Attorney General of Ontario v. $29,900 in Canadian Currency (in Rem)
[Indexed as: Ontario (Attorney General) v. $29,900 in Canadian Currency (In Rem)]
Ontario Reports
Ontario Superior Court of Justice,
Divisional Court,
Sachs, Nordheimer and Gilmore JJ.
March 30, 2017
137 O.R. (3d) 221 | 2017 ONSC 2003
Case Summary
Forfeiture — Civil forfeiture — Relief from forfeiture — Police seizing $29,900 in cash found in suitcase in R's driveway — R failing to establish [page222] that cash belonged to her — Evidence not establishing ownership of cash — Parties reaching settlement which provided that $4,000 of seized funds were to be returned to R and balance was to be forfeited to Crown under Civil Remedies Act — Motion judge not erring in ordering forfeiture of entire amount of seized money — Forfeiture mandatory under s. 3(1) of Act unless it would clearly not be in interests of justice — Application judge reasonably finding that there was no reason to exercise court's discretion to grant relief from forfeiture under s. 3(1) — Section 3(3) of Act giving court broad power to make any order it considers necessary to protect legitimate owner's interest in property — That subsection not applying as legitimate owner of cash was unknown — Civil Remedies Act, 2001, S.O. 2001, c. 28.
When called to the scene of a domestic dispute, police officers found a suitcase in R's driveway which contained $29,900 in cash along with a digital scale, a balaclava and a facemask. R claimed that the cash belonged to her and that it represented her life savings from legitimate sources. The Attorney General brought an application for forfeiture of the seized money under the Civil Remedies Act, 2001. Before the application was heard, the Crown and R entered into a settlement which provided that $4,000 of the seized money was to be returned to R and the rest was to be forfeited to the Crown. The application judge ordered that the entire amount was to be forfeited to the Crown. The Attorney General appealed.
Held, the appeal should be dismissed.
In making any order under the Civil Remedies Act, 2001, the court has an obligation to ensure that the requirements and purpose of the statute are met, because the court's order affects the world at large, and not just the persons who have reached a settlement. If the requirements of the Act are met, then a forfeiture order is mandatory subject to only two exceptions: (i) where refusal of forfeiture is necessary to protect the interests of the legitimate owner (s. 3(3)); or (ii) where forfeiture would clearly not be in the interests of justice (s. 3(1)). The application judge found as a fact that the moneys were proceeds of unlawful activity, so forfeiture was mandatory subject to the two exceptions. There was no evidence to invoke the exception in s. 3(3), and the application judge reasonably found no reason to exercise the court's discretion to grant relief from forfeiture under s. 3(1).
Other cases referred to
Ontario (Attorney General) v. $104,877 in U.S. Currency (in Rem) (2016), 129 O.R. (3d) 312, [2016] O.J. No. 453, 2016 ONCA 71; Ontario (Attorney General) v. $29,900 in Canadian Currency (in Rem), [2016] O.J. No. 5741, 2016 ONSC 6887 (S.C.J.); Poulin v. Nadon, 1950 121 (ON CA), [1950] O.R. 219, [1950] O.J. No. 433, [1950] 2 D.L.R. 303 (C.A.)
Statutes referred to
Civil Remedies Act, 2001, S.O. 2001, c. 28, ss. 3, (1), (3), (5), 8 [as am.], 15.6(3)
Rules and regulations referred to
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.03(1), 7.08, 49, 49.09
APPEAL from a civil forfeiture order.
Lisa Will and Kateryna Toderishena, for appellant. [page223]
No one appearing for respondent.
Daniel Freudman, for Naomi Rawana.
The judgment of the court was delivered by
[1] NORDHEIMER J.: — This is an appeal, by the Attorney General of Ontario, from the decision of Faieta J., dated November 9, 2016, in which he ordered the entire amount of seized moneys forfeited to the Crown in right of Ontario, under the provisions of the Civil Remedies Act, 2001, S.O. 2001, c. 28.[^1]
[2] A signed consent and draft order were presented to the application judge on September 12, 2016. The application judge requested supplementary written submissions on the issue of the court's authority to grant a consent forfeiture under the Civil Remedies Act, 2001. The appellant provided written submissions on the legal basis for granting a consent forfeiture order, and further advised that it was abandoning its claim to the $4,000 sought by Naomi Rawana.
