Attorney General of Ontario v. 20 Strike Avenue et al.

[Indexed as: Ontario (Attorney General) v. 20 Strike Avenue]

Ontario Reports

Court of Appeal for Ontario,

MacPherson, Cronk, Gillese JJ.A.

May 16, 2014

120 O.R. (3d) 377 | 2014 ONCA 395

Case Summary

Remedies — Forfeiture — Exceptions — Owner's son producing marijuana and using drugs while renting residence from owner — Application judge dismissing Attorney General's application under s. 8(1) of Civil Remedies Act for forfeiture of residence as property used to engage in unlawful activity — Application judge finding that forfeiture would not be in interests of justice because of six-year delay by Attorney General in bringing application — That finding tainted by palpable and overriding error as Attorney General had in fact acted expeditiously after receiving forfeiture recommendation from Civil Remedies for Illicit Activities Office — Application judge also erring by failing to give effect to clear provision in s. 8(5) of Act that no limitation period applies to forfeiture application under s. 8(1) — "Interests of justice" exception nevertheless applying — Forfeiture manifestly harsh and inequitable as owner was not implicated in and did not benefit from son's unlawful activity, had tried to help son overcome drug addiction and had been trying to sell property for some time — Civil Remedies Act, 2001, S.O. 2001, c. 28, s. 8(1), (5). [page378]

RP bought a single-family residence near his business and rented it to his son FP, who was employed in the business. The rent was deducted from FP's salary. FP, who had a long-standing and serious drug addiction, set up a marijuana grow operation in the residence which was discovered by the police in 2006. After pleading guilty to drug offences and serving his sentence, he resumed living at the residence. He was arrested again in July 2010, and a quantity of drugs consistent with personal use was found in the residence. After serving his sentence, he returned to live in the residence. In January 2011, he was arrested again and a small quantity of drugs was found in the residence. After that arrest, he never again resided at the residence. In February 2012, the Attorney General brought an application under s. 8(1) of the Civil Remedies Act, 2001 ("CRA") for forfeiture of the residence as property used to engage in unlawful activity. The application judge found that the "responsible owner" exception in s. 8(3) of the Act did not apply as RP had failed to establish that he had taken reasonable steps to ensure that the property was not used as an instrument of unlawful activity. He found that forfeiture would clearly not be in the interests of justice because of what he found to be an unexplained six-year delay by the Attorney General in bringing the application. The application was dismissed. The Attorney General appealed.

Held, the appeal should be dismissed.

The application judge erred in finding that the Attorney General had delayed bringing the application for six years. The police first referred the case for evaluation of a possible CRA forfeiture proceeding in September 2011, and the Attorney General acted expeditiously in bringing the application after receiving a forfeiture recommendation from the Civil Remedies for Illicit Activities Office. The application judge also erred by failing to give effect to the clear provision in s. 8(5) of the CRA that there is no limitation period for a s. 8(1) forfeiture proceeding concerning property that is an instrument of unlawful activity. Fresh consideration of the application of the "interests of justice" exception was required. In the circumstances of this case, forfeiture of the property would be manifestly harsh and inequitable and therefore would clearly not be in the interests of justice. The connection between the property and FP's illegal activities was neither consistent nor overwhelming. After he served his sentence for producing marijuana, it appeared that FP was living at the property while engaging in drug activities, rather than using the property to carry on those activities. It was also relevant that, following FP's 2006 arrest, RP attempted to sell the property, which was consistent with placing it beyond FP's use for unlawful purposes. RP was not implicated in and did not benefit from FP's unlawful activities, and had consistently tried to help him overcome his addiction. In those circumstances, a forfeiture order would not promote the deterrence and crime prevention goals of the CRA. There was also a strong argument that when the forfeiture application was commenced, the property no longer constituted an instrument of unlawful activity. While RP's conduct did not, by itself, meet the threshold for discretionary relief from forfeiture under the "interests of justice" exception, the reasonableness of his conduct was nevertheless a highly relevant consideration. It is not axiomatic that because a property owner's conduct does not meet the statutory requirements of the "responsible owner" exception, his or her conduct is also unreasonable for the purpose of the "interests of justice" exception. There was no evidence that RP turned a blind eye to his son's drug problems, and there was uncontradicted evidence to the contrary. Further, there was no evidence that he knowingly countenanced the criminal activities that flowed from FP's drug addiction. [page379]

Ontario (Attorney General) v. 8477 Darlington Crescent, [2011] O.J. No. 2122, 2011 ONCA 363, 279 O.A.C. 268, 269 C.C.C. (3d) 159, 333 D.L.R. (4th) 326, 202 A.C.W.S. (3d) 505, apld

Other cases referred to

Ontario (Attorney General) v. 51 Taylor Avenue, [2014] O.J. No. 2355, 2014 ONCA 396; Ontario (Attorney General) v. 714 Railton Avenue, London PIN #0813-0834 (LT) (In Rem), [2014] O.J. No. 2357, 2014 ONCA 397; Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 100 (SCC), [1994] 2 S.C.R. 490, [1994] S.C.J. No. 59, 115 D.L.R. (4th) 478, 168 N.R. 381, [1994] 7 W.W.R. 37, J.E. 94-1053, 20 Alta. L.R. (3d) 296, 155 A.R. 321, 23 C.C.L.I. (2d) 161, [1994] I.L.R. Â1-3077 at 2913, 48 A.C.W.S. (3d) 1240

Statutes referred to

Civil Remedies Act, 2001, S.O. 2001, c. 28 [as am.], ss. 1 [as am.], (c) [as am.], 3(1), (5), 7(1) [as am.], 8 [as am.], (1), (3), (5)

Criminal Code, R.S.C. 1985, c. C-46

Rules and regulations referred to

O. Reg. 91/02 (Remedies for Organized Crime and Other Unlawful Activities Act, 2001)

APPEAL from the order of McCarthy J., [2013] O.J. No. 1632, 2013 ONSC 2130 (S.C.J.) dismissing an application for forfeiture of a residential property.

