Court File and Parties
Court File No.: Central East Region-Newmarket 11-04549 and 11-04550 Date: 2012-09-27 Ontario Court of Justice
In the Matter of a forfeiture application by Her Majesty the Queen pursuant to Section 16 of the Controlled Drugs and Substances Act
Between:
Her Majesty the Queen Respondent/Applicant on Forfeiture
— AND —
Fercan Developments Inc. Applicant/Respondent on Forfeiture
— AND —
Her Majesty the Queen Respondent/Applicant on Forfeiture
— AND —
GRVN Group Inc. Applicant/Respondent on Forfeiture
Before: Justice Peter C. West
Oral Submissions heard on: September 18, 19 and 20, 2012
Reasons for Judgment: September 27, 2012
Counsel:
- Mr. Peter Southey, Mr. Roy Lee for the Crown
- Mr. Brian H. Greenspan, Ms. Naomi Lutes for the Applicant/Respondent of Forfeiture, Fercan Developments Inc.
- Mr. William Friedman, Mr. Patrick Bakos for the Applicant/Respondent of Forfeiture, GRVN Group Inc.
WEST J.:
Introduction
[1] The applicants, Fercan Developments Inc. ("Fercan") and GRVN Group Inc. ("GRVN"), challenge the constitutional validity of sections 16 and 19 of the Controlled Drugs and Substances Act, R.S.C. 1996, c. 19 (the "CDSA"), which permit courts to order forfeiture of "offence-related" property.
[2] Fercan is the registered owner of lands upon which the former Molson Brewery Plant was situated on 1 Big Bay Point Road, Barrie, Ontario. GVRN is the registered owner of a residential dwelling located at 1408 Rainbow Valley Road West, Phelpston, Ontario.
[3] The sole shareholder of Fercan is Vince DeRosa. He is also the corporation's sole officer and director. The sole shareholder, officer and director of GRVN is Nicola DeRosa.
[4] Both properties are subject to ex parte Restraint Orders, dated September 21, 2010 and April 11, 2011, respectively.
[5] In January 2004, a search warrant was executed with respect to the Fercan property and two large indoor marihuana grow operations were discovered in two of the leased premises located in separate parts of the Fercan building. A number of individuals were charged with designated substance offences under the CDSA in respect of the two marihuana grow operations (Project Plant). The police investigation did not lead to any charges being laid against Fercan or Vince DeRosa.
[6] In 2009 a further police investigation (Project Birmingham) was commenced utilizing a police agent. Further designated substance offences were laid against additional individuals who were involved in the two indoor marihuana grow operations originally discovered in 2004. In addition, individuals were charged with designated substance offences, which were committed during this new police investigation at the property situated at 1408 Rainbow Valley Road West, Phelpston. This further police investigation also did not lead to any charges being laid against Fercan, Vince DeRosa, GRVN or Nicola DeRosa.
[7] It my understanding from the submissions of counsel and from the two Forfeiture Applications brought by the Crown that many, if not all, of the individuals who were charged as a result of these police investigations have pleaded guilty and have been convicted of designated substance offences contrary to the CDSA in relation to the two above-noted properties. These individuals include Robert Bleich, Scott Walker, Thomas Gates, Rayne Sauve, Craig Walker, Scott Dillon and Michael Dicicco (charged in 2004) and Robert DeRosa, Jeffrey DaSilva, Dennis Hould, Robert Bleich, Larry McGee and Davorka Pelican (charged in 2010).
[8] The Crown brought two Applications for Forfeiture, pursuant to section 16(1) of the CDSA in respect of the above-noted two properties. Notice, pursuant to section 19(1), was provided by the Crown to the owners, Fercan and GRVN, of the two properties and to First Ontario Credit Union Ltd., which is the mortgagee in respect of 1 Big Bay Point Road. These applications arise from the conviction of a number of persons with designated substance offences, which include, inter alia, production of marihuana in association with a criminal organization.
[9] I have received extensive written factums and casebooks from all parties on the Constitutional Questions, as well as detailed oral submissions from counsel and I would like to express my thanks to counsel for their assistance.
The Issues
[10] The Applicant alleges that this Court is without jurisdiction to make a forfeiture order for three reasons:
The impugned provisions, sections 16 and 19 of the CDSA, are ultra vires the federal Parliament as in pith and substance they relate to property and civil rights, and lack both a valid criminal law prohibition and valid criminal law purpose;
The impugned provisions are contrary to section 96 of the Constitution Act, 1867 because they bestow upon provincial court judges a jurisdiction related to interests and title to real property. Section 96 of the Constitution Act, 1867 prohibits inferior tribunals from exercising a jurisdiction that superior courts enjoyed alone at the time of Canada's confederation; and
The impugned provisions and section 20 of the CDSA violate the procedural fairness and due process safeguards provided by the Canadian Bill of Rights. As the CDSA does not expressly oust the application of the Bill of Rights, the provisions as applied in this case are invalid.
[11] The applicant submits that those contentions raise these constitutional questions:
Is section 16 of the CDSA ultra vires the Parliament of Canada as being legislation pertaining to property and civil rights, which are exclusively within the power of the provinces under section 92(13) of the Constitution Act, 1867?
Are sections 16 and 19 of the CDSA ultra vires the Parliament of Canada as being legislation that confers upon an inferior tribunal, namely, the Ontario Court of Justice, jurisdiction exclusively held by superior courts at the time of confederation, contrary to section 96 of the Constitution Act, 1867?
Are sections 16, 19 and 20 of the CDSA inoperative by reason that they unjustifiably infringe on rights protected pursuant to sections 1(a) and 2(e) of the Canadian Bill of Rights?
[12] The Crown submits that section 16 of the CDSA is constitutionally valid as an exercise of Parliament's legislative jurisdiction over the criminal law and procedure under section 91(27) of the Constitution Act, 1867. Further, Sections 16 and 19 of the CDSA are not contrary to section 96 of the Constitution Act, 1867, in conferring jurisdiction over criminal forfeiture of offence-related property concurrently upon the Ontario Court of Justice and the Superior Court of Justice. Finally, Sections 16, 19 and 20 of the CDSA do not infringe sections 1(a) and 2(e) of the Canadian Bill of Rights.
Analysis and Findings
The Provisions
[13] The relevant sections of the CDSA are as follows:
2(1) In this Act,
"justice" has the same meaning as in section 2 of the Criminal Code;
"offence-related property" means, with the exception of a controlled substance, any property, within or outside Canada,
(a) by means of or in respect of which a designated substance offence is committed;
(b) that is used in any manner in connection with the commission of a designated substance offence; or
(c) that is intended for use for the purpose of committing a designated substance offence.
16(1) Subject to sections 18 to 19.1, where a person is convicted of a designated substance offence and, on application of the Attorney General, the court is satisfied, on a balance of probabilities, that any property is offence-related property and that the offence was committed in relation to that property, the court shall
(a) in the case of a substance included in Schedule IV, order that the substance be forfeited to Her Majesty in right of Canada and disposed of by the Minister as the Minister thinks fit; and
(b) in the case of other offence-related property,
(i) where the prosecution of the offence was committed at the instance of the government of a province and conducted by or on behalf of that government, order that the property be forfeited to Her Majesty in right of that province and disposed of by the Attorney General or Solicitor General of that province in accordance with the law, and
(ii) in any other case, order that the property be forfeited to Her Majesty in right of Canada and disposed of by such member of the Queen's Privy Council for Canada as may be designated for the purposes of this subparagraph in accordance with the law.
(2) Subject to sections 18 to 19.1, where the evidence does not establish to the satisfaction of the court that the designated substance offence of which a person has been convicted was committed in relation to property in respect of which an order of forfeiture would otherwise be made under subsection (1) but the court is satisfied, beyond a reasonable doubt, that that property is offence-related property, the court may make an order of forfeiture under subsection (1) in relation to that property.
(2.1) An order may be issued under this section in respect of property situated outside Canada, with any modifications that the circumstances require.