[3] On November 9, 2016, the application judge found that there was no basis under the Civil Remedies Act, 2001 for the court to make an order, on the terms agreed to by the parties, and, instead, granted full forfeiture of the funds.
[4] The appeal is unopposed and the orders sought are on consent. Ms. Rawana's counsel appeared to confirm this fact.
[5] For the reasons that follow, I would dismiss the appeal.
Background
[6] On November 29, 2015, officers of the Toronto Police Service responded to a call regarding an assault in progress. The landlord at [number omitted] McClure Crescent, Toronto, had called to report that her tenant, Naomi Rawana, was being assaulted. When officers arrived on scene, the landlord advised that she had seen Ms. Rawana and a male, later identified as Jerome Johnson, arguing loudly outside of the residence. She reported that Mr. Johnson had grabbed Ms. Rawana by the hair, thrown her to the ground and said"give me my money or I'm going to kill you".
[7] While they were at the scene, the officers were approached by a neighbour, who advised them that there was a suitcase, of unknown origin, on her driveway. Believing the property to be abandoned, the officers searched it, in an attempt to identify its owner. [page224]
[8] The officers discovered $29,900 concealed in a shoe box inside the suitcase. Inside the same suitcase, they also found other items including a digital scale with a leafy substance residue, binoculars, a balaclava, a facemask, a bandana, high-end men's clothing, a men's Louis Vuitton hand bag, a PlayStation and identification in the name of Harris Baffoe-Baadu.
[9] Ms. Rawana explained to the officers that Mr. Baffoe-Baadu was her boyfriend, and that the suitcase, and its contents belonged to him. She also stated that the suitcase had been thrown out of the house, during the course of the confrontation with her ex-boyfriend, Mr. Johnson.
[10] Ms. Rawana claimed that the PlayStation and the cash belonged to her, and that the money was her life savings from legitimate sources. She asked for her money back. The officers advised her that there was nothing in the suitcase to support her ownership of its contents, and that Mr. Baffoe-Baadu would have to retrieve the suitcase, and its contents, from the police.
[11] On November 29 and 30, 2015, Ms. Rawana attended at 42 Division seeking the return of the funds. She was advised that they were being held for further investigation. During her attendance on November 30, Ms. Rawana said that she had documentation to support her ownership of $18,526, but not the rest of the seized funds. She stated that she had a paid greenhouse job at Great Northern Greenhouse in Windsor. Later that day, she returned to the police station with her bank statements. Those records indicated that her total income for the preceding three-year period was approximately $20,500.
[12] On January 28, 2016, a police officer spoke with someone at Great Northern Greenhouse, who stated that she had never heard of Ms. Rawana, and did not believe that Ms. Rawana had ever worked there. On February 2, 2016, a police dog performed a sniff test on the seized cash to see if it had been exposed to any controlled substances. The test result was negative.
[13] Subsequently, both Ms. Rawana and Mr. Baffoe-Baadu provided affidavits confirming that the $29,900 belonged to Ms. Rawana, and that this was money that she had been saving for four years. According to Ms. Rawana, she has had issues with banks in the past, and that is why she chose to store her money in a shoe box, instead of depositing it in a bank.
[14] In 2012, Mr. Baffoe-Baadu was charged with possession of a Schedule II substance for the purpose of trafficking. That charge was later withdrawn. No charges were laid against Ms. Rawana, Mr. Baffoe-Baadu or Mr. Johnson after the police found the cash in question. [page225]
[15] On March 7, 2016, the appellant commenced its application for forfeiture. On March 24, 2016, Lederman J. ordered that the funds be preserved, until the application could be heard.
[16] On July 20, 2016, counsel for the appellant cross-examined Ms. Rawana on her affidavit. Ms. Rawana provided further documentation, that did not support her assertion that she was able to save the seized funds. Further, Ms. Rawana advised that she consistently sought pay day loans, which was something that she would not have had to do if she had $29,900 in savings.
[17] After this cross-examination was completed, and prior to the scheduled forfeiture hearing, the parties, through their respective counsel, reached a settlement agreement providing that $4,000 of the seized funds were to be returned to Ms. Rawana, and the rest was to be forfeited to the Crown.