William J. Manuel and Dan Phelan, for appellant.

Sharon E. Lavine and Peter R. Hamm, for respondent.

The judgment of the court was delivered by

CRONK J.A.: —

A. Introduction

[1] This Crown appeal arises from the dismissal of an application by the Attorney General of Ontario ("AGO") for forfeiture of a residential property in Bowmanville, Ontario under the Civil Remedies Act, 2001, S.O. 2001, c. 28 ("CRA"). The CRA establishes a civil forfeiture of property scheme, distinct from the forfeiture provisions of the Criminal Code, R.S.C. 1985, c. C-46, aimed at deterring crime, compensating victims of crime and remedying the societal effects of criminality. The statute provides for the forfeiture of certain kinds of property in Ontario to the provincial Crown in specific circumstances, including property that constitutes proceeds of unlawful activity (s. 3(1)) and property that is used to engage in unlawful activity (s. 8(1)).

[2] Forfeiture under the CRA, however, is subject to statutory exceptions, two of which are relevant to requests under s. 8(1) for forfeiture of property that is used to engage in unlawful activity. [page380]

[3] The first exception, found in s. 8(3) of the CRA, applies where the party seeking to avoid forfeiture establishes that he or she is a "responsible owner" of the property sought to be forfeited (the "responsible owner exception"). In this event, the court is required to make an order that protects the owner's interest in the property, unless the AGO demonstrates that such an order would "clearly not be in the interests of justice".

[4] The second exception, provided for under s. 8(1) itself, affords the courts discretion to relieve against forfeiture where a forfeiture order would "clearly not be in the interests of justice" (the "interests of justice exception").

[5] This appeal was heard at the same time as Ontario (Attorney General) v. 51 Taylor Avenue, [2014] O.J. No. 2355, 2014 ONCA 396 and Ontario (Attorney General) v. 714 Railton Avenue, London PIN #0813-0834 (LT) (In Rem), [2014] O.J. No. 2357, 2014 ONCA 397, released concurrently with these reasons. Each case involves a s. 8(1) application by the AGO for forfeiture of property used to engage in unlawful activity, defined under the CRA as property that is "an instrument of unlawful activity".

[6] In this case, the application judge concluded that the property owner could not rely on the responsible owner exception to avoid forfeiture of the targeted residence. However, he also held that the interests of justice exception to forfeiture applied in all the circumstances. In particular, he found that the AGO had delayed for six years in commencing a forfeiture proceeding, without adequate explanation and to the prejudice of the property owner. In the application judge's view, this rendered forfeiture unfair and "a manifestly harsh and inequitable result". He therefore dismissed the AGO's forfeiture application.

[7] The Crown appeals, arguing that the application judge's analysis of the interests of justice exception to forfeiture is infected by palpable and overriding factual errors, as well as errors of law.

[8] The respondent defends the application judge's reliance on the interests of justice exception to deny forfeiture. However, it submits that the application judge erred by holding that the responsible owner exception to forfeiture did not apply on the facts here. The respondent says that both exceptions to forfeiture under s. 8(1) are engaged in this case.

B. Relevant Statutory Provisions

[9] Section 1 of the CRA contains the following description of the purpose of the CRA: [page381]

1. 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, including vehicles as defined in Part III.1, from being used to engage in certain unlawful activities; and

(d) preventing injury to the public that may result from conspiracies to engage in unlawful activities.

[10] Section 8(1) of the CRA authorizes the forfeiture of property that is an "instrument of unlawful activity". It reads:

8(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 an instrument of unlawful activity.

(Emphasis added)

[11] Section 7(1) of the CRA defines the phrases "instrument of unlawful activity" and "unlawful activity" in this fashion:

"instrument of unlawful activity" means property that is likely to be used to engage in unlawful activity that, in turn, would be likely to or is intended to result in the acquisition of other property or in serious bodily harm to any person, and includes any property that is realized from the sale or other disposition of such property;

"unlawful activity" means an act or omission that,

(a) is an offence under an Act of Canada, Ontario or another province or territory of Canada, or

(b) is an offence under an Act of a jurisdiction outside Canada, if a similar act or omission would be an offence under an Act of Canada or Ontario if it were committed in Ontario,

whether the act or omission occurred before or after this Part came into force.

[12] Forfeiture under s. 8(1) is expressly subject to the responsible owner exception established by s. 8(3) of the CRA. Section 8(3) states:

8(3) If the court finds that property is an instrument of unlawful activity and a party to the proceeding proves that he, she or it is a responsible 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 responsible owner's interest in the property. [page382]

[13] The term "responsible owner" is defined in s. 7(1) of the CRA in these terms:

"responsible owner" means, with respect to property that is an instrument of unlawful activity, a person with an interest in the property who has done all that can reasonably be done to prevent the property from being used to engage in unlawful activity, including,

(a) promptly notifying appropriate law enforcement agencies whenever the person knows or ought to know that the property has been or is likely to be used to engage in unlawful activity, and

(b) refusing or withdrawing any permission that the person has authority to give and that the person knows or ought to know has facilitated or is likely to facilitate the property being used to engage in unlawful activity.

[14] As I have said, forfeiture of an instrument of unlawful activity is also subject to the interests of justice exception created by s. 8(1). The CRA contains no definition of the broad phrase "interests of justice". Instead, it is left to the court to determine, on a case-by-case basis, whether the applicable circumstances justify granting relief from forfeiture.

[15] Finally, by operation of s. 8(5) of the CRA, no statutory limitation period applies to a s. 8 forfeiture proceeding.

C. Facts

(1) Ownership and occupancy of the property

[16] On February 24, 2012, the AGO applied to the Superior Court of Justice for forfeiture of a single-family, private residence located at 20 Strike Avenue, in Bowmanville (the "property"). At all material times, Roger Parker ("Roger"), the president and principal shareholder of Parker Brothers Textile Mills ("Parker Brothers"), was the registered owner of the property.

