@B,00021931,OR
@1@Z20070530
@2
Attorney General of Ontario v. Chatterjee
[Indexed as: Ontario (Attorney General) v. Chatterjee]
@3
86 O.R. (3d) 168
@4
Court of Appeal for Ontario,
Labrosse, Sharpe and Rouleau JJ.A.
May 30, 2007
@6
Charter of Rights and Freedoms -- Application of Charter
--Person subject to forfeiture proceedings under Civil
Remedies Act not being "charged with an offence" -- Section 11
of Charter not applying -- Canadian Charter of Rights and
Freedoms, s. 11 -- Remedies for Organized Crime and Other
Unlawful Activities Act, 2001, S.O. 2001, c. 28.
Constitutional law -- Distribution of legislative authority
-- Property and civil rights -- Forfeiture -- Remedies for
Organized Crime and Other Unlawful Activities Act not being
ultra vires province -- Act not constituting colourable attempt
to legislate in relation to criminal law -- Civil and property
law consequences of unlawful activity falling within provincial
power under s. 92(13) of Constitution Act in relation to
property and civil rights in province -- Constitution Act, s.
92(13) -- Remedies for Organized Crime and Other Unlawful
Activities Act, 2001, S.O. 2001, c. 28.
The Attorney General of Ontario brought an application in rem
for forfeiture of certain items seized from C's car pursuant to
the Remedies for Organized Crime and Other Unlawful Activities
Act, 2001 (the "CRA"). In response, C argued that the CRA is
ultra vires the province and violates ss. 7, 8, 9 and 11(d) of
the Canadian Charter of Rights and Freedoms. The application
judge rejected the constitutional challenge and allowed the
Attorney General's application. C appealed. On appeal, he
abandoned his challenge under ss. 7 and 9 of the Charter.
[page169]
Held, the appeal should be dismissed.
The application judge was correct in refusing C standing to
challenge Part III of the CRA. While Part III was engaged on
the facts of this case, none of the arguments focused on it. No
item over which C now claimed an interest was subject to
forfeiture under Part III. All of the constitutional issues on
the appeal could be disposed of without consideration of Part
III, and the refusal of standing would not have the effect of
immunizing Part III, which was, in fact, being challenged in
other cases.
The Act is not ultra vires the province. The true purpose of
the Act is not to punish offenders but 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. The Act is
not a colourable attempt to legislate in relation to criminal
law. The civil and property law consequences of unlawful
activity fall squarely within provincial power under s. 92(13)
of the Constitution Act in relation to property and civil
rights in the province.
The appellant's argument that the Act violates the
presumption of innocence guaranteed by s. 11(d) of the Canadian
Charter of Rights and Freedoms could not succeed, as a person
who is subject to forfeiture proceedings under the Act is not
"charged with an offence". Proceedings brought under the Act
are not criminal or quasi-criminal in nature and do not result
in true penal consequences, and a successful application for
forfeiture under the Act does not carry the stigma associated
with a criminal conviction. Section 11 of the Charter does not
apply.
On the facts of this case, no issue under s. 8 of the Charter
arose, and the issue of whether s. 8 was engaged in certain
circumstances was best left to be determined in another case.
@5
Cases referred to
Martineau v. Canada (Minister of National Revenue), [2004] 3
S.C.R. 737, 2004 SCC 81, [2004] S.C.J. No. 58, 247 D.L.R. (4th) 577, 125
C.R.R. (2d) 301, 192 C.C.C. (3d) 129, 2004 SCC 81, 24 C.R.
(6th) 207; R. v. Zelensky, 1978 8 (SCC), [1978] 2 S.C.R. 940, [1978] S.C.J.
No. 48, 1978 8 (SCC), 86 D.L.R. (3d) 179, 41 C.C.C. (2d) 97; Walsh v.
Director of the Assets Recovery Agency, [2005] N.I.C.A. 6,
[2005] NI 383, consd
Other cases referred to
Bedard v. Dawson, 1923 43 (SCC), [1923] S.C.R. 681, [1923] S.C.J. No. 30,
1923 43 (SCC), [1923] 4 D.L.R. 293; Canada (Attorney General) v. Montreal
(City), 1978 201 (SCC), [1978] 2 S.C.R. 770, [1978] S.C.J. No. 33, 84 D.L.R.
(3d) 420; Canadian Egg Marketing Agency v. Richardson, [1998]
1997 17020 (SCC), 3 S.C.R. 157, [1998] S.C.J. No. 781, 166 D.L.R. (4th) 1, 231
N.R. 201, 1997 17020 (SCC), 57 C.R.R. (2d) 1; General Motors of Canada Ltd. v.
