DATE: 20050728
DOCKET: C39067-C39164
COURT OF APPEAL FOR ONTARIO
DOHERTY, FELDMAN and LaFORME JJ.A.
B E T W E E N :
DOCKET: C39067
HER MAJESTY THE QUEEN
Fergus O’Donnell and Cindy Sa, for the respondent
Respondent
- and -
LAWRENCE RICHARD HAPE
Alan D. Gold and Gail D. Smith for the appellant
Appellant
- AND BETWEEN -
DOCKET: C39164
HER MAJESTY THE QUEEN
Fergus O’Donnell and Cindy Sa, for the appellant
Appellant
- and -
LAWRENCE RICHARD HAPE
Alan D. Gold and Gail D. Smith for the respondent
Respondent
Heard: June 27, 2005
Appeal from the convictions entered on October 23, 2002 by Justice Russell G. Juriansz of the Superior Court of Justice, sitting without a jury, and from the sentence imposed by Juriansz J. on November 15, 2002.
BY THE COURT:
I
OVERVIEW
[1] The appellant, an investment banker, appeals from his conviction on two counts of money laundering contrary to s. 9 of the Controlled Drugs and Substances Act, S.C. 1996, c. 19 (“CDSA”). He also seeks leave to appeal from a thirty-month prison sentence. The Crown appeals from the trial judge’s refusal to make a forfeiture order in the amount of $3 million. The trial judge imposed a forfeiture order of $48,992.75 only.
[2] The trial judge, sitting without a jury, convicted the appellant after a lengthy and complex trial.
[3] The key prosecution witness was an undercover RCMP officer. During a lengthy investigation, the officer arranged for “sting” money, which he represented to the appellant to be the proceeds of heroin trafficking, to be laundered through the appellant’s investment company in the Turks and Caicos Islands and from there to an account controlled by the undercover officer in a bank in the Netherlands. An extensive part of the investigation, including searches of the appellant’s offices, took place in the Turks and Caicos Islands, thus raising issues of the applicability of the Canadian Charter of Rights and Freedoms to police conduct in foreign jurisdictions.
[4] The relevant facts are fully outlined in the reasons for judgment of the trial judge reported at [2002] O.J. No. 5044. The appellant did not testify.
[5] We reserved judgment at the end of oral argument. After further consideration, we concluded that the trial judge had made appropriate findings of fact supported by the evidence and correctly applied settled legal principles to those facts. Accordingly, counsel were advised that the appeals would be dismissed with reasons to follow. These are those reasons.
II
[6] In his factum, counsel for the appellant advanced nine grounds of appeal against conviction and also argued that the sentence was excessive. The Crown appeal raises the question of the proper interpretation of certain forfeiture provisions. In oral argument, counsel for the appellant pursued six of the grounds of appeal and the sentence appeal. These reasons address those six grounds of appeal, the sentence appeal, and the Crown’s appeal from the forfeiture order.
ANALYSIS
(1) Did the search and seizure in the Turks and Caicos Islands infringe the appellant’s rights under s. 8 of the Charter?
[7] The trial judge dismissed an application to exclude the evidence seized from the appellant’s offices on the basis that the Charter did not apply ([2002] O.J. No. 3714). He found that the investigation in the Turks and Caicos Islands, including the searches, was under the control of the Turks and Caicos police force, which obtained authorization for all seizures from the Turks and Caicos judicial authorities. He further held that the Canadian police and the Turks and Caicos police were engaged in a “co-operative investigation”. The trial judge considered the binding authorities, including R. v. Terry (1996), 1996 199 (SCC), 106 C.C.C. (3d) 508 (S.C.C.) and R. v. Cook (1998), 1998 802 (SCC), 128 C.C.C. (3d) 1 (S.C.C.) and concluded on those authorities that the Charter did not apply.