(3) A person who has been convicted of a designated substance offence or the Attorney General may appeal to the court of appeal from an order or a failure to make an order under subsection (1) as if the appeal were an appeal against the sentence imposed on the person in respect of the offence.
19(1) Before making an order under subsection 16(1) or 17(2) in relation to any property, a court shall require notice in accordance with subsection (2) to be given to, and may hear, any person who, in the opinion of the court, appears to have a valid interest in the property.
(2) A notice given under subsection (1) shall
(a) be given or served in such manner as the court directs or as may be specified in the rules of the court;
(b) be of such duration as the court considers reasonable or as may be specified in the rules of the court; and
(c) set out the designated substance offence charged and a description of the property.
(3) Where a court is satisfied that any person, other than
(a) a person who was charged with a designated substance offence, or
(b) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (a) under circumstances that give rise to a reasonable inference that the title or right was transferred for the purpose of avoiding the forfeiture of the property,
is the lawful owner or is lawfully entitled to possession of any property or any part of any property that would otherwise be forfeited pursuant to an order made under subsection 16(1) or 17(2) and that the person appears innocent of any complicity in an offence referred to in paragraph (a) or of any collusion in relation to such an offence, the court may order that the property or part be returned to that person.
Issue 1: Division of Powers
[14] Counsel for the applicant submits that sections 16 and 19(3) of the CDSA are ultra vires the federal Parliament in that they are in pith and substance laws concerning property and civil rights, which are a provincial head of power under section 92(13) of the Constitution Act, 1867. It is the submission of Mr. Greenspan and Mr. Friedman that the Supreme Court of Canada in R. v. Craig, 2009 SCC 23, [2009] 1 S.C.R. 762, effectively severed the connection between sentencing and forfeiture necessary for the forfeiture provisions to be validly enacted under the criminal law power of the federal Parliament.
[15] The applicant submits that forfeiture is completely separate and distinct from sentencing and therefore is not a proper exercise of the federal Parliament's criminal law power. They point to and rely on Abella J.'s finding in paragraph 40 as to the purpose of the forfeiture scheme in the CDSA:
…I see the purpose and statutory language underlying the forfeiture scheme as a reflection of Parliament's intention that forfeiture orders be treated independently, pursuant to a separate rationale and as a distinct response to distinct circumstances. The sentencing inquiry focuses on the individualized circumstances of the offender; the main focus of forfeiture orders, on the other hand, is on the property itself and its role in past and future crime.
[16] In my view, this submission ignores the underlying reason why Abella J. separated forfeiture from the sentencing of the offender. In a number of the lower court decisions the trial judges dealt with sentencing and forfeiture as an "interdependent global punishment", which combined the forfeiture order with terms of imprisonment or other aspects of a sentence, thereby reducing jail time for those who had property available for forfeiture. It was the view of Abella J. and McLachlin C.J. that an offender should not be permitted to "trade property for jail time" and therefore viewed "forfeiture of offence-related property" as a "discrete inquiry".
[17] Further, at paragraph 22, Abella J. states that "while a forfeiture order may have a punitive impact on an offender, it is also aimed at taking offence-related property out of circulation and rendering it unavailable for future designated substance offences." In paragraph 30, Abella J. describes the approach she eventually adopts as "an independent inquiry resting on an application of the specific test set out in s. 19.1(3) and (4) to a forfeiture order". Further, in paragraph 32, she states that this approach "treats a forfeiture order under the Controlled Drugs and Substances Act as a distinct and independent consequence tailored to serious drug offences."
[18] McLachlin C.J. agreed with Abella J.'s concern about "conflating sentencing considerations with forfeiture" and agreed that "forfeiture and the primary sentence are separate determinations."
[19] Fish, J., who dissented in part, held that the making of a forfeiture order can and should be considered in the determination of an appropriate sentence for a person convicted of a designated substance offence where the offender owns the offence-related property. At paragraph 95 he reflects the purpose of an order of forfeiture as being "justified by three principal purposes of sentencing: to deter future crime, to denounce the offence and the offender, and to prevent further criminality." He then cites R. v. Gisby, 2000 ABCA 261, at paragraphs 19-20, which dealt with the statutory antecedent of the current forfeiture scheme:
19 The CDSA was enacted by Parliament to combat the illicit drug industry. A review of the CDSA and in particular, the provisions related to the forfeiture of property, indicate that the CDSA does so both through punishment and deterrence. The forfeiture provisions are punitive to the extent that they deprive one of offence-related property, broadcasting the message that Canadian society regards designated substance offences with abhorrence. But they also introduce an element of deterrence in relation to designated substance offences. In this respect, the forfeiture provisions attach a very real cost to the business of drug crime directly equivalent to the monetary value of the offence-related property that is subject to forfeiture, thus raising the stakes associated with the commission of those offences.
20 The forfeiture provisions serve another purpose. In addition to punishment and deterrence, they help prevent or at least reduce the likelihood of future offences by removing from the illicit drug industry property which, by virtue of the definition found at s. 2(1), is being used to facilitate the commission of a designated substance offence. Provided that all requisite conditions are met, property that has been used to facilitate such offences will be forfeited and thus cannot be used to aid the perpetration of future offences.
[20] In my view, while these passages demonstrate the disconnection of the forfeiture provisions of the CDSA from the general sentencing provisions, they also reflect that criminal forfeiture of offence-related property is part of the sentencing phase or sentencing process after conviction for a designated substance offence. (See R. v. Van Kessel, 2010 BCSC 257, [2010] B.C. J. No. 350 (B.C. Sup. Ct.) and R. v. Ford, [2009] B.C.J. No. 2127 (B.C.C.A.))
[21] The forfeiture provisions in the CDSA are very similar to the forfeiture provisions contained in the Criminal Code, for example, sections 462.37, 462.38, 462.41, 462.42, which deal with forfeiture of proceeds of crime and sections 490.1, 490.2, 490.3, 490.4 and 490.41, which deal with forfeiture of offence-related property. It is of interest that a number of cases dealing with these provisions treat forfeiture as part of the sentencing process. In R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, the Supreme Court of Canada, in referring to the forfeiture provisions of the Criminal Code, stated at paragraphs 10 and 16:
10 The sentence imposed for an offence under Part XII.2 on proceeds of crime consists of two elements: the penalty for committing a designated offence (s. 462.3(1)), and forfeiture of the proceeds of crime (s. 462.37(1)). The new provisions are in addition to existing methods. The intention of Parliament is clear. Not only must the act itself be punished, but it must not benefit the offender. Parliament's purpose in doing this is to ensure that crime does not pay.
16 Parliament's intention in enacting the forfeiture provisions was to give teeth to the general sentencing provisions. While the purpose of the latter provisions is to punish an offender for committing a particular offence, the objective of forfeiture is rather to deprive the offender and the criminal organization of the proceeds of their crime and to deter them from committing crimes in the future. The severity and broad scope of the provisions suggest that Parliament is seeking to avert crime by showing that the proceeds of crime themselves, or the equivalent thereof, may be forfeited.
(See also, R. v. 1431633 Ontario Inc., [2010] ONSC 266 (Molloy J.), at paragraphs 21-30; R. v. Zderic, [2008] O.J. No. 1576 (Marrocco J., S.C.J.), at paragraphs 7-11.)
[22] In Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] 1 S.C.R. 624, the Supreme Court considered whether the Civil Remedies Act, 2001 (CRA), was ultra vires Ontario because it authorized the forfeiture of proceeds of "unlawful activity" and thereby encroached on the federal criminal law power by adding to the penalties available in the criminal process and, as such, it was argued that the CRA invalidly interfered with the sentencing regime established by Parliament. The trial judge, Loukidelis J., concluded that the CRA had two purposes; namely, compensating victims of unlawful activities and suppressing the conditions that lead to unlawful activities by removing incentives. He rejected the argument of a conflict between the CRA and the Criminal Code forfeiture provisions and found that the Criminal Code requires a conviction and the forfeiture provisions were part of the sentencing process. Binnie J. held that the CRA "was concerned with the deleterious effects of crime in general rather than attempting in a colourable way to tack a penalty onto the federal sentencing process." (Chatterjee, supra, paragraph 20) In my view, this finding by Binnie J. implies that criminal forfeiture is part of the sentencing process.