City National Leasing Ltd., 1989 133 (SCC), [1989] 1 S.C.R. 641, [1989] S.C.J.
No. 28, 1989 133 (SCC), 68 O.R. (2d) 512n, 32 O.A.C. 332, 58 D.L.R. (4th) 255,
1989 133 (SCC), 93 N.R. 326, 43 B.L.R. 225, 24 C.P.R. (3d) 417; Hy and Zel's
Inc. v. Ontario (Attorney General); Paul Madger Furs Ltd. v.
Ontario (Attorney General), 1993 30 (SCC), [1993] 3 S.C.R. 675, [1993] S.C.J.
No. 113, 1993 30 (SCC), 107 D.L.R. (4th) 634, 160 N.R. 161; Kitkatla Band v.
British Columbia (Minister of Small Business, Tourism and
Culture), 2002 SCC 31, [2002] 2 S.C.R. 146, [2002] S.C.J. No. 33, 210
D.L.R. (4th) 577, 2002 SCC 31, 286 N.R. 131, [2002] 6 W.W.R. 1, 2002 SCC
31, 2002 SCC 31, 1 B.C.L.R. (4th) 1; MacKay v. Manitoba, [1989] 2 S.C.R.
357, 1989 26 (SCC), [1989] S.C.J. No. 88, 61 Man. R. (2d) 270, 61 D.L.R.
(4th) 385, 1989 26 (SCC), 99 N.R. 116, [1989] 6 W.W.R. 351, 43 C.R.R. 1;
Ontario Public Service Employees' Union v. Ontario (Attorney
General), 1987 71 (SCC), [1987] 2 S.C.R. 2, [1987] S.C.J. No. 48, 23 O.A.C.
161, 1987 71 (SCC), 41 D.L.R. (4th) 1, 77 N.R. 321, 87 C.L.L.C. ¶14,037;
Personal Service Coffee Corp. v. Beer, 2005 25180 (ON CA), [2005] O.J. No. 3043,
2005 25180 (ON CA), 200 O.A.C. 282, 256 D.L.R. (4th) 466 (C.A.); [page170]
Phillips v. Nova Scotia (Commission of Inquiry into the
Westray Mine Tragedy), 1995 86 (SCC), [1995] 2 S.C.R. 97, [1995] S.C.J. No.
36, 1995 86 (SCC), 141 N.S.R. (2d) 1, 124 D.L.R. (4th) 129, 180 N.R. 1, 403
A.P.R. 1, 1995 86 (SCC), 28 C.R.R. (2d) 1, 98 C.C.C. (3d) 20, 39 C.R. (4th)
141 (sub nom. Phillips v. Richard, Phillips v. Nova Scotia
(Commission of Inquiry into the Westray Mine Tragedy)); R. v.
Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295, [1985] S.C.J. No.
17, 1985 69 (SCC), 37 Alta. L.R. (2d) 97, 18 D.L.R. (4th) 321, 58 N.R. 81,
1985 69 (SCC), [1985] 3 W.W.R. 481, 13 C.R.R. 64, 18 C.C.C. (3d) 385, 85
C.L.L.C. ¶14,023; R. v. Raponi, 2004 SCC 50, [2004] 3 S.C.R. 35, [2004]
S.C.J. No. 48, 2004 SCC 50, 354 A.R. 292, 323 N.R. 373, 329 W.A.C. 292,
2004 SCC 50, [2004] 9 W.W.R. 205, 122 C.R.R. (2d) 136, 185 C.C.C. (3d) 338,
2004 SCC 50, 21 C.R. (6th) 197, 28 Alta. L.R. (4th) 201; R. v.
Shubley, 1990 149 (SCC), [1990] 1 S.C.R. 3, [1990] S.C.J. No. 1, 71 O.R. (2d)
63n, 1990 149 (SCC), 37 O.A.C. 63, 65 D.L.R. (4th) 193, 104 N.R. 81, 46 C.R.R.
104, 1990 149 (SCC), 52 C.C.C. (3d) 481, 74 C.R. (3d) 1; R. v. Westendorp,
1983 1 (SCC), [1983] 1 S.C.R. 43, [1983] S.C.J. No. 6, 23 Alta. L.R. (2d)
289, 1983 1 (SCC), 144 D.L.R. (3d) 259, 46 N.R. 30, [1983] 2 W.W.R. 38, 2
C.C.C. (3d) 330, 1983 1 (SCC), 32 C.R. (3d) 97, 20 M.P.L.R. 267; R. v.
