ONTARIO COURT OF JUSTICE DATE: 2024 06 03

B E T W E E N :

CITY OF TORONTO

— AND —

2694605 ONTARIO INC.

Before: Justice Rondinelli

Reasons for Judgment released on June 3, 2024

Counsel: C. Bendick, for the Appellant N. Gerry, for the Respondent

Rondinelli J.:

Introduction

[1] This is an appeal by the City of Toronto (“The City”) pursuant to s. 116 of the Provincial Offences Act. The Respondent was charged with four counts under s. 13(1) of the Cannabis Control Act (“CCA”), with offence dates of July 12, 2019, September 19, 2019, January 15, 2020 and March 11, 2020.

[2] After a 5-day trial, Justice of the Peace A. Walker acquitted the Respondent of all four counts. The City only appeals the latter two dismissals of January 15, 2020 and March 11, 2020.

[3] The facts are straightforward and not in dispute.

[4] On May 9, 2019, the Respondent became the owner of property known as 1321 St. Clair Avenue West (“the property”). James Deleo is the sole director and shareholder of the Respondent corporation and his family owns and operates a bakery near the property.

[5] Mr. Deleo became interested in purchasing the property in December 2018. At that time, he believed that the property was being operated as a coffee shop but agreed that he did not know much about this business. Mr. Deleo made an offer to purchase the property on February 4, 2019, despite not having set foot on the property.

[6] On April 9, 2019, Mr. Deleo attended the property as a result of an appraisal required as part of a financing condition for the sale of the property. During this visit, Mr. Deleo met Ahmed Iqbal who was the owner of the business and existing commercial leaseholder. Mr. Iqbal informed Mr. Deleo that he intended to sell imported teas and Belgian chocolate from the premises. Mr. Iqbal also advised that he had a friend that wanted to lease part of the second floor and the third floor for residential purposes. Mr. Deleo agreed and met with the proposed residential tenant, Gustavo Rodrigues on May 7, 2019. Mr. Rodrigues indicated he was in Canada on a student visa and provided Mr. Deleo with one year’s worth of rent.

[7] The leases were amended and Mr. Iqbal had a commercial lease with Mr. Deleo for the main floor and half of the second floor. Mr. Rodrigues had a residential lease with Mr. Deleo for the other half of the second floor and the third floor.

[8] As it turns out, a business named CAFÉ had been operating an illegal cannabis dispensary at the property since 2018. The illegal cannabis dispensary continued after the Respondent assumed ownership on May 9, 2019. On May 29, 2019, City of Toronto inspectors attended the property and confirmed that the illegal cannabis dispensary continued. Accordingly, the City prepared a Notice of Contravention and served it upon Mr. Deleo on June 18, 2019. It was at this point that Mr. Deleo became aware of the illegal cannabis dispensary at the property.

[9] On the same day as receiving the Notice, Mr. Deleo went to the CAFÉ business and asked the barista for Mr. Iqbal or Mr. Rodrigues. Neither was there. Mr. Deleo inquired whether the business sold cannabis, upon which the barista replied, “Yes, of course.” Mr Deleo then toured the property and saw “wall to wall marihuana” and that Mr. Rodrigues “obviously didn’t live there.” Upon returning home, Mr. Deleo conducted a Google search of the business and it revealed that CAFÉ had many incidents with police.

[10] On June 19, 2019, Mr. Deleo spoke to his cousin who was a real estate lawyer. Based on his cousin’s advice, Mr. Deleo prepared and served notices aimed at terminating the commercial tenancy of Mr. Iqbal and the residential tenancy of Mr. Rodrigues. His cousin further advised that once the notices were served, that he could change the locks and call a moving company to remove possessions from the property.

[11] On June 30, 2019, Mr. Deleo changed the locks on the property and intended to have a moving company attend two days later following the Canada Day holiday. The next day, after returning from vacation, Mr. Deleo noticed that the property was once again open and operating. Mr. Deleo changed the locks once again in the early morning of July 7, 2019. The CAFÉ business was nonetheless open and operating later that day.