[17] Roger purchased the property in 2003 for $159,900, assuming a mortgage in the approximate amount of $147,000 in partial satisfaction of the purchase price. Roger honoured his mortgage obligations in the normal course, from his own funds, until the date of the AGO's forfeiture application.

[18] It was Roger's evidence that he acquired the property for reasons related to his textile business. He expected that it would serve as his residence if he were required to attend the Parker Brothers facility in Bowmanville for significant periods of time. As it happened, Roger never resided at the property. Instead, he rented the property to his son, Fred Parker ("Fred"), at various intervals between 2004 and late January 2011. Fred worked at the Parker Brothers textile plant in Bowmanville. Roger charged [page383] Fred rent for his occupancy of the property, in the amounts of $800 and, later, $1,310 per month. He arranged for the rental payments to be automatically deducted from his son's salary at Parker Brothers.

[19] At the time of the forfeiture hearing, Fred was 43 years old. It is common ground that he has battled a long-standing and serious addiction to drugs since he was about 18 years of age. For decades, with Roger's assistance and that of other family members, Fred repeatedly attempted to overcome his drug habit. Unfortunately, his efforts were unsuccessful.

[20] Fred also has a lengthy criminal record, consisting of approximately 36 criminal convictions dating from 1989, including at least nine convictions for the possession of drugs or possession of drugs for the purposes of trafficking. He also has 14 convictions for failing to comply with court orders. In several instances, Roger acted as Fred's bail surety in respect of his criminal charges, and paid his legal bills.

(2) Criminal activity at the property

(a) March 2006 police investigation

[21] On March 10, 2006, the police executed a search warrant at the property. They found an indoor marijuana grow operation in three rooms in the basement of the home, with 86 marijuana plants having an estimated street value of up to $86,000. They also discovered various drug-related paraphernalia, 117.8 grams of packaged marijuana, 147 grams of cocaine, small amounts of cannabis resin, oxycodone and ecstasy, and $2,549.15 in cash located in various rooms of the house. Fred, who was then residing at the property, was arrested.

[22] Later the same month, the police executed a search warrant at the Parker Brothers plant in Bowmanville, where Fred worked. At the plant, the police discovered a sophisticated, industrial-scale marijuana grow operation in a hidden room, with 895 marijuana plants having an estimated street value of $895,000.

[23] From March 10, 2006 until May 2, 2006, Fred was detained in custody. On the latter date, he was released on bail with Roger acting as surety. While on bail, he resided with his father.

[24] On January 7, 2008, Fred pleaded guilty to production of marijuana and possession of cocaine for the purposes of trafficking. He was sentenced to two years and six months' imprisonment. [page384]

(b) July 2010 police investigation

[25] In September 2009, Fred was released on parole. He resumed living at the property, together with his girlfriend and son.

[26] In late June or early July 2010, having received information that Fred was selling drugs from the property while on parole, the police placed Fred under surveillance. During the surveillance, the police saw Fred attending a known crack house located near the property. They also observed significant traffic at the crack house and at the property, when Fred was present, consistent with drug trafficking activity.

[27] On the afternoon of July 2, 2010, Fred was arrested outside the crack house. He was found in possession of $1,610 in cash, eight grams of cocaine, 33 oxycodone pills of varying strength, and a vial containing five grams of hash oil/cannabis resin.

[28] Later the same day, the police executed a search warrant at the property. They seized a variety of pills, including a bottle of 15 oxycocet pills (in part containing oxycodone) and two tablets containing the controlled substance nabilone, together with a digital scale and marijuana grinder, from the kitchen of the house.

[29] On July 20, 2010, Fred pleaded guilty to possession for the purposes of trafficking (cocaine) and possession of a controlled substance (oxycodone). He was sentenced to five months in jail, plus two years' probation.

[30] As a result of these convictions, Fred was in custody from early July 2010 to October 2010. On his release from jail, he returned to live at the property.

(c) January 2011 police investigation

[31] In December 2010 and January 2011, the police received information that Fred and his girlfriend were trafficking in prescription drugs. On January 19 and 20, 2011, the police observed the couple leaving the property and meeting with various individuals for short periods of time in their vehicle, engaging in what the police believed was a series of drug transactions. These encounters included a brief meeting with an individual who, on subsequent arrest, was found in possession of three oxycodone pills and 2.4 grams of crack cocaine.

[32] On January 22, 2011, the police monitored Fred throughout the day. Later that evening, when the police conducted a traffic stop of the car that Fred was driving, Fred and his girlfriend were arrested for trafficking. During a search of the vehicle incident to arrest, the police discovered small quantities of [page385] drugs and drug-related items on Fred's person or in the car, including 0.02 grams of crack cocaine, 178 marijuana seeds, seven vials of cannabis resin, a spoon with cocaine residue, two crack pipes, two needles containing an unknown substance, a butane torch and $1,335 in cash.

[33] The next day, January 23, 2011, the police again executed a search warrant at the property. On this occasion, they found five 30 milligram benzodiazapine tablets, 30 milligrams of marijuana and 73 unknown pink tablets, plus a spoon containing 0.4 grams of cocaine residue, a digital scale and a stun taser. Virtually none of these items was in plain view.

[34] On May 18, 2011, Fred pleaded guilty to possession of a controlled substance, possession of a prohibited weapon and three counts of breach of recognizance. He was sentenced to approximately 11 months in jail and two years' probation.

[35] After his arrest on January 22, 2011, Fred never again resided at the property. On his release from custody in December 2011, he resumed living with his father.

(3) Forfeiture proceeding and sale of the property

[36] On February 24, 2012, the AGO applied for an order forfeiting the property as an instrument of unlawful activity under s. 8(1), or as the proceeds of unlawful activity under s. 3(1), of the CRA.[^1] On the same day, the AGO obtained a 30-day preservation order concerning the property. The preservation order was subsequently continued until the hearing of the forfeiture application or further court order.

