Court File and Parties

Court File No.: Central East - Newmarket 4911-998-11-03707-02 Date: 2013-04-15 Ontario Court of Justice

Between: Her Majesty the Queen — and — Christos Paras

Before: Justice Richard Blouin

Heard on: March 18, March 27 and April 2, 2013

Reasons for Judgment on Forfeiture Application

Released on: April 15, 2013

Counsel: S. Dawson for the Federal Crown A. Stuffco for the defendant Christos Paras

BLOUIN J.:

Facts

[1] On February 29, 2012, the defendant entered a guilty plea before me, on the day of a scheduled preliminary hearing, to one count of Production of Marihuana. In support of that plea, the defendant admitted to the following:

• On the 28th of April, 2011, officers began an investigation at 2871 Bur Oak Avenue in the town of Markham. They had received a complaint with respect to the smell of vegetative marihuana in the basement of a townhouse connected to that address and based on that complaint an investigation was begun. On the 28th of April they attended at the residence where they too smell (sic) the strong smell of marihuana from the basement, as well as from the exhaust pipe connecting to the neighbouring residence. Officers had retrieved hydro records with respect to the unit at 2871 Bur Oak and indicated it was using twice the energy consumption of the neighbouring townhouse and it was on – over 12 hour periods which was a common pattern seen in hydro in marihuana growing operations.

• When the officers were on scene Mr. Paras was in the house with somebody else. He was arrested when he left the home. A search warrant was obtained with respect to that location and subsequent to the search 303 plants were seized. The house had been modified with respect to grow operations – the whole house – it wasn't simply a one room basement type situation. The officers seized as well – and these were stage 3 plants as well as some clones – they seized documentation indicating grow charts from 2009, 2010, 2011, debt lists, et cetera, mortgage documentation indicating the home is in Mr. Paras's name and other documentation of Mr. Paras's identification, as well as receipts for grow equipment and chemicals dating back to March of 2008.

• They seized some bulk marihuana in the refrigerator and the usual grow operation equipment in terms of ballast, lights – I had a better list – those are the facts, Your Honour.

[2] The defendant received a sentence of 12 months to be served in the community, which was jointly submitted by counsel. The defendant's townhouse at 2871 Bur Oak Avenue in Markham was restrained by O'Connor, J. pursuant to s. 14 of the Controlled Drugs and Substances Act (CDSA) on April 16, 2011. This application was brought by the Crown for forfeiture of that property under s. 16(1).

The Law

[3] "Offence-related property" is defined in s. 2(1) as:

"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;

[4] Section 16 provides for the forfeiture of offence-related property:

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

(b) in the case of any other offence-related property,

(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.

Section 19 provides:

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.

Section 19.1 provides:

19.1 (1) Where all or part of offence-related property that would otherwise be forfeited under subsection 16(1) or 17(2) is a dwelling-house, before making an order of forfeiture, a court shall require notice in accordance with subsection (2) to be given to, and may hear, any person who resides in the dwelling-house and is a member of the immediate family of the person charged with or convicted of the indictable offence under this Act in relation to which the property would be forfeited.

(2) A notice shall

(a) be given or served in the manner that the court directs or that may be specified in the rules of the court;

(b) be of any duration that the court considers reasonable or that may be specified in the rules of the court; and

(c) set out the offence charged and a description of the property.

(3) Subject to an order made under subsection 19(3), if a court is satisfied that the impact of an order of forfeiture made under subsection 16(1) or 17(2) in respect of real property would be disproportionate to 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, as the case may be, it may decide not to order the forfeiture of the property or part of the property and may revoke any restraint order made in respect of that property or part.

(4) Where all or part of the property that would otherwise be forfeited under subsection 16(1) or 17(2) is a dwelling-house, when making a decision under subsection (3), the court shall also consider

(a) the impact of an order of forfeiture on any member of the immediate family of the person charged with or convicted of the offence, if the dwelling-house was the member's principal residence at the time the charge was laid and continues to be the member's principal residence; and

(b) whether the member referred to in paragraph (a) appears innocent of any complicity in the offence or of any collusion in relation to the offence.

Section 20 provides:

20. (1) Where any offence-related property is forfeited to Her Majesty pursuant to an order made under subsection 16(1) or 17(2), any person who claims an interest in the property, other than

(a) in the case of property forfeited pursuant to an order made under subsection 16(1), a person who was convicted of the designated substance offence in relation to which the property was forfeited,

(b) in the case of property forfeited pursuant to an order made under subsection 17(2), a person who was charged with the designated substance offence in relation to which the property was forfeited, or

(c) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (a) or (b) under circumstances that give rise to a reasonable inference that the title or right was transferred from that person for the purpose of avoiding the forfeiture of the property,

may, within thirty days after the forfeiture, apply by notice in writing to a judge for an order under subsection (4).