[8] Counsel for the appellant argued that in fact the role of the Turks and Caicos authorities was minimal and that the investigation was for all intents and purposes a Canadian investigation controlled by Canadian authorities. We must reject this argument as it runs contrary to the findings of fact made by the trial judge. Those findings were supported in the evidence. Counsel for the appellant also argued that even if the investigation was a co-operative one in which the Turks and Caicos authorities played a controlling role, the Charter still applied to the conduct of the Canadian authorities. In our view, this submission is contrary to the authorities relied on by the trial judge and referred to above.
[9] The trial judge correctly applied the law to the findings of fact he made.
(2) Did the trial judge err in admitting the Dutch banking records?
[10] The Crown introduced - over the appellant’s objections - copies of microfilm prints of a Dutch bank’s records showing that the appellant’s company had made deposits into the police account. In effect, these were hardcopy printouts from a microfilm device. The evidence was that, the bank produced copies rather than originals in order to remove confidential banking information of other account holders.
[11] The appellant objected to the admission of the documents on the basis that they did not fall under the “business records” exception to the hearsay rule. The trial judge upheld the admission of the documents.
[12] The trial judge was satisfied that the photocopies were sufficiently reliable, and admitted them as business records. He held that they reflected the bank’s record of transactions related to the account in question, and that the documents should be accepted under the common law exception for business records, and noted: “If I have modified the common law exception somewhat, that modification is consistent with the principled approach’s requirements of necessity and reliability”.
[13] Mr. Gold, for the appellant, advanced the startling submission that trial judges cannot alter the common law. He submitted that only appellate courts could modify and develop the common law. No authority was cited for this proposition.
[14] Making new law is not the standard fare of the trial judges. Where the circumstances warrant, however, they are entitled to do so absent controlling appellate authority. If trial judges could not modify the common law in appropriate cases, they would find themselves driven to make decisions that would inevitably be reversed after the cost and delay associated with the appellate process. This makes no sense.
[15] In any event, we would not describe the trial judge’s decision to admit the copies as a variation of the common law. Rather, his reasons reflect an application of the well established threshold reliability criterion to the admissibility of hearsay evidence in the form of copies of banking documents. We regard his approach as an application of the accepted common law principles governing the admissibility of hearsay to the documents placed before the court. As there is nothing in the record to cast doubt on the integrity of the copies or the records from which the copies were made, we conclude that the trial judge’s ruling was correct.
(3) Did the trial judge err in allowing the Crown to re-open its case?
[16] After the defence elected not to call any evidence, the Crown applied to re-open its case. The Crown wished to call evidence to explain why the account number in Exhibit 68 was not the same as the account number provided by the undercover officer to the appellant. The proposed bank witness would testify that there were two connected police accounts, one in U.S. dollars and the other in Dutch guilders. The first account was to record deposits and the second account was to pay the account expenses. The accounts were, however, connected by the same “SWIFT” number appearing on the records of both accounts. The trial judge granted the Crown’s application.
[17] The appellant submits that, the Crown’s omission concerned an essential element of the offence, namely, that funds were deposited into the police account. The reopening of the Crown’s case he says enabled it to fill in a cavernous gap. The Crown, therefore, should not be permitted to expect the court to remedy its deficiency.
[18] The general rule is against allowing the Crown to re-open its case after the defence has started to answer the case against it. This rule is based on prejudice to the accused person: R. v. M.B.P. (1994), 1994 125 (SCC), 89 C.C.C. (3d) 289 (S.C.C.). There is also, however, an exception where “the Crown’s omission or mistake was over a non-controversial issue to do with purely formal procedural or technical matters, having nothing to do with the substance or merits of a case”: R. v. M.B.P. at 301. The trial judge, in the exercise of his discretion, held that the exception applied in this case. We see no basis upon which to interfere with the exercise of that discretion.
(4) Was the offence under s. 9 of the CDSA made out?
[19] The appellant argues that there was insufficient evidence that he did anything with the police money other than simply possess it. He asserts that mere possession is not an offence under s. 9 of the CDSA. Further, he adds that, there was insufficient evidence that the appellant believed that the undercover officer's money was “obtained or derived” from narcotic drug offences, given the myriad of money sources and “clients” that the undercover officer had described in his various conversations with the appellant.