[37] At the time of the forfeiture application, the property was listed for sale. It was Roger's evidence that he had attempted to sell the property as early as 2007, without success. By court order dated June 20, 2012, Roger was authorized to sell the property, subject to various conditions, including the requirement that the net proceeds of sale be paid into court pending the determination of the AGO's forfeiture application. The property was subsequently sold on consent of the parties and the net proceeds of sale, in the amount of $123,269.54, were paid into court. [page386]

(a) Parties' positions at the forfeiture hearing

[38] In his application for forfeiture, the AGO identified Roger as the registered owner of the property. The AGO asserted that Roger purchased the property for Fred's benefit or, alternatively, that Fred was "a nominee owner" of the property. The AGO also alleged that, based on the numerous times that Roger had acted as Fred's bail surety, he appeared to be fully aware of Fred's drug trafficking and criminal activity. Indeed, the AGO maintained that Roger "facilitated" and "condoned" his son's criminal activities at the property and the Parker Brothers Bowmanville plant.

[39] At the forfeiture hearing, the AGO argued that Roger had failed to prevent Fred from repeatedly using the property to engage in unlawful activity. As a result, Roger could not demonstrate that he was a "responsible owner" of the property within the meaning of the responsible owner exception to forfeiture under s. 8(3) of the CRA. Similarly, according to the AGO, Roger could not bring himself within the interests of justice exception to forfeiture under s. 8(1) of the CRA. Neither exception to forfeiture having been triggered, a forfeiture order was therefore mandatory.

[40] The respondent conceded that the property could be considered an "instrument of unlawful activity", as defined under s. 7 of the CRA. The respondent argued, however, that Roger was a responsible owner of the property within the meaning of ss. 7 and 8(3) of the CRA, with the result that the responsible owner exception to forfeiture applied. The respondent also maintained, based on the circumstances as a whole, that the interests of justice exception to forfeiture applied. In support of this submission, the respondent emphasized the limited connection between the property and Fred's unlawful activities, and Roger's own limited connection to his son's unlawful activities. These considerations, the respondent urged, compelled the conclusion that forfeiture should be denied based on the interests of justice exception.

(b) Application judge's decision

[41] The application judge reviewed the relevant provisions of the CRA, the purposes of the CRA and the parties' positions. He concluded that the property was an instrument of unlawful activity within the meaning of s. 7 of the CRA.

[42] The application judge then considered whether the statutory exceptions to forfeiture applied in the circumstances. [page387] He first addressed the responsible owner exception, holding as follows:

(1) Roger failed to establish that he had taken reasonable steps to ensure that the property was not used as an instrument of unlawful activity;

(2) Roger's evidence that he made regular visits to the property to determine if his son was engaged in drug activity and that, during these visits, the house was clean and free of drug paraphernalia, must be rejected;

(3) Roger was aware, prior to 2011, of his son's problems with substance abuse and law enforcement authorities. He was also aware, on at least two occasions (as a result of Fred's 2006 and 2010 convictions), of Fred's unlawful activity at the property; and

(4) nonetheless, Roger failed to take any steps to terminate his son's use of the property. Moreover, he also failed to take "the type of extraordinary measures (such as unscheduled or surprise visits) that a reasonably diligent property owner, in the circumstances, would undertake".

[43] Based on these findings, the application judge held that the respondent could not avail itself of the responsible owner exception.

[44] The application judge then turned to the interests of justice exception to forfeiture. He considered certain of the principles relating to forfeiture described by this court in Ontario (Attorney General) v. 8477 Darlington Crescent, [2011] O.J. No. 2122, 2011 ONCA 363, 279 O.A.C. 268 ("Darlington"),[^2] in particular, whether Roger's conduct, as owner of the property, assisted the respondent. He found that

(1) there was no suggestion that Roger was complicit in, or profited from, his son's unlawful activities at the property;

(2) contrary to the AGO's contention, Roger was the sole and exclusive beneficiary of the property, having purchased it for legitimate reasons; and

(3) Roger rented the property to his son for legitimate reasons connected with his son's employment by Parker Brothers. [page388]

[45] However, the application judge also held that

(4) since Roger had failed to act as a responsible owner in relation to the property, his conduct alone was insufficient to trigger the interests of justice exception to forfeiture.

[46] Having considered Roger's conduct, as owner of the property, the application judge then reviewed what he termed "the entire circumstances of the case", in particular, the AGO's conduct, to determine whether the interests of justice exception should be invoked. He made the following key findings:

(1) although the AGO had grounds to bring a forfeiture application as early as March 2006, the AGO delayed six years -- until late February 2012 -- before commencing the application;

(2) it was "clearly not in the interests of justice" to allow the AGO "to bide" his time in commencing proceedings under the CRA, while Roger, as an "unsuspecting property owner", continued to maintain the property and to use his own funds to pay down his mortgage, thereby increasing his equity in the property over time;

(3) the only reason offered by the AGO for the six-year delay was a backlog in prospective forfeiture applications; and

(4) in the absence of an adequate explanation for the delay and in light of the prejudice to the property owner, the interests of justice exception to forfeiture applied to prevent the AGO from delaying "beyond a reasonable period from the date when prima facie grounds for forfeiture existed".

[47] The application judge's conclusion on the interests of justice exception is set out in this succinct passage, at para. 19 of his reasons:

I cannot imagine that reasonable members of the community would not find it troubling, perhaps even shocking, for a court to order forfeiture in these circumstances. Fairness requires a balancing of the competing interests of the [appellant] and the property owner. An unexplained six year delay in bringing a forfeiture application under s. 8(1) of the [CRA], while an unsuspecting owner of the property builds up his equity in a property for the benefit of the [AGO], is unfair to the point of offensive. To grant forfeiture in these circumstances would, in my view, be a manifestly harsh and inequitable result. [page389]

[48] Accordingly, relying on the s. 8(1) interests of justice exception to forfeiture, the application judge dismissed the AGO's forfeiture application.