Preliminary Issue
[18] Before turning to the issue that is before this court, I want to make one observation about the manner in which this proceeding, and others like it, is constituted. In this proceeding, the named responding party is the item that is in dispute. I do not know of any authority that provides that inanimate objects, such as moneys, can be made parties to a proceeding in this court. The items in dispute are clearly the subject matter of the proceeding, but that is very different from naming it as a party. The Rules of Civil Procedure, R.R.O. 1990, Reg. 194 contemplate that parties will be persons -- whether individuals or corporations. Certainly, the definitions of "plaintiff""defendant""applicant" and "respondent" under the Rules of Civil Procedure so stipulate. For example, as it relates to this application, a respondent is defined under rule 1.03(1) as
a person against whom an application is made or an appeal is brought, as the circumstances require[.]
(Emphasis added)
[19] Proceedings under the Civil Remedies Act, 2001 are expressly stated to be proceedings in rem, not in personam. They should appropriately bear an in rem title of proceedings. Alternatively, if the Attorney General is aware of persons, who claim an interest in the items that are the subject matter of the proceeding, then they can be named as parties to the proceeding. If the Attorney General is not aware of any such persons, then the proceeding could be titled accordingly, by naming the respondents as "persons unknown". Whatever route is taken, to the extent that a practice appears to have grown up, in these [page226] proceedings, to name the currency, or a house or other property that is in issue, as a party, it is a practice that should stop.
Analysis
[20] The appellant's principal submission, on this appeal, is that the "parties" were entitled to come to a settlement of the dispute over these moneys, and that the court should generally honour settlements that are arrived at by "parties". In this respect, the appellant points to s. 15.6(3) of the Civil Remedies Act, 2001, which reads:
15.6(3) The rules of court apply with necessary modifications to the court's jurisdiction to make an order in respect of any party or other person in any proceeding as if the proceeding were in personam and such person were a named defendant or respondent in the proceeding.
[21] The appellant relies on s. 15.6(3) for his contention that the Rules of Civil Procedure are incorporated into any proceedings under the Civil Remedies Act, 2001 and, in particular, Rule 49 regarding settlements. The appellant relies on the provisions of Rule 49 as support for his position that the court ought to have granted judgment in terms of the settlement reached.
[22] Accepting that is the effect of s. 15.6(3), all that the Rules of Civil Procedure do is accord procedural rights to parties to a civil proceeding. They do not accord substantive rights. The substantive rights must be found in the statute itself. In the case of the Civil Remedies Act, 2001, those rights are clearly outlined.
[23] In any event, the problem with the appellant's position, in this respect, is that it ignores the fact that the enforcement provisions, relating to settlements under Rule 49, are discretionary. The court is not obliged to enforce a settlement, just because an offer to settle was made, and was accepted. The appellant accepts this is the case. In any event, it is clear from the fact that rule 49.09 provides that, on a motion to enforce a settlement, a judge "may" grant judgment. It is also consistent with the court's approach generally to settlements. The court always retains a discretion whether to enforce any resolution that parties may arrive at. For example, there may be terms included in a settlement that the court would, for entirely proper reasons, refuse to enforce.
[24] An example of this overriding discretion is found in the need for court approval of settlements involving persons under a disability: rule 7.08. The court is not obliged to approve a settlement just because the parties involved have reached it. I note, in this regard, the point that was made by Robertson C.J.O. in Poulin v. Nadon, 1950 121 (ON CA), [1950] O.R. 219, [1950] O.J. No. 433 (C.A.) [page227] when he commented on the obligation resting on a court when approving a settlement [at para. 6]:
The principles established make it plain beyond a doubt that the judge to whom the application is made for approval of such a settlement has an important and onerous judicial duty to perform.
[25] The appellant also relies on the principle that courts encourage settlements, and contends that the decision of the application judge flies in the face of that general approach. However, that contention fails to take into account that a proceeding under the Civil Remedies Act, 2001 is not a normal proceeding. It is a special statutorily created proceeding for the extraordinary remedy by which the lawful owner of property can have that property forfeited to the Government of Ontario. Presumably, that is why the statute expressly states that the proceeding is in rem, not in personam. Consequently, in this case, any order that this court might make affects not only Ms. Rawana, who claimed an interest in the moneys, but also any and all other persons, who may have any interest in these funds, including the actual owner of the moneys.