[20] In our view, the answer to the appellant’s submissions is found in the reasons of the trial judge. His findings of fact dispose of these submissions. We cannot interfere with these findings absent a clear and palpable error.
(5) Was Count 3 within the court’s jurisdiction?
[21] Count three charged the appellant with laundering $80,000 U.S. given to him in the Turks and Caicos Islands. The appellant applied for a stay of count three on the basis that, having been wholly committed elsewhere, it could not be prosecuted in Canada.
[22] In dismissing the application, the trial judge found that the evidence established that the money was purported to be from trafficking heroin in Canada; that some of the preparatory activities and arrangements for delivery of the money took place in Canada; and that the Turks and Caicos authorities co-operated with the RCMP in the investigation.
[23] We would not give effect to this ground of appeal. The offence meets the “real and substantial link” test articulated by LaForest J. in R. v. Libman (1985), 1985 51 (SCC), 21 C.C.C. (3d) 206 (S.C.C.) at 232, as follows:
[A]ll that is necessary to make an offence subject to the jurisdiction of our courts is that a significant portion of the activities constituting that offence took place in Canada. As it is put by modern academics, it is sufficient that there be a “real and substantial link” between an offence and this country … .
[24] The evidence at trial was clear. Meetings and conversations relating to the money laundering took place in Canada, the appellant maintained several residences here, and the supposed source of the police funds was heroin trafficking in Montreal. There is a public interest in protecting Canadian citizens from the drug trade, which is fed by money laundering activities. There is no justification for excluding the appellant’s conduct from prosecution merely because he conducted his operations on an international scale.
(6) Was the appellant’s right to be tried within a reasonable time under s. 11(b) of the Charter infringed?
[25] The period from the appellant’s arrest to conviction was 31/2 years. The appellant brought an application for a stay of the charges on the basis that his right to a trial without unreasonable delay, guaranteed under s. 11(d) of the Charter, was infringed: ([2002] O.J. No. 5240). The appellant argues that the unreasonable delay was caused by the Crown’s failure to provide disclosure in a timely manner and to conduct its prosecution competently.
[26] The trial judge dismissed that application holding at para. 45:
The factually and legally complex applications necessitated much preparation by counsel, and much consideration, and sometimes reconsideration of their positions. The great amount of time required to deal with the defence’s applications was an inherent requirement of the case.
[27] The trial judge further observed at para. 51 that there was:
No evidence that the parties ever were prepared to proceed and wished to proceed, and the system was unable to accommodate them.
[28] The trial judge reviewed the history of the matter in detail. We find no error in that review. This was a complex case involving thousands of documents, voluminous and evolving disclosure requirements, and three jurisdictions (Canada, the Turks and Caicos, and the Netherlands). There were many defence motions and applications, none of which were frivolous, but all of which took time. In the circumstances of this case, we agree that the lengthy passage of time between the charge and the trial cannot be branded as unreasonable delay. The trial judge correctly dismissed the s. 11(b) application.
(7) Was the prison sentence harsh and excessive?
[29] At trial the parties agreed that a prison sentence was called for in accordance with R. v. Tejani (1999), 1999 3765 (ON CA), 138 C.C.C. (3d) 366 (Ont. C.A.). The Crown sought a four-year sentence, while counsel for the appellant submitted that the appropriate range was zero to six months. The trial judge concluded that the appropriate and fit sentence is thirty months imprisonment.
[30] We find no error in principle in the trial judge’s reasons for sentence. Nor would we describe the sentence as manifestly unfit. Counsel argued that the fact that there was no actual drug money involved in the appellant’s offences somehow mitigated his culpability. We disagree. The appellant showed himself ready, willing and able to lend his substantial commercial facilities and expertise to drug dealers for mutual financial gain. His moral culpability and the blameworthiness of his conduct fully justify a denunciatory sentence.