D. Issues

[49] The Crown argues that the application judge's analysis of the interests of justice exception to forfeiture is fatally flawed in several respects. It submits that the application judge erred

(1) by finding that the AGO delayed for six years, without adequate explanation and to the prejudice of the property owner, in commencing the forfeiture application;

(2) by imposing a judicially created limitation period for forfeiture applications under s. 8(1) of the CRA;

(3) by improperly substituting his discretion for that of the police and the AGO regarding whether, and when, a forfeiture application should be commenced; and

(4) by adopting a broad and liberal construction of the interests of justice exception under s. 8(1) of the CRA.

[50] The respondent raises an additional issue, arguing that the application judge erred

(5) by concluding that the CRA s. 8(3) responsible owner exception to forfeiture does not apply in this case.

E. Analysis

(1) Interests of justice exception to forfeiture

[51] The interpretation of the interests of justice and responsible owner exceptions to forfeiture under s. 8(1) and (3) of the CRA are matters of first impression for this court.

[52] However, this court has considered similar issues under the CRA, in the context of forfeiture applications relating to property that constitutes the proceeds of crime. Section 3(1) of the CRA provides for relief from forfeiture of such property where a forfeiture order would "clearly not be in the interests of justice". In Darlington, this court considered this exception to forfeiture and commented, at para. 84:

The "interests of justice" exception to forfeiture recognizes that, given the very broad definition of "proceeds of unlawful activity" and the narrow exception to forfeiture carved out by the definition of "legitimate owner", there will be cases that fall within the scope of the forfeiture power where, on any reasonable view, forfeiture would be a draconian and unjust result. [page390]

[53] These comments are equally applicable to the interests of justice exception under s. 8(1) of the CRA and should guide this court's approach to relief from forfeiture under that provision. I will return to the holdings in Darlington later in these reasons.

(a) Findings of unexplained, prejudicial and unfair delay

[54] The Crown's primary submission on appeal is that the application judge's analysis of the interests of justice exception under s. 8(1) rests on several factual findings that are tainted by palpable and overriding errors. It contends that the application judge's core finding that the AGO delayed for six years in seeking forfeiture of the property, together with his associated findings regarding the reason for the delay and the ensuing prejudice to the property owner, are fatally flawed. These errors, the Crown says, led the application judge to further err by invoking the interests of justice exception to deny forfeiture of the property. Since these submissions are interrelated, I will address them together.

[55] First, the finding of a six-year delay. The application judge held, in effect, that the AGO knowingly delayed -- "bide[d] his time" -- for six years in commencing the forfeiture application. This finding comes very close to a holding of abuse of process or bad faith by the AGO. I agree with the Crown that, on this record, this serious finding is unsustainable.

[56] Simply put, the evidentiary record does not support the finding of a six-year delay attributable to the AGO. The record details the staged process followed in Ontario under O. Reg. 91/02 (Remedies for Organized Crime and Other Unlawful Activities Act, 2001) for the determination whether a civil forfeiture proceeding should be commenced under the CRA. In brief, this process involves an investigation by the police into suspected unlawful activity at a property, a referral by the police to an asset forfeiture unit officer for assessment, a referral by that officer to the Crown Law Office -- Criminal to perform a "gatekeeping" function concerning potential civil forfeiture proceedings and, if a forfeiture submission is to proceed, a referral by that office to the Civil Remedies for Illicit Activities Office ("CRIA") -- the office within the Ontario Ministry of the Attorney General ("MAG") responsible for proceedings under the CRA. The CRIA then provides an opinion to the AGO about whether a forfeiture proceeding should be commenced.

[57] As a result of this multi-step process, the AGO is generally not in a position to decide whether to approve the initiation of CRA forfeiture proceedings until a forfeiture submission has [page391] been received and evaluated by the CRIA and provided, with advice, to the AGO. The decision whether to advance a forfeiture submission is made initially by the police and then by officials in the Crown Law Office -- Criminal of the MAG. Only then is a forfeiture submission potentially forwarded to the CRIA and, from it, to the AGO.

[58] The record here reveals that the police first referred this case for evaluation of a possible CRA forfeiture proceeding in September 2011. Prior to that date, the police acted independently in the enforcement of the criminal law during their investigations of potential unlawful activities at the property. It appears that it was not until approximately November 2011 that the forfeiture submission was forwarded by the CRIA to the AGO for consideration.

[59] In these circumstances, I do not think it can fairly be said that the AGO delayed six years in initiating the forfeiture application. The forfeiture submission did not even reach the MAG from the police until September 2011. Measured from that date, the forfeiture proceeding was commenced within five months of the initial police referral and within approximately three months of the CRIA submission to the AGO.

[60] Contrary to the application judge's finding, therefore, there is no evidence that the AGO "bide[d]" his time in commencing the forfeiture application, let alone for six years. Lacking any evidentiary footing, this finding is tainted by palpable and overriding error.

[61] I note that the respondent made no complaint of undue and unfair delay in its materials on the forfeiture application. Nor does it advance such a claim before this court. The issue of excessive delay appears to have been raised by the application judge, of his own motion, during submissions at the forfeiture hearing.

[62] I would not foreclose the possibility that, in a proper case, the timeliness of a forfeiture application may be relevant to the analysis whether the interests of justice exception to forfeiture is implicated. Indeed, the AGO acknowledged as much during oral argument at the appeal hearing. However, an undue delay claim must be assessed in the context of the full record. This did not occur in this case. The application judge's reasons make no mention of the CRA referral process or of the critical dates on which the forfeiture submission was first received by the MAG and subsequently forwarded to the AGO.

[63] There is a second material defect in the application judge's findings regarding delay. In one part of his reasons, the application judge stated that a six-year delay in commencing the [page392] forfeiture application arose because of a backlog in prospective forfeiture applications. Later in his reasons, the application judge suggested that the cause of the delay was "unexplained" and that this unexplained delay and ensuing prejudice to the property owner resulted in unfairness "to the point of [being] offensive". I take these seemingly conflicting statements to mean that, in the application judge's view, the AGO failed to offer an acceptable explanation for what the application judge regarded as an unwarranted and prejudicial delay in commencing the forfeiture proceeding.