[5] The Crown called an expert, Constable Smith. The defendant and his father testified, and provided affidavits.

Findings

Offence Related Property

[6] In my view, there is no doubt this townhouse was offence-related property. Without it, the marihuana could not have been produced. The basement was almost entirely dedicated to marihuana plants and equipment to grow them. The electrical system had been substantially altered to distribute the electricity necessary to power the high intensity lights. A bedroom closet contained plants. Even entering the house provided an observation of a substantial duct just outside the bathroom (see Exhibit 1). Upon final submissions, defence did not contest this.

Forfeiture Disproportionate

[7] Section 19.1(3) deals with an exemption from presumptive forfeiture in relation to real property. The burden of establishing disproportionality rests on the respondent. If the respondent can satisfy the court under s. 19.1(3) of the CDSA that the impact of forfeiture would be disproportionate, having regard to (i) the nature and gravity of the offence, (ii) the circumstances surrounding the commission of the offence and (iii) the record, if any, of the person charged, the court "may" decline to order forfeiture of the property, or any part of the property.

[8] In R. v. Craig 2009 SCC 23, the Supreme Court of Canada provided lower courts with some assistance in analyzing the 19.1 factors, starting at para. 55:

55 The proportionality test under s. 19.1(3) therefore allows a court to tailor the amount of property to be forfeited in a way that takes into account the relative weight of the listed factors. Partial forfeiture gives the court greater scope for applying the proportionality test so that the only options available to the sentencing judge are not a stark choice between full or no forfeiture. This establishes a spectrum of potential forfeiture orders that can be adjusted to reflect the relative gravity of the case, pursuant to the purposes of the forfeiture scheme.

56 What, then, should a judge consider under s. 19.1(3)? The nature and gravity of the offence could include the character and quantity of the substance involved, the level of sophistication of the crime and the extent to which the commercial production or distribution of drugs was involved.

57 The second factor, the circumstances surrounding the commission of the offence, might include consideration of the offender's role in the commission of the offence, the nature of the property and the manner in which it was used in the offence, risks to the security or safety of the community, whether the property was used in a manner that detrimentally affected its legitimate use and enjoyment, whether the property was fortified or otherwise adapted to accommodate the grow operation, the extent of the offender's involvement in organized crime and whether the property itself was held by a criminal organization.

58 The criminal record of the offender is self-explanatory. It will be of particular relevance if the prior offences were drug related.

59 Based on the particular circumstances of the case, therefore, judges have the discretion to order no forfeiture, partial forfeiture or full forfeiture of offence-related real property. The extent of the property forfeited will vary. Full forfeiture may be anticipated, for example, in the case of a fortified property purchased for criminal purposes and solely dedicated to the commercial production and distribution of illegal substances, perhaps with a connection to organized crime. On the other hand, one might decline to order forfeiture in the case of an individual with no criminal record and no connection to organized crime who grows very little marihuana in her home. Each situation will be subject to a judge's appreciation of how the s. 19.1(3) factors should be applied in the particular circumstances, which, as previously stated, may result in no, partial or full forfeiture.

[9] One important issue that I must first resolve is that outlined in s. 19(3). Is the defendant's father a "lawful owner" or is he "lawfully entitled to possession of any property or part of any property that would otherwise be forfeited?" I am satisfied that Dimitri Paras is innocent of any complicity or collusion regarding the offence. I am also satisfied his right or entitlement (if it is found to be so) was not obtained for the purpose of avoiding forfeiture of the property.

[10] Around Christmas time 2012, Scotiabank, which held a $254,304.87 mortgage balance on the property, demanded full payment, within 15 days. Mr. Paras Sr., not wanting to see the property foreclosed by the bank, paid off the balance on January 11, 2013.

[11] The Crown conceded that had this application proceeded before December 2012, the bank would be entitled to their interest in the property, pursuant to s. 19(3). Alternatively, the bank could (and banks often do) apply to a Superior Court judge under s. 20 of the CDSA to recover their interest in the property. The Crown argued that the relief sought by Mr. Paras Sr. was governed by s. 20 and not s. 19(3) since the father was not a lawful owner, nor lawfully entitled.