(8) The Crown’s appeal from the refusal to make a forfeiture order in the amount of $3,000.000.00
[31] On sentence, the Crown sought two orders of forfeiture. First, an order under s. 462.37(1) of the Criminal Code in the amount of $48,992.75. This amount represented the fees paid to the appellant by the undercover RCMP officer in connection with the two transactions that were the subject matter of the two counts on which the appellant was convicted. Second, margin sought a forfeiture order under s. 462.37(2) of the Criminal Code in the amount of $3,000,000.00. The Crown alleged that various assets in the possession of the appellant represented the proceeds, direct or indirect, from various drug offences and money laundering offences committed by the appellant in the 1980s.
[32] Counsel for the appellant contended that the trial judge had no authority to make a forfeiture order arising out of alleged drug offences that occurred in the 1980s before the enactment of the CDSA. Counsel further contended that a forfeiture order could not be made in relation to property that had absolutely no connection to the allegations which were the subject matter of the trial resulting in the appellant’s convictions.
[33] For the purpose of determining the trial judge’s jurisdiction to make a forfeiture order in relation to the $3,000,000.00, it was agreed that he could assume that the Crown would prove that the money was the proceeds of drug offences and money laundering offences committed in the 1980s. The parties agreed that if the trial judge decided he had jurisdiction to make the forfeiture order, the Crown would be required to lead evidence to establish that the money was in fact the proceeds of criminal drug activity in the 1980s.
[34] The relevant forfeiture provisions as they existed at the time of trial are set out below:
462.37(1) Subject to this section and section 462.39 to 462.41, where an offender is convicted, or discharged under section 730, of an enterprise crime offence and the court imposing sentence on the offender, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime and that the enterprise crime offence was committed in relation to that property, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law.
(2) Where the evidence does not establish to the satisfaction of the court that the enterprise crime offence of which the offender is convicted, or discharged under section 730, was committed in relation to property in respect of which an order of forfeiture would otherwise be made under subsection (1) but the court is satisfied, beyond a reasonable doubt, that that property is proceeds of crime, the court may make an order of forfeiture under subsection (1) in relation to that property.
[35] In careful reasons reported at [2002] O.J. No. 4873, the trial judge made the first forfeiture order and directed that the $48,992.75 paid to the appellant by the undercover RCMP officer be forfeited to the Crown. This order was clearly contemplated under s. 462.37(1) and was not opposed at the time of sentence.
[36] The trial judge further held that he had no jurisdiction to make any forfeiture order in respect of the $3,000.000.00 said to be the proceeds of various drug offences committed in the 1980s.
[37] In rejecting the Crown’s forfeiture application in relation to the $3,000,000.00, the trial judge observed that the phrase “proceeds of crime” as defined in the relevant provisions of the Criminal Code referred to “a designated substance offence”. That phrase in turn was defined as an offence under Part I of the CDSA. The trial judge reasoned that whatever offences the appellant may have committed in the 1980s that yielded the property said to constitute the proceeds of crime, those offences could not have been offences under the CDSA since it was not enacted until 1997. Drug offences committed in the 1980s could not, therefore, fall within the definition of “a designated substance offence” and could not yield property that fell within the definition of the phrase “proceeds of crime” for the purpose of the forfeiture provisions as they read at the time of sentencing.