[64] This finding is also infected by palpable and overriding error. Before this court, both parties acknowledge that there was no evidence, and no party even suggested before the application judge, that the timing of the commencement of the forfeiture application was driven by a backlog in forfeiture applications.

[65] Finally, the application judge's dismissal of the forfeiture application was based in part on his finding of prejudice to Roger, as the "unsuspecting" property owner, due to the appreciation of Roger's equity in the property prior to the commencement of the forfeiture application. I have already concluded that the application judge's findings of unexplained and unfair delay attributable to the AGO are unsustainable. It follows that any increase -- or decrease -- in Roger's equity in the property prior to the date of the forfeiture application was largely irrelevant. At its highest, this was but one factor to be considered in the analysis whether the court should exercise its discretion under the interests of justice exception to shelter the property from forfeiture.

(b) Application judge's approach to s. 8(5) of the CRA

[66] The Crown also argues that the application judge erred in his approach to s. 8(5) of the CRA. Some forfeiture applications under the CRA are subject to a statutory limitation period, as for example, where forfeiture of property that constitutes proceeds of unlawful activity is sought under s. 3(1): see s. 3(5) of the CRA. This stands in stark contrast to forfeiture requests under s. 8(1). Section 8(5) of the CRA provides that there is no limitation period for a s. 8(1) forfeiture proceeding concerning property that is an instrument of unlawful activity.

[67] The application judge was clearly cognizant of this important statutory provision, referring to it at least three times in his reasons. The Crown submits that the application judge nonetheless erred by, in effect, applying a "judicially-imposed limitation period" in respect of s. 8(1) forfeiture applications. In [page393] so doing, the Crown contends, the application judge improperly substituted his own discretion for that of the police and the AGO as to whether, and when, a CRA s. 8(1) forfeiture proceeding should be commenced.

[68] I agree that the application judge erred by failing to give effect to s. 8(5) of the CRA. The legislative direction afforded by s. 8(5) exists for a reason. It is designed to prevent the use of property for unlawful activity, whenever such use is discovered. Section 8(5) confirms the legislature's clear intention that delay alone will not defeat a s. 8(1) forfeiture application concerning property that is used to engage in unlawful activity. It follows that by relying principally, if not exclusively, on his perception of the AGO's delay in this case to deny forfeiture of the property, notwithstanding the plain language of s. 8(5), the application judge further erred.

[69] Moreover, s. 8(5) of the CRA signals the legislature's intention to provide the AGO with wide discretion in determining whether, and when, to commence a s. 8(1) forfeiture application under the CRA. The application judge held that the AGO had grounds, as early as March 2006, to bring a forfeiture application and that the AGO's decision to proceed with forfeiture only in February 2012 was unfair and "manifestly harsh and inequitable". I agree with the Crown's submission that, in so holding, the application judge essentially substituted his discretion under s. 8(1) of the CRA to consider whether forfeiture of the property was clearly not in the interests of justice for the discretion of the police and the AGO regarding the timing for commencement of a s. 8(1) forfeiture application. With respect, this was not the application judge's role.

(c) Fresh consideration of the interests of justice exception

[70] In light of the application judge's errors, described above, it is unnecessary to consider the AGO's other complaints regarding the application judge's exercise of his discretion to relieve against forfeiture of the property. As the application judge's reliance on the interests of justice exception rests on a flawed foundation, it cannot stand. It therefore falls to this court to determine whether the court's discretion to relieve against forfeiture under the interests of justice exception should be exercised.

[71] The test for relief from forfeiture under the interests of justice exception in s. 8(1) of the CRA is a high one. As the Darlington court noted, relief from forfeiture on this ground may only be granted where forfeiture is "clearly" not in the interests of justice. Justice Doherty explained in Darlington, at para. 85: [page394]

[Section] 3(1) does not contemplate that the question of forfeiture will be decided based on a mere balancing of the pros and cons of making a forfeiture order. The word "clearly" modifies the phrase "interests of justice" and must be given some meaning. I think the word "clearly" speaks to the cogency of the claim advanced for relief from forfeiture. The party seeking relief must demonstrate that, in the circumstances, the forfeiture order would be a manifestly harsh and inequitable result.

[72] After careful consideration of the record and in light of the undisputed findings of the application judge, I conclude that forfeiture of the property would be manifestly harsh and inequitable in the circumstances of this case and, hence, that it is clearly not in the interests of justice. Accordingly, the court's discretion to relieve against forfeiture should be exercised. I reach this conclusion for the following reasons.

[73] In Darlington, this court analogized the discretion to refuse forfeiture under s. 3(1) of the CRA to the private law remedy of relief from forfeiture. Citing the Supreme Court's decision in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 100 (SCC), [1994] 2 S.C.R. 490, [1994] S.C.J. No. 59, at p. 504 S.C.R., the Darlington court noted, at para. 87, that the power to relieve from civil forfeiture is both discretionary and fact-specific. Further, a court asked to grant relief from forfeiture under the CRA must consider all factors that are relevant to the "interests of justice": Darlington, at para. 97.

[74] In Darlington, at para. 97, this court recognized that it is not possible to list all the factors that could properly be considered by the court in evaluating the interests of justice in a particular case. However, Doherty J.A. identified the following factors as relevant:

(1) the closeness of the connection between the property and the illegal activity (para. 97);

(2) the reasonableness of the conduct of the party whose property is the subject of the forfeiture application as it relates to the unlawful activity (paras. 98 and 99);

(3) the interplay between the purposes of the CRA and the exercise of the discretion to relieve against forfeiture (paras. 98 and 107); and

(4) the value of the property owner's interest in the property compared to the value of the property that is tainted by the unlawful activity (paras. 98 and 104).