[23] Further, under the heading "Overlapping Effects", Binnie J. states that the CRA's "very generality shows that the province is concerned about the effects of crime as a generic source of social ill and provincial expense, and not with supplementing federal criminal law as part of the sentencing process." (Chatterjee, supra, paragraph 41)
[24] Finally, an issue was raised that the Criminal Code forfeiture provisions would be displaced by the CRA with its lower threshold of proof. Binnie J. was of the view that this might be true, but where no forfeiture is sought in the sentencing process, he saw no reason why the Attorney General could not make an application under the CRA. Where forfeiture was sought and refused in the criminal process, then a different issue would arise. (Chatterjee, supra, paragraph 49)
[25] It is my opinion therefore, in light of the preceding paragraphs, that the criminal forfeiture provisions contained in the CDSA are separate from the determination of an appropriate sentence to be imposed for a person convicted of a designated substance offence but are nonetheless part of the sentencing process or sentencing phase of the criminal proceeding. I adopt the conclusion of McKinnon J., in Van Kessel, supra, at paragraph 49:
In my view, all Craig does is oblige judges to consider and sentence an offender regardless of real property interests. Once that sentence has been imposed then the Court considers the forfeiture provisions, having regard to the factors described in section 19.1 of the CDSA, including "the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the criminal record, if any, of the person charged with or convicted of the offence".
Pith and Substance
[26] The approach to be taken when conducting a division of powers analysis has been discussed in numerous Supreme Court of Canada cases. In Reference re: Firearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783, the unanimous Court held, at paragraph 15:
There are two stages to this analysis. The first step is to determine the "pith and substance" or essential character of the law. The second step is to classify that essential character by reference to the heads of power under the Constitution Act, 1867 in order to determine whether the law comes within the jurisdiction of the enacting government. If it does, then the law is valid.
[27] In determining the pith and substance or the "essential character" of a law, both the purpose of the legislation and the effect of the challenged law must be examined. To determine the law's purpose, a court may look to the statutory language and extrinsic evidence, such as Hansard or minutes of parliamentary debates. This analysis must seek to ascertain the true purpose of the legislation as opposed to its stated or apparent purpose. Reference re: Firearms Act (Can.), supra, paragraphs 16-17; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3, at paragraphs 25-27.
[28] Binnie J. in Chatterjee, supra, at paragraph 16, cautioned that in conducting the pith and substance analysis, it is important to evaluate the law without reference to a head of power:
In principle this assessment should be made without regard to the head(s) of legislative competence, which are to be looked at only once the "pith and substance" of the impugned law is determined. Unless the two steps are kept distinct there is a danger that the whole exercise will become blurred and overly oriented towards results.
[29] From my review of the cases, two other general principles are also important in the consideration of Parliament's legislative jurisdiction over criminal law. Both are referred in Chatterjee, supra. The first is that perfectly valid laws enacted pursuant to Parliament's jurisdiction over criminal law will have constitutionally acceptable incidental effects on provincial jurisdiction over property and civil rights (see paragraphs 24, 29 and 32). Such effects are unavoidable given that much of Parliament's criminal law relates to property interests. Binnie J., at paragraph 30, found that the CRA was enacted "in relation to" property and civil rights and may incidentally "affect" criminal law and procedure without doing violence to the division of powers. He then cites Dickson C.J. in General Motors of Canada Ltd. v. City National Leasing Ltd., [1989] 1 S.C.R. 641, at p. 670, "[b]oth provincial and federal governments have equal ability to legislate in ways that may incidentally affect the other government's sphere of power".
[30] The Supreme Court in Chatterjee, supra, at paragraph 3, also held that the legislative purpose of deterring and preventing crime is broad enough that both Parliament and provincial governments can validly pursue it.
The CRA [provincial statute] was enacted to deter crime and to compensate its victims. The former purpose is broad enough that both the federal government (in relation to criminal law) and the provincial governments (in relation to property and civil rights) can validly pursue it.
This refers to the fact that certain laws can have a "double aspect" and can be valid under both federal and provincial heads of power. Professor Peter Hogg in The Constitutional Law of Canada, Vol. 1. 5th ed. (Looseleaf), (Scarborough, Thomson Canada, 2007) at p. 15-12, explains this principle as follows: "when the court finds that the federal and provincial characteristics of a law of that kind are roughly equal in importance, then the conclusion is that laws of that kind may be enacted by either Parliament or a Legislature."
The Purpose of the Legislation
[31] The first step in determining the purpose of the law is to look at the wording of the impugned provisions themselves. Section 16 is clearly written with the purpose of allowing the court to order forfeiture of offence-related property following a conviction for a designated substance offence. The definition of offence-related property is quite broad, as it includes any property by means of or in respect of which a designated substance offence is committed; property that is used in any manner in connection with the commission of a designated substance offence; or property that is intended for use for the purpose of committing a designated substance offence.
[32] Further, in R. v. Van Kessel, supra, at paragraph 22 (B.C. Sup. Ct.), McKinnon J., held that subsection (2) of section 16 strengthens the view that the purpose of the impugned provisions is the forfeiture of offence-related property as the court can order forfeiture of any property it is satisfied, beyond a reasonable doubt, is offence-related property, even if the evidence does not establish that the offence for which a person has been convicted was committed in relation to that property. "This subsection is clearly intended to remove offence-related property from circulation, regardless of its connection to any specific criminal offence."
[33] The forfeiture scheme, as amended by Bill C-24 in 2001, expanded the definition of offence-related property to include any real property. Previously, offence-related property only included real property which was "built or significantly modified for the purpose of facilitating the commission of a designated substance offence." Abella J., at paragraphs 16-17, cited with approval the judgment of the Alberta Court of Appeal in R. v. Gisby, supra, where the Court described the purposes of the antecedent forfeiture scheme under the CDSA as follows:
The CDSA was enacted by Parliament to combat the illicit drug industry. A review of the CDSA and in particular, the provisions related to the forfeiture of property, indicate that the CDSA does so both through punishment and deterrence. The forfeiture provisions are punitive to the extent that they deprive one of offence-related property, broadcasting the message that Canadian society regards designated substance offences with abhorrence. But they also introduce an element of deterrence in relation to designated substance offences. In this respect, the forfeiture provisions attach a very real cost to the business of drug crime directly equivalent to the monetary value of the offence-related property that is subject to forfeiture, thus raising the stakes associated with the commission of those offences. (Paragraph 19)
The forfeiture provisions serve another purpose. In addition to punishment and deterrence, they help prevent or at least reduce the likelihood of future offences by removing from the illicit drug industry property which, by virtue of the definition found at s. 2(1), is being used to facilitate the commission of a designated substance offence. Provided that all requisite conditions are met, property that has been used to facilitate such offences will be forfeited and thus cannot be used to aid the perpetration of future offences. (Paragraph 20)
[34] In Gisby, at paragraphs 21-23, the Alberta Court of Appeal also discussed the issue of a non-charged third party owner:
21 One might be inclined to think that if the purpose of the forfeiture provisions is to prevent future offences, forfeiture is redundant to the extent that the conviction of the offender presumably guards against the commission of future offences, as least during the period of punishment. While this may be true with respect to a convicted party, it is often the case that offence-related property is not owned by the offender, but by a culpable third-party with some sort of relationship to him or her, and continues to be used for illicit purposes by other persons notwithstanding the conviction of the designated substance offender.
22 However, the innocence or guilt of the property owner is immaterial insofar as the initial determination under s. 16(1) of the CDSA is concerned. That section requires that "a person" be convicted of a designated offence in relation to the property that is subject to be forfeited. Provided that the property in question is offence-related in satisfaction of the definition found at s. 2(1), the property will be subject to forfeiture. The provisions do not require the owner of the property in question to have been convicted in order for forfeiture to take effect, though the person convicted could of course be the owner of the offence-related property.