[38] The trial judge’s conclusion that the operative definitions did not refer to drug offences committed prior to the enactment of the CDSA was sufficient to determine the Crown’s forfeiture application against the Crown. The trial judge went on, however, to identify a more fundamental problem with the Crown’s submission. He held that the forfeiture scheme outlined in s. 462.37 contemplated forfeiture of property that was not only the proceeds of crime, but was also connected to the allegations that gave rise to the trial and the convictions for which the appellant was being sentenced at the time of the forfeiture application. The trial judge rejected the Crown’s submission that the forfeiture provisions and, in particular, s. 462.37(2) created a freestanding right in the Crown to expand sentencing proceedings to include allegations in respect of property that had played no part in the trial giving rise to the conviction and hence the sentencing proceedings in which the forfeiture application was made. The trial judge said, at para. 26:
Subsection 462.37(2) does allow an order of forfeiture to be made even though the Crown has failed to establish that the “property is proceeds of crime and that the [designated substance offence] was committed in relation to that property” as required by s-s. 462.37(1). The connection between the sentence and the crime is not lost as the forfeiture application must be brought under s-s. 462.37(1) and must be directed at proceeds of the crime for which the offender was convicted and is being sentenced. When such an application is properly brought, if the evidence does not establish to the satisfaction of the court that the crime being sentenced was committed in relation to the property, the court may nevertheless make a forfeiture application if it is satisfied beyond a reasonable doubt that the property is proceeds of unrelated crime. It would be inappropriate to allow an offender to continue in possession of property that the evidence established beyond a reasonable doubt to be “proceeds of crime”. However, the legislative scheme contemplates forfeiture applications that bear a nexus to the crime being sentenced at least in the sense that they are directed at proceeds of that crime [emphasis added].
[39] We are in full agreement with the trial judge’s analysis of the Crown’s request for a forfeiture order in respect of the $3,000,000.00. Parliament chose to limit the definition of “designated drug offence” to certain offences committed against the CDSA. It chose not to extend the definition to similar drug offences committed under predecessor legislation. Section 44(f) of the Interpretation Act, R.S.C. 1985, C.I.-21, does not assist the Crown. It provides that where a new enactment is the same as the enactment it replaces, the new enactment shall not be held to operate as new law, but shall be regarded as declaratory of the law contained in the former enactment. The issue before the trial judge did not turn on whether the CDSA was substantively the same as the former legislation. It turned on whether a specific reference to the CDSA should be read as incorporating a reference to former drug legislation. That issue turned on a reading of the plain language of the section and not on s. 44(f) of the Interpretation Act.
[40] We also agree with the trial judge’s conclusion that s. 462.37(2) contemplates a nexus between the offence which was the subject of the trial giving rise to the conviction and sentencing proceedings and the property the Crown seeks forfeited. That is not to say that the property must be the proceeds of the crime for which the accused was convicted. If that were the case, the property would be properly forfeited under s. 462.37(1). The property must, however, have been the subject matter of the allegations made at trial. If at the end of the trial the property that was the subject matter of the allegations on which the trial was based is determined to fall within the definition of proceeds of crime, but is not the proceeds of the offence for which the accused was convicted at trial, s. 462.37(2) may have application.
[41] The Crown’s submission that it can introduce entirely new allegations, unrelated to those advanced at trial, as part of a forfeiture hearing during the sentencing proceedings raises serious constitutional problems. The forfeiture provisions cannot be read so as to allow the Crown to circumvent the comprehensive process complete with constitutional protections, associated with the charging and prosecuting of criminal allegations. The section does not contemplate the forfeiture of property that was not the subject matter of the criminal allegation made at trial.
[42] The Crown relies on Quebec (Attorney General) v. Laroche (2002), 2002 SCC 72, 169 C.C.C. (3d) 97 (S.C.C.) and R. v. Lore (1997), 1997 10604 (QC CA), 116 C.C.C. (3d) 255 at 272 (Que. C.A.) to support its broad reading of the forfeiture provisions. We do not read the cases so widely. They hold that forfeiture is possible under s. 462.37(2) even though the property sought forfeited was not obtained by the offender through the commission of the offences for which he was convicted. They do not hold that forfeiture can be ordered in relation to property that has absolutely no connection to the allegations that were the subject matter of the trial.
CONCLUSION
[43] For the reasons set out above, all appeals are dismissed.
RELEASED: “DD” “JUL 28 2005”
“Doherty J.A.”
“K. Feldman J.A.”
“H.S. LaForme J.A.”