[26] Accordingly, this proceeding cannot simply be analogized to the usual form of civil proceeding, where two or more parties have a dispute, and they decide to resolve their dispute on a specific basis. In those circumstances, the court will generally approve such settlements (although I note that court approval would not normally be necessary), on the basis that the parties are compromising their own interests, and no one else's. That is not the function of proceedings under the Civil Remedies Act, 2001. Under that statute, property is being taken by the Government of Ontario for redistribution to others, as a consequence of its use in criminal activities. As the application judge said, at para. 16,
. . . a forfeiture order can only be issued under ss. 3 or 8 of the Act if the seized property is in fact "proceeds of unlawful activity" or "an instrument of unlawful activity". Similarly, relief from forfeiture can only be granted under ss. 3 or 8 of the Act if a party to the proceeding in fact proves that he or she is a "legitimate owner" or "responsible owner" of the property, or that it would "clearly not be in the interest of justice" for the property to be forfeited to Ontario.
(Citation omitted)
[27] As a result, in order to obtain an order, under the Civil Remedies Act, 2001, the requirements of the statute must be strictly complied with. [page228]
[28] Those statutory requirements are set out in s. 3 of the Civil Remedies Act, 2001.[^2] Two subsections of s. 3 are of particular importance. Section 3(1) reads:
3(1) In a proceeding commenced by the Attorney General, the Superior Court of Justice shall, subject to subsection (3) and except where it would clearly not be in the interests of justice, make an order forfeiting property that is in Ontario to the Crown in right of Ontario if the court finds that the property is proceeds of unlawful activity.
[29] The section is clear that, if the court finds that the property is proceeds of unlawful activity, then the court "shall" make an order forfeiting the property, unless it would clearly not be in the interests of justice to do so. Put simply, once the property is determined to be proceeds of unlawful activity, then the forfeiture order is mandatory, subject only to a finding that the interests of justice require forfeiture to be refused. I note that there is nothing in s. 3(1) that suggests that the court can split the property into a forfeited amount and an unforfeited amount.
[30] That ability, if it exists, might be found in s. 3(3), to which s. 3(1) is expressly subject. Section 3(3) reads:
3(3) If the court finds that property is proceeds of unlawful activity and a party to the proceeding proves that he, she or it is a legitimate owner of the property, the court, except where it would clearly not be in the interests of justice, shall make such order as it considers necessary to protect the legitimate owner's interest in the property.
[31] Under s. 3(3), the court is given broad authority to make any order "as it considers necessary" to protect the legitimate owner's interest in the property. Seemingly, that would authorize the court to order forfeiture of a portion of the property, and a return of the other portion of the property, if the court was satisfied that that was necessary, to protect the legitimate owner's interest in the property. Take, for example, the situation where there has been a comingling of moneys. If there is a legitimate dispute over who owns what portion of the moneys in issue, and the costs associated with litigating that question are out of proportion to the amount in issue, then the court might legitimately approve a settlement, where a compromise was reached. That, however, is not this case.
[32] The authority to make such an order, though, only arises where the court has proof of the identity of the legitimate owner of the property. As the Court of Appeal said in [page229] Ontario (Attorney General) v. $104,877 in U.S. Currency (In Rem) (2016), 2016 ONCA 71, 129 O.R. (3d) 312, [2016] O.J. No. 453 (C.A.), at para. 5:
We conclude that, in rejecting the appellant's submissions, the application judge made no error. She correctly applied the two-step process mandated by the Civil Remedies Act: first, the Attorney General of Ontario must satisfy the court that the property is either the proceeds of unlawful activity or the instrument of unlawful activity; and then, second, the respondent may seek protection from forfeiture under s. 3(3) or s. 8(3) as either a "legitimate owner" or a "responsible owner".
[33] In this case, as the appellant appears to accept, there was no evidence as to who was the legitimate owner of the moneys. Consequently, s. 3(3) cannot be relied upon to give the court authority to order a portion of the funds forfeited, and a portion not forfeited, especially since the application judge made an express finding, on the record that was before him, that he was not satisfied that Ms. Rawana was the legitimate owner of any of the seized moneys (reasons, at para. 27).