23 Thus, s. 16(1) gives recognition to the manner in which the illegal drug industry operates. It provides for the forfeiture of offence-related property where "a person", who may or may not be the legal owner of the offence-related property, is convicted. The forfeiture provision is therefore designed to prevent, or at least impede, the commission of further offences by ensuring that offence-related property cannot be used to facilitate those offences.
[35] In Craig, supra, at paragraph 20, Abella J. quoted the statements made by the Honourable Anne McLellan, then Minister of Justice and Attorney General of Canada, concerning the amendments to the CDSA respecting forfeiture:
…I am pleased today to lead off the debate on an issue of major concern to all Canadians: the problem of organized crime and the legislative tools available to our police, prosecutors and courts to address that problem....Not all provisions of the bill specifically target organized crime groups. Several elements in the proposed legislation are meant to improve criminal law generally. These improvements to the law will nonetheless be extremely useful in combatting organized crime. ...The last element that I want to stress deals with offence related property. The bill contains amendments to make the offence related property forfeiture regime in the code apply to all indictable offences. As well, the present exemption from forfeiture for most real property would be eliminated. [Emphasis added.] (House of Commons Debates, vol. 137, 1st Sess. 37th Parl., April 23, 2001, at pp. 2952, 2955 and 2956).
[36] I have referred above to a number of passages in Craig, supra, where Abella J. discusses the purpose of this legislation and they are worth repeating here:
… while a forfeiture order may have a punitive impact on an offender, it is also aimed at taking offence-related property out of circulation and rendering it unavailable for future designated substance offences. (Paragraph 22)
… I see the purpose and statutory language underlying the forfeiture scheme as a reflection of Parliament's intention that forfeiture orders be treated independently, pursuant to a separate rationale and as a distinct response to distinct circumstances. The sentencing inquiry focuses on the individualized circumstances of the offender; the main focus of forfeiture orders, on the other hand, is on the property itself and its role in past and future crime. (Emphasis added) (Paragraph 40)
For a start, the fact that forfeiture may apply to property owned by a complicit individual who is neither sentenced nor even charged with an offence is, to me, an indication that forfeiture orders and terms of imprisonment or other aspects of a sentence were intended to be treated as separate and distinctive consequences. The forfeiture scheme is focused in part on taking offence-related property out of circulation and on confronting organized crime, whether or not the property is owned by the offender. Individuals who have allowed their property to be used for criminal purposes, even if their conduct does not rise to the level of criminal liability with respect to the particular offence, may, as a result, also be subject to forfeiture orders, as reflected in s. 19(3), which provides a recovery mechanism for third-party owners of offence-related property to be forfeited. Under that section, a court must be satisfied that individuals are innocent of any complicity or collusion in the offence before they can recover their property. This is consistent with the historic roots of forfeiture as punishment for negligently allowing one's property to be used for wrongful purposes, a consequence connected to, but not identical to, punishment for the offence. (Paragraph 41)
[37] McLachlin C.J. also commented on the purpose of the legislation:
… Forfeiture of offence-related property under the Act (as under the Criminal Code, R.S.C. 1985, c. C-46) is generally mandatory and total. The intention of Parliament was to deprive offenders and other complicit individuals of the tools of the trade: see R. v. Gisby, 2000 ABCA 261, 148 C.C.C. (3d) 549, at paras. 20-21. This is distinct from the forfeiture of proceeds of crime, the purpose of which is to deprive an offender of ill-gotten gains: R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, at paras. 9-10. Where forfeiture of the proceeds of crime is at issue, the focus is on the assets accumulated as a result of criminal activity. In the case of offence-related property, the focus is on the physical property itself and the criminal opportunity that continued possession of the property furnishes to the offender or to other complicit persons. (Emphasis added) (Paragraph 81)
[38] In my view, these passages clearly support the view that the forfeiture provisions in the CDSA in pith and substance are about removing offence-related property from offenders and complicit third parties to prevent future crime. Further, as discussed by Abella J., the forfeiture provisions relating to offence-related property also serve to punish the offender who has been convicted and the loss of offence-related property owned by a complicit third party "is consistent with the historic roots of forfeiture as punishment for negligently allowing one's property to be used for wrongful purposes, a consequence connected to, but not identical to, punishment for the offence." (Paragraph 41)
The Effect of the Legislation
[39] When considering the effect of the law, a court may consider both the practical and legal effect of that law. This requires first examining what effect flows directly from the provisions of the statute itself and then, second, what "side effects" flow from the application of the statute which are not direct effects of the provisions of the statute itself. (See R. v. Morgentaler, [1993] 3 S.C.R. 463, at pp. 482-83; Kitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), 2002 SCC 31, [2002] 2 S.C.R. 146, at paragraph 54. Iacobucci J. provided some examples of how this would work in Global Securities Corp. v. British Columbia (Securities Commission), 2000 SCC 21, [2000] 1 S.C.R. 494 at paragraph 23:
The effects of the legislation may also be relevant to the validity of the legislation in so far as they reveal its pith and substance. For example, in Saumur v. City of Quebec, [1953] 2 S.C.R. 299, the Court struck down a municipal by-law that prohibited leafleting because it had been applied so as to suppress the religious views of Jehovah's Witnesses. Similarly, in Attorney-General for Alberta v. Attorney-General for Canada, [1939] A.C. 117, the Privy Council struck down a law imposing a tax on banks because the effects of the tax were so severe that the true purpose of the law could only be in relation to banking, not taxation. However, merely incidental effects will not disturb the constitutionality of an otherwise intra vires law.
[40] The effect of the CDSA's forfeiture provisions is that upon a conviction for a designated substance offence, offence-related property is forfeited to the Crown, unless a court exercises its discretion not to order forfeiture pursuant to several statutory considerations, including the court being satisfied that a third party owner was innocent of complicity or collusion in the offence. Property which is not used in relation to a criminal offence is unaffected by these provisions. In my view, the effect of these provisions is very narrow and focused and only prescribes a consequence as a result of a conviction.
[41] In my view, the impugned provisions of the CDSA are, in pith and substance, concerned with the forfeiture of offence-related property, after a conviction is entered, from either the offender or an uncharged complicit third party owner.
Heads of Power
[42] The second step after assessing the pith and substance of the impugned provisions is to determine whether the matter comes within the jurisdiction of the federal Parliament. As reflected in Reference re: Firearms Act (Can.), supra, at paragraph 26, the "determination of which head of power a particular law falls under is not an exact science. In a federal system, each level of government can expect to have its jurisdiction affected by the other to a certain degree."
[43] The question to be decided is, whether the impugned provisions fall within the federal Parliament's jurisdiction over criminal law, section 91(27) of the Constitution Act, 1867 or under the provincial government's jurisdiction over property and civil rights, section 92(13). There is a presumption of constitutionality, which means that the applicant, as the party challenging the legislation, is required to demonstrate that sections 16 and 19 of the CDSA do not fall within the jurisdiction of Parliament (See Nova Scotia (Board of Censors) v. McNeil, [1978] 2 S.C.R. 662).
[44] The applicant submits that a criminal law provision must meet at least three criteria: it must contain a prohibition, a penalty and must have a valid criminal law purpose. They refer to R. v. Boggs, [1981] 1 S.C.R. 49, where Estey J., on behalf of the court, cited with approval the decision of Rand J. in Lord's Day Alliance v. A.G.B.C. et. al., [1959] S.C.R. 497, at pp. 508-9:
Undoubtedly criminal acts are those forbidden by law, ordinarily at least if not necessarily accompanied by penal sanctions, enacted to serve what is considered a public interest or to interdict what is deemed a public harm or evil. In a unitary state the expression would seem appropriate to most if not all such prohibitions; but in a federal system distinctions must be made arising from the true object, purpose, nature or character of each particular enactment.