[12] Support for that position, he submitted, was found in a recent decision of Speyer J. in R. v. Amrow Sodhi, [2011] ONCJ 301. That case involved a forfeiture application of property legally owned and mortgaged by a convicted son (just as in our case). In Sodhi, the son received $95,000 from his mother ostensibly to become a joint tenant in the property. That never happened on title. The Crown took the position that her present claim to have equitable interest, and therefore qualify as a joint tenant, was "a specious attempt by Mr. Sodhi to protect his equity in the house." On the facts of Sodhi, Justice Speyer found no proprietary or possessory interest in the property, and declined to order the $95,000 returned to the mother.

[13] I find the facts of this case to be significantly different. Whereas the circumstantial evidence in Sodhi led Justice Speyer to conclude there was no reliable evidence suggesting the mother's valid legal interest in the property, here we know that Scotiabank had a valid legal interest in the property in December of 2012. In order to prevent foreclosure, Mr. Paras Sr. paid $254,000 to honour the debt. I am satisfied that Mr. Paras Sr., in essence, acquired Scotiabank's interest. When he paid the money, he stood in their place. Even in an absence of evidence that he registered that interest on title, I find he is lawfully entitled to possession of that part of the property that would otherwise be forfeited pursuant to s. 16(1) of the CDSA.

[14] Accordingly, any forfeiture order I make is subject to my order that part of the property, namely $254,304.87, be returned to Dimitri Paras.

[15] The only remaining issue is whether the forfeiture of the remaining equity on the property (approximately $100,000) would be disproportionate as outlined in s. 19.1(3).

Criminal Record

[16] Dealing with the simplest factor first, the defendant had no criminal record. He has maintained steady employment for a significant period of time.

Circumstances Surrounding Commission of the Offence

[17] Secondly, the defendant was the sole producer. There was no evidence the defendant produced for a criminal organization. I accept his evidence that he produced for personal use, and to sell to a limited number of friends. No evidence indicates to the contrary. The property was a residential townhouse that needed to be remediated after the grow operation was removed, which the defendant undertook with his father's assistance at significant expense. The defendant acquired the house before it became a grow operation and lived in it at all times. No one else lived with him. The property was adapted to be used as a grow operation. Even the defendant's parents were not invited into the home because its use would be easily detected. The electrical system was altered, to allow for a greater flow of electricity than normal use would occasion, creating a fire hazard. This presented a risk to the surrounding residential community.

Nature and Gravity of the Offence

[18] Thirdly, the character of the substance is at the softer end of the drugs listed in the CDSA and the danger to the neighbouring community, which obviously existed here, would not be as great as it would be if this operation involved harder drugs (like a meth lab). However, the quantity was relatively substantial. In Craig, the Supreme Court characterized 186 plants as a "moderately sized grow operation" (see para. 85). This operation obviously exceeds that (at 303 plants). It was obviously a commercial operation since the defendant sold drugs to friends, and kept an accounting, however rudimentary, of the sales. Revenue Canada re-assessed the defendant's income to account for unreported income of $65,000 over the three years from 2008 to 2010. Although the defendant did not specifically avert to that re-assessment as related to marihuana sales, he agrees there appears to be no other reason. Given the equipment used (high intensity lights, ballasts, watering system), the operation could be considered somewhat sophisticated. I note however, that the house was not fortified, no weapons were found, there was no hydro by-pass, and no theft of electricity.

[19] I conclude that this case comes closest to the fact situation in R. v. Craig. Mr. Paras had more plants, but Craig had employees, and was assessed $250,000 by the CRA for unpaid taxes on revenue obtained through production of marihuana. Although each forfeiture decision must be made examining the facts of each situation, many of the same non-aggravating factors existed.

[20] In my view, the full forfeiture of the remaining equity in the property would be disproportionate. As a result, I revoke the restraint order and decide not to order forfeiture of part of the property; that part being 50 percent of the remaining equity. Since the property was appraised on November 29, 2012 at between $345,000 and $362,000, but has not been valued presently, that amount will be dependent on the present market value when forfeiture occurs. For ease of calculation, if the property is valued at $354,304.87, the remaining equity would be $100,000 and therefore $50,000 of the property will not be forfeited.

Released: April 15, 2013

Signed: "Justice Richard Blouin"

Footnotes

[1] R. v. Siek [2007] N.S.CA 23 at para. 27; R. v. Nguyen et al 2007 ONCJ 23 at para. 58; R. v. Bui 2010 BCCA 279 at paras. 43–44.