Wigglesworth, 1987 41 (SCC), [1987] 2 S.C.R. 541, [1987] S.C.J. No. 71, 24
O.A.C. 321, 1987 41 (SCC), 61 Sask. R. 105, 45 D.L.R. (4th) 235, 81 N.R. 161,
1987 41 (SCC), [1988] 1 W.W.R. 193, 32 C.R.R. 219, 37 C.C.C. (3d) 385, 60
C.R. (3d) 193 (sub nom. Wigglesworth v. R.); Reference re:
Firearms Act (Canada), 2000 SCC 31, [2000] 1 S.C.R. 783, [2000] S.C.J. No.
31, 2000 SCC 31, 82 Alta. L.R. (3d) 1, 185 D.L.R. (4th) 577, 254 N.R. 201,
2000 SCC 31, [2000] 10 W.W.R. 1, 144 C.C.C. (3d) 385, 34 C.R. (5th) 1; Rio
Hotel Ltd. v. New Brunswick (Liquor Licensing Board), [1987] 2
S.C.R. 59, 1987 72 (SCC), [1987] S.C.J. No. 46, 44 D.L.R. (4th) 663
Statutes referred to
Absconding Debtors Act, R.S.O. 1990, c. A.2
Canadian Charter of Rights and Freedoms, ss. 7, 8, 9, 11(d)
Constitution Act, 1867, ss. 91, 92
Criminal Code, R.S.C. 1985, c. C-46, s. 11
Customs Act, R.S.C. 1985, c. 1 (2nd Supp.)
Fraudulent Conveyances Act, R.S.O. 1990, c. F.29
Insurance Act, R.S.O. 1990, c. I.8, ss. 233, 385
Land Titles Act, R.S.O. 1990, c. L.5, ss. 155 [as am.], 156 [as
am.], 157
Remedies for Organized Crime and Other Unlawful Activities Act,
2001, S.O. 2001, c. 28 (Civil Remedies Act, 2001), s. 1, Part
III, Part IV, Part V, ss. 16, 17, 18, 19 [as am.]
Authorities referred to
Hogg, Peter W., Constitutional Law of Canada, looseleaf
(Scarborough, Ont.: Thomson Carswell, 1992)
@6
APPEAL from the judgment of Loukidelis J., [2006] O.J. No.
2236 (S.C.J.), granting an application for forfeiture.
@8
James Diamond and Messod Boussidan, for the appellant.
Robin K. Basu and James McKeachie, for the respondent.
Paul Burstein and Louis P. Strezos, for intervenor The
Criminal Lawyers' Association.
@7
[1] BY THE COURT: -- 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
[page171] 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
Province of Ontario and contrary to sections of the Canadian
Charter of Rights and Freedoms. The Criminal Lawyers'
Association (the "intervenor") has been granted standing to
intervene in relation to the constitutional issues.
Background
[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.
The Civil Remedies Act
[5] The CRA was enacted in 2001 and took effect in April
- 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 [page172]
(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.
The Issues Raised on Appeal
[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
(6) finding that the CRA does not violate s. 8 of the
Charter; and
(7) allowing the application for forfeiture on its merits.
I -- Standing
Issue 1: Standing
[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 [page173] Kitkatla Band v. British Columbia (Minister
of Small Business, Tourism and Culture), 2002 SCC 31, [2002] 2 S.C.R. 146,
2002 SCC 31, [2002] S.C.J. No. 33 and MacKay v. Manitoba, [1989] 2 S.C.R.
357, 1989 26 (SCC), [1989] S.C.J. No. 88 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 86 (SCC), [1995] 2 S.C.R. 97, [1995]
S.C.J. No. 36 and Hy and Zel's Inc. v. Ontario (Attorney
General); Paul Magder Furs Ltd. v. Ontario (Attorney General),
1993 30 (SCC), [1993] 3 S.C.R. 675, [1993] S.C.J. No. 113, 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, 1997 17020 (SCC), [1998] 3 S.C.R. 157, [1998] S.C.J. No.
- 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 69 (SCC), [1985] 1 S.C.R. 295, [1985] S.C.J. No.
- on the basis that the appellant was not facing criminal
charges. [page174]
[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.
II -- The Constitutional Challenge: Federalism
[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
Ontario Public Service Employees' Union v. Ontario (Attorney
General), 1987 71 (SCC), [1987] 2 S.C.R. 2, [1987] S.C.J. No. 48, Dickson
C.J.C. wrote [at para. 24]: "[I]n my opinion, the Court should
be particularly cautious about invalidating a provincial law
when the federal government does not contest its validity."
[18] Third, the Ontario Civil Remedies Act falls within a
larger national and international framework of civil forfeiture
schemes that operates in addition to conviction-based
confiscation laws. Manitoba, Saskatchewan, British Columbia and
Alberta have all recently enacted civil forfeiture schemes that
are similar to Ontario's (Alberta's has not yet been proclaimed
in force), and Qu‚bec recently placed a civil forfeiture bill
before the National Assembly. As well, the United Kingdom,
Ireland, South Africa, the Commonwealth of Australia and five
of the Australian states have recently enacted non-conviction-
based civil forfeiture statutes. Most of these jurisdictions
already had in place conviction-based regimes as part of their
criminal law.