[45] In Reference re: Firearms Act (Can.), supra, at paragraph 27, the court reiterated that "As a general rule, legislation may be classified as criminal law if it possesses three prerequisites: a valid criminal law purpose backed by a prohibition and a penalty." (Emphasis added) The applicant submits that "the impugned provisions fail to satisfy two of the three constitutional requirements: the provisions do not contain a valid prohibition, nor are they directed at a valid criminal law purpose."
[46] The Crown responds by arguing that the content of Parliament's legislative jurisdiction over the criminal law found in section 91(27) is not limited to laws containing a prohibition, a penalty and a valid criminal law purpose; rather, the Supreme Court of Canada, in the Goodyear Tire and Rubber Company of Canada v. The Queen, [1956] S.C.R. 303 per Locke J. at p. 308 has clearly stated that Parliament's legislative power extends to legislation designed for the prevention and deterrence of crime as well.
The power to legislate in relation to criminal law is not restricted, in my opinion, to defining offences and providing penalties for their commission. The power of Parliament extends to legislation designed for the prevention of crime as well as to punishing crime.
[47] Professor Peter Hogg in Constitutional Law of Canada, supra, makes the following observations:
A law may be validly enacted "in relation to" the criminal law, although the law itself does not have the characteristics of a criminal law….Its most important application, however, is in support of laws aimed at the prevention of crime, for example binding over a person to keep the peace or controlling the possession of guns. There is no doubt that laws of this kind are valid, although they depart from the traditional format of criminal law. The same rationale of prevention has been held to justify a provision in the Combines Investigation Act authorizing the courts to make orders prohibiting future conduct which would constitute an offence under the Act.
Professor Hogg cites A.G. Can. v. Pattison, 1981 ABCA 98, 123 D.L.R. (3d) 111 (Alta. C.A.), at paragraphs 17-22 and Goodyear Tire, supra, at pp. 308-9. He also refers to R. v. S.(S.), [1990] 2 S.C.R. 254, which is a case dealing with whether section 4(1) of the Young Offenders Act, which dealt with alternative measures, was ultra vires the federal Parliament's jurisdiction over criminal law. Dickson C.J., on behalf of the Court, held as follows:
38 Although I agree with the argument of the appellant that s. 4(1) differs from most criminal law remedial statutes in that the focus is on alternatives to more traditional criminal sanctions, I do not find this factor to be dispositive. While resort to non-judicial alternatives in the correction of young offenders may not resemble the criminal law model envisioned by Lord Atkin, this Court has held repeatedly that the legislative power over criminal law must be sufficiently flexible to recognize new developments in methods of dealing with [page282] offenders. This principle was applied by Laskin C.J., in dealing with a restitutionary remedy for a criminal offence: R. v. Zelensky, [1978] 2 S.C.R. 940. The principle is equally relevant here.
39 Further support for this interpretation of s. 4(1) can be drawn from the principle that Parliament's jurisdiction over criminal law in s. 91(27) extends beyond the confines of creating offences and establishing penalties. In Goodyear Tire & Rubber Co. of Canada Ltd. v. The Queen, [1956] S.C.R. 303, this Court upheld a prohibition order provided for by the Criminal Code and the Combines Investigation Act. Locke J., writing for a majority of the Court, found that the validity of the order was sustainable not only on the basis that it defined a new offence, but also on the basis that it was a means for the prevention of further crime (at p. 308):
The power to legislate in relation to criminal law is not restricted, in my opinion, to defining offences and providing penalties for their commission. The power of Parliament extends to legislation designed for the prevention of crime as well as to punishing crime.
In my opinion, the discretion to create an alternative measures program pursuant to s. 4 represents a legitimate attempt to deter young offenders from continued criminal activity. In this regard, I agree with Tarnopolsky J.A.'s characterization of s. 4 as demonstrating a "concern with a curative approach, rather than the traditionally punitive approach of the criminal law. There is a concern with preventing recidivism and with balancing the interests of the offending 'young person' with those of society" (p. 270). Although I do not intend to define the limits of the "prevention of crime" doctrine, s. 4 of the Young Offenders Act is well within its scope.
[48] Finally, in R. v. Budreo, [2000] O.J. No. 72, at paragraph 27 the Ontario Court of Appeal, in dealing with section 810.1 of the Criminal Code, which permits the court to impose a recognizance on any person likely to commit any one of a number of listed sexual offences against a child under 14 years of age and to prohibit that person for up to one year from engaging in activities or attending places - a public park, public swimming area, daycare centre, schoolground or playground - where children under 14 are likely to be present, summarized this established jurisprudence:
26 Whether s. 810.1 is punitive or preventive permeated the argument of this appeal. Indeed, characterizing s. 810.1 as punitive is central to the appellant's position. If s. 810.1 is punitive, if it creates an offence, then the appellant fairly argues that it contains inadequate constitutional safeguards. Then J., however, held that s. 810.1 was a preventive measure aimed at the protection of children, and I agree with him.
27 The criminal justice system has two broad objectives: punish wrongdoers and prevent future harm. A law aimed at the prevention of crime is just as valid an exercise of the federal criminal law power under s. 91(27) of the Constitution Act, 1867, as a law aimed at punishing crime. Thus, the appellant has not argued, nor could he, that Parliament cannot validly pass a law to prevent future harm to children.
[49] In my opinion, the federal Parliament's imposition of a scheme of forfeiture in the Controlled Drugs and Substances Act that is only available where a person has been convicted of a designated substance offence in respect of offence-related property is well within the scope of its power to legislate in relation to criminal law provisions designed for the prevention of crime. As I have indicated above, it is my view that the forfeiture provisions of the CDSA, although separate from the "primary" sentencing of the offender, are nonetheless part of the sentencing process or sentencing phase of the criminal proceedings.
[50] Consequently, I find that sections 16 and 19 of the CDSA have been validly enacted pursuant to Parliament's power over criminal law in section 91(27) of the Constitution Act, 1867. The constitutional question should be answered as follows:
Is section 16 of the CDSA ultra vires the Parliament of Canada as being legislation pertaining to property and civil rights, which are exclusively within the power of the provinces under section 92(13) of the Constitution Act, 1867?
Answer: No.
[51] In view of my disposition of this question, I need not consider the alternative argument that these provisions are "necessarily incidental" to the criminal law power.
Section 96, Constitution Act, 1867
[52] The Applicant further argues that sections 16, 19 and 19.1 of the CDSA are ultra vires the federal Parliament because they purport to confer jurisdiction to the Ontario Court of Justice related to interests and title to real property.
[53] Section 96 of the Constitution Act, 1867 prohibits courts from exercising a jurisdiction that superior courts alone enjoyed at the time of Canada's confederation. Section 96 provides that:
The Governor General shall appoint the Judges of the Superior, District, and County Courts in each Province, except those of the Courts of Probate in Nova Scotia and New Brunswick.
[54] Courts created by the federal government under section 101 or by the provincial government under section 92(14) are generally not permitted to intrude on the core jurisdiction of a section 96 court. The Ontario Court of Justice is a court created pursuant to section 92(14) of the Constitution Act, 1867. Section 38 of the Courts of Justice Act grants the Ontario Court of Justice jurisdiction over certain criminal law matters, certain family matters and provincial offences.
[55] It is the position of the Applicant that contrary to section 96, the forfeiture provisions of the CDSA allow a provincial court to deal with property interests, because of the CDSA's use of the word "court" in sections 16, 19 and 19.1. The forfeiture provisions of the CDSA use different terms respecting the forum in which applications can be brought.