[75] The first three factors listed above are pertinent in this case. In my opinion, the evaluation of these factors on the facts [page395] here yields several compelling reasons that militate in favour of relief from forfeiture of the property.

[76] First, the connection between the property and Fred's illegal activities is neither consistent nor overwhelming. There is no doubt that there was a connection between the property and Fred's drug activities in 2006, when a marijuana grow operation was found at the premises. However, after that discovery, Fred did not reside at the property for three and one-half years. Indeed, when the six-year period between Fred's arrest in March 2006 and the date of the forfeiture application is viewed as a whole, Fred did not live at the property for almost four years and ten months. And, when Fred was released from jail in 2011, Roger did not permit him to resume living at the property. Instead, he was required to reside with his father.

[77] Further, there is no suggestion of drug activity at the property after Fred returned to live there in September 2009, until the summer of 2010. Even then, Fred was arrested at the nearby crack house, not at the property. Further, the drug-related items discovered at the property were consistent with personal drug use.

[78] Fred did suffer a relapse, and return to drug activity in late 2010 and January 2011. However, Fred and his girlfriend were arrested in late January 2011 in their vehicle, from which they were conducting drug transactions. No arrests took place as a result of activities at the property, notwithstanding police surveillance of Fred at the home, and no trafficking charges concerning drug transactions at the property proceeded. On the evidence before the application judge, it appears that Fred was living at the property while engaging in drug activities, rather than using the property to carry on those activities.

[79] It is also relevant that, following Fred's 2006 arrest, Roger attempted to sell the property, albeit without success. On the application judge's findings, Roger's reasons for owning the property were entirely and legitimately related to his business. There was evidence that, in 2007, Roger listed the property for sale, and he testified that he put it up for sale "three or four times". Although his efforts to sell the property were unsuccessful, they do reflect conduct consistent with placing the property beyond Fred's use for unlawful purposes. At a minimum, they undermine any suggestion that Roger intended to permit or was indifferent to his son's activities at the property.

[80] Moreover, by the time of the forfeiture application, the property had been vacant for about one year and was again listed for sale. As I have indicated, it was eventually sold, with [page396] court approval, in 2012. There is no claim that it was available after January 2011 for any unlawful activity.

[81] Finally, throughout his occupancy of the property, Fred paid rent, deducted at source by his employer, Parker Brothers, from his salary. This is not a case where rental payments were generated from the profits of drug-related activities. Nor is this a case where the property owner acquired or maintained the property utilizing funds from unlawful activities. On the application judge's findings, supported by the evidence, Roger was the exclusive beneficiary of the property, having acquired it with his own funds for a bona fide business-related purpose. He also maintained the property and honoured his mortgage obligations utilizing his own funds. Notwithstanding the AGO's more sweeping allegations in his materials on the forfeiture application, there was no evidence at the forfeiture hearing that Roger was complicit in, or profited from, his son's unlawful activities.

[82] In all these circumstances, while the evidence established a connection between the property and unlawful activity sufficient to ground the uncontested finding that the property was an instrument of unlawful activity, that connection was limited and intermittent.

[83] The second important factor to be considered is the interplay between the purposes of the CRA and the application of the interests of justice exception in s. 8(1). In Darlington, this court confirmed, at para. 95, that forfeiture orders under the CRA are intended to further the purposes of the statute, as set out in s. 1. As a result, in deciding whether to grant relief from forfeiture under the CRA, the court must have regard to the effect of granting such relief on the achievement of the purposes of the CRA.

[84] However, the Darlington court also held, at para. 96, that the broad concept of "interests of justice" contemplated under the CRA is not synonymous with the purposes of the CRA identified in s. 1. Rather, those purposes form but part of the concept of "interests of justice": Darlington, at paras. 96 and 107. Justice Doherty explained, at para. 96:

[The phrase "interests of justice"] is a broad one and includes maintaining public confidence in the civil justice process. That confidence is promoted by orders that are, broadly speaking, in accord with the community's sense of fairness. A forfeiture order made in circumstances where any reasonable person would regard the order as excessive, while perhaps serving the purposes of the CRA in the narrow sense, would do a real disservice to the administration of justice and thereby undermine rather than promote the "interests of justice". [page397]

[85] The purposes of the CRA include compensating the victims of crime, crime prevention and deterrence. Section 1(c) of the CRA provides that forfeiture is intended to assist in preventing property "from being used to engage in certain unlawful activities". Under s. 7(1) of the CRA, the term "instrument of unlawful activity" is defined as property "that is likely to be used to engage in unlawful activity". Thus, with respect to property that is used to engage in unlawful activity, both the purposes of the CRA and the definition of "instrument of unlawful activity" have a prospective, crime prevention and deterrence focus.

[86] I again emphasize that by the time of the forfeiture application, the property had been vacant for some time, Fred was residing with his father, Roger was attempting to sell the property, and the property, in fact, was sold shortly thereafter. Further, Roger was not himself implicated in any unlawful activity relating to the use of the property.

[87] In these circumstances, an order requiring forfeiture of the property would not promote the deterrence and crime prevention goals of the CRA. There is also a strong argument that, by February 2012 (when the forfeiture application was commenced), the property no longer constituted an "instrument of unlawful activity". I note that the application judge does not appear to have factored these considerations into his analysis.

[88] I turn now to the third factor relevant to the analysis of the interests of justice exception in this case -- the reasonableness of the property owner's conduct in relation to unlawful activity at the property.

[89] The application judge considered the reasonableness of Roger's conduct primarily under the rubric of his analysis of the responsible owner exception to forfeiture. With respect to this exception, he held that Roger knew of Fred's problems with substance abuse and the law. He also found that Roger failed to take (1) reasonable steps to ensure that the property was not used as an instrument of unlawful activity; (2) any steps to terminate Fred's use of the property; and (3) the type of "extraordinary measures (such as unscheduled or surprise visits) that a reasonably diligent property owner, in the circumstances, would undertake". In so holding, the application judge rejected Roger's evidence of regular visits to the property to ensure that his son was not engaging in drug activity.