[19] Against this backdrop, we turn to the issues. [page175]
Issue 2: Did the application judge err in his analysis of the
pith and substance of the CRA?
[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.
Issue 3: Did the application judge err in failing to classify
the CRA as criminal law?
[22] The application judge noted that in the Reference re:
Firearms Act (Canada), 2000 SCC 31, [2000] 1 S.C.R. 783, [2000] S.C.J. No.
31, ("Firearms Reference"), the Supreme Court reiterated that a
law can be classified as criminal law when it has a criminal
purpose backed by a prohibition and a penalty.
[23] The CRA does not define or create any offence. It has
nothing to do with the identification, charging, prosecution,
[page176] 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 (SCC), [1983] 1 S.C.R. 43, [1983] S.C.J. No. 6,
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 intervenor 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.
(i) Civil and property law consequences
[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. Canada (Minister of National
Revenue), 2004 SCC 81, [2004] 3 S.C.R. 737, [2004] S.C.J. No. 58. That
decision held that the forfeiture scheme under the federal
Customs Act, R.S.C. 1985, c. 1 (2nd Supp.) was a civil
mechanism. It was not penal in nature for purposes of the
application of certain Charter rights. In our view, Martineau
provides strong support for the proposition that [page177]
forfeiture under the CRA is a matter of civil law. While
Martineau was not a division of powers case, we see no reason
why the reasoning used by the court when it considered the
forfeiture process under the Customs Act should not apply
equally to the forfeiture process under the CRA. The court
stated at para. 45:
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, [2005] NI 383, 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.
(ii) Compensation of victims of crime
[29] Compensation of victims of crime is also a matter of
property and civil rights in the province. In R. v. Zelensky,
1978 8 (SCC), [1978] 2 S.C.R. 940, [1978] S.C.J. No. 48, 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 [page178] property
rights and remedies can be determined: R. v. Raponi, [2004] 3
S.C.R. 35, 2004 SCC 50, [2004] S.C.J. No. 48, 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, 1923 43 (SCC), [1923] S.C.J. No. 30, at p. 684 S.C.R. per Duff J.;
Canada (Attorney General) v. Montr‚al (City), [1978] 2 S.C.R.
770, 1978 201 (SCC), [1978] S.C.J. No. 33, at p. 792 S.C.R. per Beetz J. We do
not accept the submission that these cases can be distinguished
on the basis that they focus on future prevention while the CRA
focuses on past wrongdoing. Like the closure of the premises in
Bedard and the banning of parades in Dupond, the forfeiture of
proceeds under the CRA removes a resource that is capable of
being used to promote crime in the future.
Issue 4: Did the application judge err in finding that the
CRA's intrusions into the criminal law are incidental to its
purpose?
[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 Ltd.,
1989 133 (SCC), [1989] 1 S.C.R. 641, [1989] S.C.J. No. 28, at p. 669 S.C.R.
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 [page179] 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 72 (SCC), [1987] 2 S.C.R. 59, [1987] S.C.J. No. 46, at p. 65
S.C.R., 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.
Conclusion: The constitutional challenge on federalism
grounds
[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.
III -- The Charter Issues
[38] Before the application judge, the appellant argued that
the CRA violates ss. 7, 8, 9 and 11(d) of the Charter. The
appellant [page180] has abandoned the challenge to ss. 7 and 9.
The intervenor submits that s. 8 is not violated and does not
address s. 11(d).
Issue 5: [Section 11(d)](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html) of the [Charter](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html)
[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 41 (SCC), [1987] 2 S.C.R. 541, [1987]
S.C.J. No. 71, 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 149 (SCC), [1990] 1 S.C.R. 3, [1990] S.C.J. No. 1, 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 p. 561
S.C.R. 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. [page181]
Issue 6: [Section 8](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html) of the [Charter](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html)
[45] We agree with the submission of the Criminal Lawyers'
Association and the respondent that, on the facts of this case,
no s. 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.
IV -- The Forfeiture Application
Issue 7: The merits of the forfeiture application
(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; [page182]
-- 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.
(b) Should there have been a trial of the issues?
[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] O.J.
No. 3043, 2005 25180 (ON CA), 256 D.L.R. (4th) 466 (C.A.), on which he was counsel
and upon which he now relies in arguing for a trial of an
issue. [page183]
[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.
Disposition
[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.
Appeal dismissed.
@1
@H