[56] The CDSA grants exclusive jurisdiction to "a judge", a section 96 superior court in respect of the following applications:
a. Application for Restraint Order in respect of offence-related property (section 14);
b. Management of restrained offence-related property (section 14.1);
c. Jurisdiction over an in rem proceeding in respect of offence-related property (section 17);
d. Application for relief from a forfeiture order in respect of offence-related property (section 20);
[57] The CDSA grants a "court" (which includes a Superior Court Judge or Ontario Court of Justice judge) the following jurisdiction:
a. Management of seized property pursuant to section 11 (section 14.1);
b. Order of forfeiture of offence-related property after conviction (section 16);
c. Before ordering that offence-related property be forfeited, may set aside conveyance or transfer of the property that occurred after the seizure of the property or the making of a restraint order in respect of the property, unless the conveyance or transfer was for valuable consideration to a person acting in good faith (section 18);
d. Hear application for relief of forfeiture respecting offence-related property from lawful owner or a person who is lawfully entitled to possession (section 19(3));
e. Hear application in respect of real property that is offence-related property to determine if forfeiture of property would be disproportionate having regard to enumerated criteria (section 19.1(3)); and
f. Hear application in respect of dwelling house that is offence-related property to determine if forfeiture of property would be disproportionate having regard to enumerated criteria (section 19.1(3)).
[58] Section 19(3) permits a court to order that all or part of the offence-related property can be returned to the lawful owner or a person who is lawfully entitled to possession of the property that would be otherwise forfeited if the court is satisfied that this person appears innocent of any complicity in the designated substance offence for which the offender was convicted or of any collusion in relation to such offence.
[59] Subject to section 19(3), under Section 19.1(3) where a court is satisfied that the impact of an order of forfeiture made under section 16(1) in respect of real property would be disproportionate having regard to a number of enumerated criteria, the court may decide not to order forfeiture of all or part of the property and may revoke any restraint order made in respect of that property or part.
[60] Section 19.1(4) provides that where a court is satisfied that the impact of an order of forfeiture made under section 16(1) in respect of a dwelling house would be disproportionate having regard to the enumerated criteria under subsection (3) and additional criteria set out in subsection (4), the court may decide not to order forfeiture under subsection (3) of all or part of the property and may revoke any restraint order made in respect of that property or part.
[61] It is the Applicant's position that a statutorily-created provincial court does not have jurisdiction or power to order forfeiture in relation to property.
Test to Determine Whether OCJ has Jurisdiction over Forfeiture
[62] The test for determining whether an inferior court or an administrative tribunal can be constitutionally conferred a power or jurisdiction was set out in Reference re: Residential Tenancies Act 1979, [1981] 1 S.C.R. 714, by Dickson J., as he then was, at pp. 734-36:
The jurisprudence since John East [Labour Relations Board of Saskatchewan v. John East Iron Works, Ltd., [1949] A.C. 134] leads one to conclude that the test must now be formulated in three steps. The first involves consideration, in the light of the historical conditions existing in 1867, of the particular power or jurisdiction conferred upon the tribunal. The question here is whether the power or jurisdiction conforms to the power or jurisdiction exercised by superior, district or county courts at the time of Confederation. …
If the historical inquiry leads to the conclusion that the power or jurisdiction is not broadly conformable to jurisdiction formerly exercised by s. 96 courts, that is the end of the matter. …If, however, the historical evidence indicates that the impugned power is identical or analogous to a power exercised by s. 96 courts at Confederation, then one must proceed to the second step of the inquiry.
Step two involves consideration of the function within its institutional setting to determine whether the function itself is different when viewed in that setting. In particular, can the function still be considered to be a 'judicial' function? In addressing the issue, it is important to keep in mind the further statement by Rand J. in Dupont v. Inglis that "... it is the subject-matter rather than the apparatus of adjudication that is determinative". Thus the question of whether any particular function is 'judicial' is not to be determined simply on the basis of procedural trappings. The primary issue is the nature of the question which the tribunal is called upon to decide. Where the tribunal is faced with a private dispute between parties, and is called upon to adjudicate through the application of a recognized body of rules in a manner consistent with fairness and impartiality, then, normally, it is acting in a 'judicial capacity'. …
…if the power or jurisdiction is exercised in a judicial manner, then it becomes necessary to proceed to the third and final step in the analysis and review the tribunal's function as a whole in order to appraise the impugned function in its entire institutional context. …The scheme is only invalid when the adjudicative function is a sole or central function of the tribunal so that the tribunal can be said to be operating 'like a s. 96 court'.
[63] In Reference re Young Offenders Act (P.E.I.), [1991] 1 S.C.R. 252, at paragraph 16, Lamer C.J. added a further step which must be determined prior to proceeding to step one of the Residential Tenancies test; namely, "the power or jurisdiction in issue must first be properly characterized."
[64] The Crown submits that the power or jurisdiction must be characterized (a) neither too narrowly or too broadly, and (b) with reference to the essential aspects of the power or jurisdiction. In Reference re Young Offenders, supra, at paragraph 17, Lamer C.J. held that "The characterization of the issue must be sufficiently narrow to avoid large accretions of jurisdiction by inferior courts at the expense of superior courts, but not so narrow as to freeze the jurisdiction of inferior courts at what it was in 1867." Consequently, the Supreme Court rejected various proposed characterizations of the issue: "the power to adjudicate over murder" was too narrow and "the jurisdiction over juveniles" was too broad. Instead, it characterized the jurisdiction under the Young Offenders Act as "jurisdiction over young persons charged with a criminal offence."
[65] The Applicant submits that the jurisdiction in issue is "jurisdiction related to interests and title in real property" and "power to deal with real property and to create property interests in land." In my view, the characterization urged by the Applicant is far too broad. It makes no reference to what is an essential aspect of the jurisdiction in issue; namely, its connection to criminal law purposes and criminal proceedings. This is set out in the pre-conditions prescribed in the impugned provisions of the CDSA: the provisions only become available after a person has been convicted of a designated substance offence and the Crown is able to demonstrate that the property is "offence-related".
[66] It is my opinion that the proper characterization of the issue here should be jurisdiction over criminal forfeiture of offence-related property. I have already found that the forfeiture hearing is part of the sentencing process or sentencing phase of the criminal proceeding and that the purpose of the legislation is the prevention of crime.
[67] I agree with the submission of the Crown that the case of Nova Scotia (Attorney General) v. Gillis, [1980] N.S.J. No. 401 (C.A.) is not of assistance in characterizing the jurisdiction or power in issue respecting the CDSA provisions. In my view, a criminal forfeiture hearing cannot be properly or fairly characterized as the adjudication of a title dispute, simpliciter, without any reference to its connection to criminal law purposes and criminal proceedings. Forfeiture under the CDSA and the Criminal Code only comes into play after a conviction has been entered in respect of designated offences and in respect of offence-related property.
[68] Characterizing the jurisdiction as jurisdiction over criminal forfeiture of offence-related property narrowly restricts the impugned provisions to properties that are used in the commission of designated substances offences. The provincial court does not therefore have jurisdiction related to the interests and title of all real property, nor does it have power to deal with all real property and to create property interests in land. The power or jurisdiction is restricted to ordering forfeiture, in a criminal proceeding – the sentencing phase after a conviction is registered—in respect of offence-related property, where the offence was committed in relation to that property. In my view, a partial forfeiture order (approved in Craig) does not partition property, it simply orders that a partial interest in the property be forfeited to the Crown and "disposed of by [the designated minister] in accordance with the law."
The Historical Inquiry
[69] The historical legislative background of the forfeiture provisions in the CDSA are set out in the Crown's factum, paragraphs 8-13. The first forfeiture provisions were contained in the Opium and Drug Act, 1911 which included section 8, which provided:
- When any person is convicted of an offence against this Act, the convicting magistrate may adjudge and order, in addition to any penalty or punishment, that the drug in respect of which the offence was committed, or which has been seized under the search warrant as aforesaid, and all receptacles of any kind whatsoever found containing the same, be forfeited and destroyed…
[70] In 1925, the Opium and Narcotic Drug Act, 1923 was amended to expand the property which could be forfeited. Section 19 included not only the drug and any receptacles, but also a "conveyance of any kind" in which the drug was found. The 1929 amendments, at section 21, expanded the reasons for which receptacles and conveyances could be forfeited. In addition to containing a drug, forfeiture could result from the receptacle or conveyance being used "in any manner in connection with the offence..." The property which could be forfeited was also expanded to include "any moneys used for the purchase of drugs..."