[34] A further problem flowed from the absence of evidence on this issue, and that was that there was no evidence, before the application judge, that an order returning the sum of $4,000 to Ms. Rawana was "necessary to protect the legitimate owner's interest in the property". This problem was recognized by the application judge when he said, in the penultimate paragraph of his reasons (para. 38):
In this case, the Attorney General asks this Court to approve a settlement returning $4,000 to Rawana, notwithstanding the Attorney General's submissions on the merits of its Application. The parties have not explained why $4,000, as opposed to any other amount, should be returned to Rawana. Such evidence might have informed the application of one of the grounds or exceptions under the Act. Without such evidence, returning $4,000 appears to be arbitrary and not rationally connected to the requirements of the Act.
[35] The appellant complains that the application judge did not alert him to any concern regarding the lack of evidence. That is not surprising, since the appellant took the position that none of the exceptions under the Civil Remedies Act, 2001 were applicable in this case and, thus, chose not to provide any evidence on these points. One would hardly expect, in those circumstances, for the application judge to revisit that issue. In any event, it is not the obligation of the court to instruct, or tutor, a party regarding the evidence that they should be putting before the court. It is the parties who bear the responsibility for adducing the necessary evidence, and the court adjudicates on the evidence as presented. In this case, it is the Attorney General of Ontario who bears the onus, or burden, to satisfy the court, on evidence, that the requirements of the Civil Remedies Act, 2001 [page230] have been met. The Attorney General cannot foist that responsibility onto the court.
[36] In my view, the application judge was correct in concluding, once he was satisfied that the moneys were proceeds of unlawful activity, that the entire amount had to be forfeited, absent any evidence that could satisfy the court that any other order was necessary, either in the interests of justice or in order to protect the interests of the legitimate owner of the moneys. While the requirement for evidence may make the completion of applications under the Civil Remedies Act, 2001 more difficult, that inconvenience is a necessary price to pay to ensure that the provisions of this extraordinary statute are met, and that judges can fulfill their mandate under the statute. In particular, it is necessary to ensure that the interests of the legitimate owner of property, that is seized under this statute, are not trampled over by a rush to conclude the proceeding.
[37] On that latter point, it should be remembered that there is a 15-year window for persons to come forward and claim ownership in funds that are the subject of proceedings under the Civil Remedies Act, 2001: s. 3(5). By way of example in this case, if the true owner of these funds were to subsequently seek to regain them, the appellant would be in a position to return the moneys they received, but what would happen regarding the funds paid to Ms. Rawana? Would the true owner have to pursue her for return of the moneys and, if so, would the true owner be faced with the argument that this court had already determined the ownership of those funds to be that of Ms. Rawana? After all, that would appear to be the only proper basis by which this court would have been entitled to order the return of moneys to her. This scenario highlights the importance of compliance with the statutory scheme.
[38] In summary, this court has an obligation, in making any order under the Civil Remedies Act, 2001, to ensure that the requirements and purpose of the statute are met, because the court's order does not affect just the persons who have reached the resolution, but also affects the world at large. If the requirements of the Civil Remedies Act, 2001 are met, then a forfeiture order is mandatory subject to only two exceptions: (i) where refusal of forfeiture is necessary to protect the interests of the legitimate owner or (ii) where forfeiture would "clearly not be in the interests of justice". The first exception requires proof of the identity of the legitimate owner. The second exception is discretionary and fact specific.
[39] The application judge found, as a fact, that the moneys were proceeds of unlawful activity, so forfeiture was mandatory [page231] subject to the two exceptions. There was no evidence to invoke the first exception, and the application found no reason to exercise the court's discretion to grant relief from forfeiture. The application judge's exercise of his discretion, in that regard, was a reasonable one. There is no proper legal basis for this court to interfere with it.
[40] The appeal is dismissed. This is not an appropriate case to make any order as to costs.
Appeal dismissed.
Notes
[^1]: Ontario (Attorney General) v. $29,900 in Canadian Currency (In Rem), [2016] O.J. No. 5741, 2016 ONSC 6887 (S.C.J.).
[^2]: The analysis that follows would apply equally if s. 8 of the Civil Remedies Act, 2001 was engaged.
End of Document