[90] The application judge failed to undertake any analysis regarding the reasonableness of Roger's conduct in relation to his son's unlawful activities for the purpose of determining whether the interests of justice exception to forfeiture should be [page398] invoked. Instead, based on his findings with respect to the responsible owner exception, he found that Roger's "conduct alone" was insufficient to warrant the protection of the interests of justice exception. As I have explained, he then concluded that the AGO's delay in commencing the forfeiture application justified the denial of forfeiture.

[91] In my view, there are several difficulties with this approach to the analysis of the interests of justice exception. I accept that it was the application judge's task to assess the evidence. Absent palpable and overriding error, the application judge's factual findings attract deference from this court.

[92] But, for the purpose of determining whether to invoke the interests of justice exception to forfeiture, the reasonableness of Roger's conduct must be evaluated in the context of the full evidentiary record. It bears repetition that when relief from forfeiture is sought, all factors relevant to the interests of justice must be considered: Darlington, at para. 97.

[93] Moreover, as this court emphasized in Darlington, at para. 100, elementary justice requires that care be taken on a CRA forfeiture application to distinguish between a property owner "who had no involvement in the criminal activity, was unaware of that activity, had acted reasonably throughout and did not profit from the activity" and a property owner "who was involved in and directly profited from the unlawful activity".

[94] While involvement in criminal activity is not a prerequisite to a forfeiture order under s. 8(1) (Darlington, at paras. 99 and 100), forfeiture under the CRA is not intended to penalize the undeserving or the innocent. Justice Doherty put it this way in Darlington, at para. 101:

[T]aking a person's property away from that person has a punitive component. The interests of justice require that punitive orders made by the courts be reasonably perceived by the community as being deserved by those against whom they are made.

[Citation omitted]

I agree.

[95] In this case, while the application judge identified aspects of the evidence that supported the conclusion that Roger could not rely on the responsible owner exception to forfeiture, he failed to consider the evidence as a whole regarding the reasonableness of Roger's conduct in relation to the property and his son's activities when addressing relief from forfeiture under the interests of justice exception.

[96] I agree that Roger's conduct, by itself, does not meet the threshold articulated in Darlington for discretionary relief from forfeiture under the interests of justice exception. But that is not [page399] the end of the matter. Assuming, as the application judge held, that the responsible owner exception did not apply, the reasonableness of Roger's conduct in relation to the property and his son's unlawful activities remained a critical, separate consideration in the determination whether discretionary relief from forfeiture should be granted under the interests of justice exception to forfeiture.

[97] It is not axiomatic that because a property owner's conduct does not meet the statutory requirements of the responsible owner exception to forfeiture, his or her conduct is also unreasonable for the purposes of the interests of justice exception. This may, but need not, be so. The requisite inquiries under these exceptions are different and discrete.

[98] Consider that, in this case, on the application judge's unchallenged findings, Roger was entirely innocent of any involvement in and derived no benefit from his son's unlawful activities. As the application judge found, there was no suggestion that Roger was complicit in, or profited from, Fred's unlawful activities.

[99] Furthermore, contrary to the AGO's contention at the forfeiture hearing, the application judge accepted that the property was acquired for a legitimate purpose, that Roger was the sole and exclusive beneficiary of it, and that Roger rented the property to his son -- deducting the rental payments from his son's salary -- for legitimate reasons connected with his son's lawful employment by Parker Brothers. There was simply no evidence that Roger sought to facilitate, encourage or sanction Fred's unlawful activities. To the contrary, the evidence established that Roger furnished the property to Fred to provide him, as well as his grandchild and his son's girlfriend, with a place to live.

[100] Importantly, there was also no evidence that Roger turned a blind eye to his son's drug problems. Indeed, there was uncontradicted evidence to the contrary. The record reveals that Roger attempted, for almost 25 years, to assist his son in overcoming his serious and long-standing addiction to drugs. The evidence indicates that Roger was steadfast in his efforts to support Fred's repeated attempts at rehabilitation, by his own account devoting hundreds of hours and expending thousands of dollars on these efforts. Roger was not a compliant or uninvolved father and property owner. Further, there is no evidence that he knowingly countenanced the criminal activities that flowed from Fred's drug addiction. The application judge's reasons make no mention of these critical contextual factors. [page400]

[101] Finally, it was open to the application judge to reject Roger's evidence of his efforts to detect any drug-related activities by his son at the property. However, both Fred and his sister gave evidence confirming diligent monitoring activities by their father at the property. The application judge made no mention of their evidence on this important issue in his reasons.

(d) Conclusion on interests of justice exception

[102] In all the circumstances, I conclude that the three factors discussed above, in combination, engage the interests of justice exception and justify this court's exercise of its discretion under s. 8(1) of the CRA to refuse forfeiture.

(2) Responsible owner exception to forfeiture

[103] Since I am persuaded that it would clearly not be in the interests of justice to order forfeiture of the property in this case, I would deny forfeiture on the basis of the s. 8(1) interests of justice exception to forfeiture. Accordingly, I need not address the respondent's argument that forfeiture should also be denied on the basis of the responsible owner exception to forfeiture.

F. Disposition

[104] For the reasons given, I would dismiss the appeal. I would award the respondent its costs of the appeal, fixed in the amount of $10,000, inclusive of disbursements and HST.

[105] The costs of the forfeiture hearing have yet to be fixed. In the circumstances, I would direct that the respondent file brief written submissions concerning the costs of that hearing with the registrar of this court within 14 days from the release of these reasons. The AGO may file its brief responding costs submissions within 14 days thereafter.

Appeal dismissed.

Notes

[^1]: The AGO also sought forfeiture of the vehicle in which Fred and his girlfriend were observed, on January 22, 2011, to be engaged in what the police concluded were drug transactions. The vehicle was registered to Fred's sister. Forfeiture of the vehicle was denied by the application judge. That ruling is not at issue on this appeal.

[^2]: Also reported as Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (In Rem).

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