in-basket application by the Attorney General of Canada for orders under s. 7 of the Seized Property Management Act permitting¹ the sale of property that had been seized under the Cannabis Act because that property was perishable or rapidly depreciating.
2. On reviewing the material, I notified counsel for the Attorney General that I was disinclined to make the orders sought, not because I disapproved of the disposal of the detained assets,² but rather because I saw no legal basis requiring the court’s imprimatur. I offered the opportunity to make either oral or written submissions on the matter and after receipt and review of written materials I declined to issue the orders sought because the structure of the Act does not require an order in these circumstances.

The Factual Background

3. The facts are simply stated:
   1. Search warrants under the Cannabis Act were executed on 13 August, 2020.
   2. A massive amount of apparently illicit growing marihuana and a very large amount of processed marihuana were seized, along with fifty thousand dollars in cash.
   3. Six pallets of specialized growing soil were seized as offence-related property. This soil had a best-before date.
   4. At the time of seizure, the soil was five months from the end of its shelf life.
   5. At the time of the application, the soil was two months from the end of its shelf life.
   6. The soil was to be disposed of at auction once a court order was obtained. The auction would take time to organize.
   7. A “management order” had been obtained in relation to the soil (and much other offence-related property from the same seizure), on 14 October, 2020.

The Structural and Legal Background

4. A lot of crimes are committed for greed and involve the illicit acquisition of money. Some crimes cannot be committed without the use of property or equipment. The illicit cultivation of marihuana is one crime that generates a lot of money and involves the use of a lot of equipment or real property. As in the present case, when search warrants are executed it is common for money and equipment, categorized as “offence-related property”, to be seized, and sometimes for real properties and financial instruments to be restrained. It is at this point that the Seized Property Management Act (“SPMA”) becomes relevant.
5. While the police can be very good at investigating offences and at securely storing certain types of seized property (cash, weapons and the like, for example), how to move, store, maintain and dispose of all sorts of other things that are used in or derived from all manner of criminality is not the sort of thing that is taught at police college, nor is it likely to be the best use of police time and resources. It is certainly not the core business of police services. Operating on the theory that things should be done by people with the best combination of skills and resources to do them, the SPMA allows for the transfer of items such as offence-related property or proceeds of crime to the Seized Property Management Directorate, a unit under the direction of the Minister of Public Works and Government Services of Canada. That transfer of responsibility is effected by an application under s. 6 of the SPMA and an order under s. 7 thereof.
6. Section 7 of the SPMA:
   1. Authorizes a judge or justice to grant a management order allowing SPMD (technically, “the Minister” rather than SPMD) to take control of seized property (s. 7(1)). As noted above, a management order had already been granted in this case.
   2. Sets out the powers of SMPD: including the power of interlocutory sale of certain assets, the power to destroy property of little value and the power to forfeit a limited category of assets to the Crown (s. 7.2(2)).
7. Section 7 of the SPMA devotes four subsections to the process to be followed by SPMD before destroying property of little value, including notice to anyone with an interest in the property and a court order).
8. Section 7 of the SPMA devotes a three-clause subsection to the process to be followed where SPMD proposes to forfeit certain classes of property held under a management order including a sixty-day notice period during which persons with an interest in the seized property may assert that interest before the court.
9. The many subsections of section 7 of the SPMA, by contrast, devote not a single word constraining SPMD’s interlocutory sale of property, other than the limitations inherent in the original grant of power as follows: “The power of the Minister in respect of any seized property that is the subject of a management order includes, (a) the power to make an interlocutory sale of perishable or rapidly depreciating property”. Those thirty-three words are the entire expression of Parliament’s will on the topic.
10. We are thus left with a subsection (s. 7(2)), that grants the SPMD three powers and then places preconditions on two of them, but not on the power of interlocutory sale. If the SPMD wants to sell perishable or rapidly depreciating property, the language of the SPMA says nothing about notice and nothing requiring judicial involvement beyond the antecedent granting of a management order. The plain language of the statute defines the power of interlocutory sale to be a perquisite of SMPD once a management order has been granted. A court grants SPMD control of the assets via the management order and certain powers follow, some conditional on further court involvement, some not. The power of interlocutory sale of those two types of assets is expressed unconditionally.
11. When I told Ms. Smith initially that I was disinclined to grant the order for sale because I thought it was not required, I was told that the application for an order for interlocutory sale was brought because there was a division of opinion within government as to whether or not an order was needed. I am not sure of very many things in life, but I am certain that those who believe an order is required are mistaken.
12. There are different ways to get to my conclusion. One is Latin and, while, to the great regret of my late father, I, like Shakespeare, have “little Latin and less Greek”, pithy Latin expressions were still being tossed around during my time in law school, even some decades after the decline and fall of the Roman Empire. If I recall clearly, one of those pithy Latin phrases was, “inclusio unius est exclusio alterius”, which means that if a document includes one thing but doesn’t mention another, then that other thing is not included. Thus, if two of SPMD’s management powers require court intervention and notice and the other one (in the very same grant of power), has no such qualification, that is because notice and an order are not required (in this case for an interlocutory sale of perishable property).
13. Latin, of course, has fallen out of fashion, in favour of some radical idea that the law should be expressed in words that the general populace might understand, but fortunately we have new principles of interpretation, in English and French, which ultimately lead us to the same place. Section 12 of the Interpretation Act, for example, says that statutes are to be, “given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.” In Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, at paragraph 26 a unanimous Supreme Court defined the modern approach to legislative interpretation as follows