[71] In 1961, the Narcotic Control Act was enacted. For the first time, Parliament provided a mechanism for the relief from forfeiture, if a third party owner could show to the satisfaction of the judge, that they were innocent of any complicity in the offence that resulted in the forfeiture and of any collusion in relation to that offence.
[72] These 1961 amendments were introduced to Parliament by both the Minister of National Health and Welfare and the Minister of Justice. The Minister of Health stated:
The present act provides for the automatic forfeiture of any conveyance containing a narcotic or used in any manner in connection with the commission of an offence. This provision was designed to further impede the mobility of the trafficker by making vehicles subject to forfeiture.
Recognizing that under modern practices innocent persons may frequently have an interest in vehicles which would have otherwise been prejudiced, the bill sets out a procedure whereby an innocent person may obtain protection to cover his interest in a vehicle used in trafficking and which is forfeited by the court.
[73] The Minister of Justice advised that the amendments relating to forfeiture were another instance "…where the government has been careful to revise such provisions and bring them into conformity with the bill of rights."
[74] The later legislative history of the CDSA forfeiture provisions is summarized by the Supreme Court in Craig:
14 The Controlled Drugs and Substances Act is the statutory successor to the Narcotic Control Act, R.S.C. 1985, c. N-1. It originated in Bill C-7 in 1994 and came into force in 1997.
15 While the original text of the Bill included a forfeiture scheme, the scheme did not apply to real property. Bill C-7 was subsequently amended to address the problem of fortified drug houses used by criminal organizations for the production of illegal substances (House of Commons Debates, vol. 133, 1st Sess., 35th Parl., October 30, 1995, at p. 15978). The definition of offence-related property was accordingly changed to include "real property built or significantly modified for the purpose of facilitating the commission of a designated substance offence" (Bill C-7, Controlled Drugs and Substances Act, s. 2, 1st Sess., 35th Parl., 1994-1995).
18 The Controlled Drugs and Substances Act was amended by Bill C-24 in 2001. It contained two important changes of relevance to this appeal: it expanded the definition of offence-related property to include any real property, including property not built or significantly modified for criminal purposes, and it set out a proportionality test in s. 19.1(3).
20 In introducing the amending legislation, the Honourable Anne McLellan, then Minister of Justice and Attorney General of Canada, stated:
I am pleased today to lead off the debate on an issue of major concern to all Canadians: the problem of organized crime and the legislative tools available to our police, prosecutors and courts to address that problem.... Not all provisions of the bill specifically target organized crime groups. Several elements in the proposed legislation are meant to improve criminal law generally. These improvements to the law will nonetheless be extremely useful in combatting organized crime. ... The last element that I want to stress deals with offence related property. The bill contains amendments to make the offence related property forfeiture regime in the code apply to all indictable offences. As well, the present exemption from forfeiture for most real property would be eliminated. [Emphasis added.]
(House of Commons Debates, vol. 137, 1st Sess. 37th Parl., April 23, 2001, at pp. 2952, 2955 and 2956)
[75] It is my opinion that jurisdiction over criminal forfeiture of offence-related property was not a power exercised by the superior courts at the time of confederation. Consequently, this jurisdiction can constitutionally be given to inferior courts. "…if the power in question does not conform to one exercised by a superior court in 1867, the inquiry ends here." MacMillan Bloedel Ltd. v. Simpson, [1995] S.C.J. No. 101, at paragraph 12.
[76] I was provided with a number of cases that dealt with forfeiture of property rights by the superior court: Re McLean Gold Mines Limited and The Attorney-General for Ontario (1923), 54 O.L.R. 573 (Ont. Supreme Ct.); Eastwood et al. v. McKenzie (1839), 5 U.C.Q.B. (O.S.) 708; and Stevens v. Clement (1852), 9 U.C.R. 650 (Upper Canada Court of Queen's Bench); Young v. Carter, [1912] O.J. No. 154 (Ont. H.C.); however, these decisions do not support the submission that criminal forfeiture of offence-related property was a power or jurisdiction exercised by the superior court at the time of confederation.
[77] Forfeiture in relation to offence-related property was not a consideration that was part of the sentencing process. This, in my view, is similar to the circumstances in Reference re Young Offenders Act (P.E.I.), supra, dealing with jurisdiction over young persons charged with criminal offences. As found by Lamer C.J., at paragraph 25, "Legislation concerning juvenile delinquents was the consequence of a concern that appeared in the legal world after 1867 and involved the creation of a new scheme including new powers. Because these adjudicative powers were created after confederation, they could constitutionally be entrusted to inferior courts. This, in my view, is dispositive of this appeal." The same comment is applicable to the criminal forfeiture of offence-related property. This feature of the sentencing phase of a criminal proceeding arose after 1867 as a result of a concern that offenders and other complicit individuals should be deprived "the tools of the trade", that offence-related property should be taken out of circulation thereby rendering it unavailable for future designated substance offences. The forfeiture provisions developed for the purpose of preventing crime and as a result of concerns raised by an increase in "organized crime".
[78] Consequently, I am of the view that section 96 of the Constitution Act, 1867 does not prevent the Ontario Court of Justice from exercising jurisdiction over the criminal forfeiture of offence-related property. The constitutional question should be answered as follows:
Are sections 16 and 19 of the CDSA ultra vires the Parliament of Canada as being legislation that confers upon an inferior tribunal, namely, the Ontario Court of Justice, jurisdiction exclusively held by superior courts at the time of confederation, contrary to section 96 of the Constitution Act, 1867?
Answer: No
[79] If I am incorrect in my determination under the historical inquiry that criminal forfeiture of offence-related property was not a power exercised by the superior court at the time of confederation, I must then apply the two further steps set out in Residential Tenancies.
[80] Clearly forfeiture under the CDSA is "judicial". The scheme is adversarial not ministerial and is governed by formal rules of evidence, onuses and burdens, all of which are the hallmark of a judicial function. Both parties agree that a forfeiture hearing proceeding in provincial court must be characterized as "judicial".
[81] It is the third step in the test upon which the analysis rests. The Applicant submits that there is nothing "ancillary" or "subsidiary" to the general administrative functions assigned to the decision-maker, nor is it "necessarily incidental" to the achievement of a broader policy goal of the Parliament. Rather, says the Applicant, forfeiture is the core, substantive purpose of Parliament under the CDSA and, as a result, should be held to be ultra vires the federal Parliament. The Applicant points to its submission that Craig stands for the proposition that the forfeiture provisions of the CDSA are not part of the sentencing process, that forfeiture and sentencing are completely separate hearings that are not connected in any way.
[82] The Crown argues that under the third step I should ask the question posed by Wilson J. in Reference re Young Offenders Act (P.E.I.), supra, at paragraph 55:
At this stage of the test the courts must determine whether the impugned judicial powers of the youth courts, as exercised within the context of the legislative purpose for which they were created, are "necessarily incidental" to broader policy aims set out in the Act or, alternatively, whether they are effectively usurping the role of s. 96 courts.
In Re R. and Trimarchi (1987), 63 O.R. (2d) 515, at p. 526d (C.A.): "It viewed the matter in a wider perspective, with the result that section 96 did not bar Parliament from altering criminal jurisdiction, provided that it stopped short of destroying criminal jurisdiction of the superior court."
[83] In my respectful view, forfeiture of real property, as argued by the Applicant, is not the primary purpose of the CDSA, rather, the primary purpose of the CDSA is to prohibit, suppress, deter and prevent the conduct prohibited by it and forfeiture of offence-related property is ancillary and incidental to that purpose. As I have already found, forfeiture, under the CDSA, follows conviction and is part of the sentencing process. In my view, conferral of the powers under sections 16, 19 and 19.1 upon the sentencing court is necessary to achieving Parliament's broader policy goal of permitting the sentencing court to dispose of all issues relating to sentencing, including the determination of whether property is offence-related and subject to forfeiture, and whether any of the statutory considerations exist under which the court may exercise its discretion to relieve from forfeiture (See also R. v. Van Kessel, supra, at paragraphs 59-68).
[84] Finally, it is my view, that conferring this ancillary jurisdiction concurrently upon both the Ontario Court of Justice and the Superior Court does not usurp the Superior Court's jurisdiction or destroy is jurisdiction. Consequently, I would decide the second constitutional question in the same way:
Are sections 16 and 19 of the CDSA ultra vires the Parliament of Canada as being legislation that confers upon an inferior tribunal, namely, the Ontario Court of Justice, jurisdiction exclusively held by superior courts at the time of confederation, contrary to section 96 of the Constitution Act, 1867?
Answer: No
Do Sections 16, 19 and 20 of the CDSA Violate the Canadian Bill of Rights?
[85] It is the further position of the Applicant that the forfeiture provisions of the CDSA are of no force and effect by virtue of the reverse onus placed upon innocent third parties. This reverse onus under section 19(3) and 20(4) is invalid in that it is inconsistent with the due process and procedural fairness guarantees provided by the Canadian Bill of Rights.
[86] As I expressed to counsel during oral submissions, I do not have jurisdiction over an application brought under section 20(4), as that application must be brought before a judge of the superior court. Further, section 20 has no applicability to the application brought by the Attorney General of Canada, pursuant to section 16(1), for the forfeiture of offence-related property. Finally, Mr. Greenspan conceded during his submissions that under section 20 the onus would be on the person claiming an interest in the forfeited property because it is their application. Consequently, for all of the above reasons, I decline to consider whether section 20 is inconsistent with the Canadian Bill of Rights.
[87] Section 19(3) provides that where a court is satisfied that a lawful owner or a person who is lawfully entitled to possession of any property or any part of any property that would otherwise be forfeited pursuant to section 16(1), and that person appears innocent of any complicity in the designated substance offence or of any collusion in relation to such an offence, the court may order that the property or part be returned to that person. Numerous cases have interpreted this section as placing an onus, on a balance of probabilities, on the person seeking relief from forfeiture of the property.
[88] The Applicant submits that sections 1(a) and 2(e) of the Bill of Rights conflict with the CDSA forfeiture provisions, which place a reverse onus on an uncharged lawful owner or person lawfully entitled to possession of the property, because they allow for the forfeiture of property without a fair hearing, and this in turn allows for the interference with property rights without due process.
[89] The relevant sections of the Canadian Bill of Rights, S.C. 1960, c. 44 (reproduced in R.S.C. 1985, App. III) are as set out below:
- It is hereby recognized and declared that in Canada there have existed and shall continue to exist without discrimination by reason of race, national origin, colour, religion or sex, the following human rights and fundamental freedoms, namely,
(a) the right of the individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law;
- Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to
(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations;
[90] Section 1(a) refers to the right of an individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law. In Canada (Attorney General) v. Central Cartage Co. (C.A.), [1990] 2 F.C. 641 at paragraph 31 (C.A.), Iacobucci J. held that section 1(a) "applies only to individuals which does not include bodies corporate." Consequently, the Applicant's submission that section 1(a) has application must fail. Consequently, Fercan and GRVN can only rely upon section 2(e) and the right to a fair hearing in accordance with the principles of fundamental justice.
[91] In Authorson v. Canada (Attorney General), 2003 SCC 39, [2003] 2 S.C.R. 40 the Supreme Court applied the Bill of Rights in the context of property rights. With respect to procedural fairness, the Court held that, where a court must determine whether to order a governmental deprivation of property rights, the Bill of Rights "guarantees notice and some opportunity to contest the governmental deprivation of property rights only in the context of an adjudication of that person's rights and obligations before a court or tribunal" (paragraph 42).
[92] The Applicant submits that the meaning of procedural fairness was examined in R. v. Duke, [1972] S.C.R. 917 at p. 923:
Without attempting to formulate any final definition of those words, I would take them to mean, generally, that the tribunal which adjudicates upon his rights just act fairly, in good faith, without bias, and in a judicial temper, and must give to him the opportunity adequately to state his case.
[93] The historical background of the CDSA forfeiture provisions reveal that until 1961, an innocent third party owner had no ability to apply for relief of a forfeiture order in relation to offence-related property. A non-charged third party owner faces no risk that their liberty interests might be affected by an order pursuant to section 16(1). They cannot be found guilty of any offence as they are not charged. In Central Cartage, supra, at paragraph 39, Iacobucci J. held that:
…it should be noted paragraph 2(e) of the Canadian Bill of Rights guarantees a fair hearing in accordance with the principles of fundamental justice. As was stated by Lamer, J. in Reference Re Section 94(2) of the B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486, at 511, the words "principles of fundamental justice" qualify the "right to a fair hearing" and operate differently from section 7 of the Charter because in that section they qualify much more fundamental rights, namely, the "right to life, liberty and security of the person". Consequently paragraph 2(e) is much narrower in scope than section 7 of the Charter in that the former deals solely with procedural fairness.
[94] The Crown submits that "the CDSA provisions more than meet the requirements set out in Authorson. A non-exhaustive list of the procedural protections that Fercan and GRVN have at this hearing – either as a matter of explicit statutory right, case law applying the provisions, or procedures adopted by this court – includes:
(a) reasonable notice;
(b) the opportunity to be heard;
(c) disclosure to the extent commensurate with the interests at stake;
(d) a hearing before an independent and impartial judicial officer;
(e) an oral hearing;
(f) a public hearing;
(g) the right to be represented by legal counsel;
(h) the right to adduce both viva voce and documentary evidence;
(i) the right to test the Crown's evidence by way of cross-examination;
(j) the right to make oral legal submissions;
(k) reasons for decision"
[95] In my view, these procedural safeguards extend much further than what was indicated was the requirement for procedural fairness under the Bill of Rights in Duke or Authorson. The British Columbia Court of Appeal in Milton v. Canada (Minister of Fisheries and Oceans), [1986] B.C.J. No. 1389 dismissed a challenge under the Bill of Rights, section 2(e) to similar forfeiture provisions found in the Fisheries Act. Uncharged and unconvicted persons were able to apply for relief from forfeiture where they claimed ownership in fish nets that were believed to have been used to commit offences under the Fisheries Act. It was argued that by shifting the burden of proof to the uncharged to establish that they were innocent of any complicity in the alleged offence that resulted in the forfeiture and of any collusion in relation to the offence; this violated the right to be presumed innocent. The Court rejected the claim that this violated section 2(e):
The complaint under (3) requiring an applicant to satisfy the court of the matters referred to in s. 59(5)(b) seems to be that somehow this requirement destroys the presumption of innocence. The applicant is not being prosecuted for the commission of the alleged offence. He is simply making an application for an order declaring that his interest in the seized goods, whatever it may be, is not forfeited and a declaration as to the nature and extent of his interest. Section 59(5)(b) requires that he establish to the satisfaction of the judge that he is innocent of any complicity in the alleged offence and of any collusion in relation to that offence with any person who may have committed the offence. This is something that the applicant alone could establish because these are factors which are peculiarly within his knowledge.
[96] In my view, section 2(e) does not provide for substantive rights such as the presumption of innocence. The procedural safeguards in place under the forfeiture scheme in the CDSA exceed the procedural fairness requirements pursuant to section 2(e). Consequently, placing an onus on an uncharged third party owner does not infringe the Canadian Bill of Rights and the forfeiture provisions of the CDSA are valid and operable.
[97] The answer to the third constitutional question is as follows:
Are sections 16, 19 and 20 of the CDSA inoperative by reason that they unjustifiably infringe on rights protected pursuant to sections 1(a) and 2(e) of the Canadian Bill of Rights?
Answer: No
Released: September 27, 2012
Signed: "Justice Peter C. West"