In Elmer Driedger’s definitive formulation, found at p. 87 of his Construction of Statutes (2nd ed. 1983):

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

14. The grammatical and ordinary sense of the words of s. 7 of the SPMA is that notice and court intervention are required for SPMD to destroy property or to forfeit it, but not for interlocutory sale of perishable or rapidly depreciating property. There is no other way to read the provision, grammatically and in its context. The same interpretation is “harmonious with the scheme of the Act” (to track the Supreme Court’s language, borrowed from Professor Driedger), or, “best ensures the attainment of [the Act’s] objects” (to track Parliament’s language in s. 12 of the Interpretation Act). The SPMA is designed to facilitate the management of proceeds of crime or offence-related property and to preserve the value of that property for future return to those from whom it was seized or for forfeiture to the Crown. Even leaving aside the absence from s. 7 of the SPMA of a notice or court order requirement for interlocutory sale, everyone’s interest is protected by giving SPMD the power unilaterally to dispose of property that is either “perishable” or “rapidly depreciating”. Delay would not only result in a loss of value (or a total elimination of value), reading in a notice and/or court order requirement would also increase SPMD’s workload, which would in turn increase delay and increase the likelihood of loss. The seized property in this case had a short shelf-life to begin with and some of what remained was used up in pursuit of a disposal order that was not required. One does not need to be a genius to appreciate that the realizable value of perishable property declines as its best-before date looms larger. An auction two weeks before the expiry date is not likely to realize the same value as an auction three months before that date.
15. In perhaps the ultimate irony, reading in a court order requirement would not be a neutral event; it would increase SPMD’s expenses because it would then have to pay to dispose of seized property that by virtue of avoidable delay no longer had realizable value. That would be a regrettable outcome, inconsistent with the clear language and purpose of the SPMA.
16. I also note that the language of s. 7(2)(a) of the SPMA differs from the language of s. 490.01(b) of the Criminal Code, which allows for a person with possession of seized property that is perishable or rapidly depreciating to dispose of (or destroy) that property, but requires an ex parte application to a justice of the peace. That requirement is an explicit divergence from the language of s. 7(2)(a) of the SPMA. I suppose it is possible that this divergence is unintentional; after all even the most perspicacious of legislative draftspersons can have a bad day. However, there is a readily apparent reason to word s. 7(2)(a) of the SPMA and s. 490.01(b) of the Criminal Code differently. The powers exercised under s. 7(2)(a) are powers exercised by a government minister with specific expertise in the management of assets and so Parliament has delegated to that person the authority to decide what should be disposed of as perishable or rapidly depreciating. The disposal power under s. 490.01(b), however, can be sought by anyone with possession of seized property, who may have little or no expertise in what is perishable or rapidly depreciating or in how best to realize and optimize its value. In such a circumstance, prior judicial authorization makes sense. When the SPMD is involved under s. 7(2)(a) of the SPMA, however, it is the court that lacks expertise and SPMD that is in the best position to make the determination about sale, a power that Parliament has given them.
17. I was also told that the SPMD, in conducting its affairs as the guardian of seized assets, operates on an “order in, order out” basis, i.e. that if something came into SPMD’s possession by way of a court order (i.e. a management order), it will not be disposed of without a court order. I am generally of the view that such an approach is a sound one (I suspect, for example, that that principle is more honoured in the breach than the observance by police services in relation to s. 490 of the Criminal Code), but when the statute clearly says otherwise, as s. 7(2)(a) of the SPMA clearly does, that otherwise sensible institutional inclination must yield to Parliament’s expressed intention.
18. It is for the foregoing reasons that I declined to issue the orders sought by the Attorney General.

Released: 6 November, 2021

Footnotes

1. 1I underline “permitting” because, as shall be seen, no permission is required.
2. 2And not because I felt that notice to the respondents was required.