[12] Toronto Police executed another search warrant at the property on July 12, 2019. This search confirmed the illegal CAFÉ business was continuing. Pursuant to s. 18(2) of the CCA, Toronto police also issued an interim closure order of the property, which barred entry of all persons. Toronto police changed the locks to the door and pinned them. Pinning consists of screwing a metal plate from the inside that prevents the door from opening.

[13] Inspections at approximately 4 a.m. on July 18, 2019 revealed there was a person inside the property and that the cannabis had been restocked. Accordingly, the City installed concrete blocks later that day at the entrance to the property thereby blocking the entrance. On July 20, 2019 three individuals were witnessed trying to move the blocks with hydraulic devices. Police attended and arrested these individuals.

[14] Further search warrants were executed at the property on September 19, 2019, January 15, 2020 and March 11, 2020. During the searches, Toronto Police seized cannabis. On each occasion, new interim closure orders were issued. During this time frame, police reinstalled concrete barriers that had been removed and posted security guards for a period of 3 weeks.

[15] After each inspection on July 12, 2019, September 19, 2019, January 15, 2020 and March 11, 2020 the persons found operating the CAFÉ business were charged with the illegal sale of cannabis and the Respondent was charged with permitting the sale of illegal cannabis.

[16] The trial for the four charges proceeded before Justice of the Peace A. Walker. Her Worship acquitted the Respondent of all 4 charges, finding that the Respondent had met the statutory defence under s. 13(2) of the CCA.

[17] On appeal, the City argues that the Justice of the Peace applied the incorrect standard in applying the statutory defence available to landlords under s. 13(2) of the CCA.

[18] The City further claims that this case centres on the availability and appropriateness of a remedy under s. 18(4) of the CCA as a means by which landlords can satisfy their obligations to take reasonable measures to ensure their properties are not being used as illegal cannabis dispensaries.

[19] For the reasons that follow, I do not agree with the City’s submissions and find that the appeal must be dismissed.

S. 13(1) of the CCA is a Mens Rea Offence

[20] The Respondent was charged under s. 13(1) of the CCA, which reads: Landlords

13 (1) No person shall knowingly permit a premises of which he or she is a landlord to be used in relation to an activity prohibited by section 6.

[21] The Justice of the Peace held that s. 13(1) is a mens rea offence. I agree with this assessment. [1] As Justice Dickson (as he then was) held in R. v. Sault Ste Marie, [1978] 2 SCR 1299 at p. 1326:

Offences which are criminal in the true sense fall in the first category. Public welfare offences would prima facie be in the second category. They are not subject to the presumption of full mens rea. An offence of this type would fall in the first category only if such words as “wilfully,” “with intent,” “knowingly,” or “intentionally” are contained in the statutory provision creating the offence.

[22] The word “knowingly” presumptively creates a mens rea offence. Further, the possibility of high fines or potential imprisonment as a penalty strengthens the interpretation of this offence as a full mens rea offence in a regulatory regime. [2]

The Statutory Defence under s. 13(2) of the CCA

[23] The knowledge of the Respondent was not in dispute in this case. As of June 18, 2019, Mr. Deleo was fixed with the knowledge that the property was being used as an illegal cannabis dispensary.

[24] The main issue before the Justice of the Peace was whether the Respondent advanced a successful defence under s. 13(2) of the CCA, which provides:

Defence

(2) It is a defence to a charge under subsection (1) that the defendant took reasonable measures to prevent the activity.

[25] The Justice of the Peace concluded that the Respondent had met the statutory defence, holding:

These charges that Mr. Deleo is facing are men rea, not strict liability. The defence is not one of due diligence whereby he must exhaust all his options to prevent the activity. He must take reasonable measures to prevent the activity. This is a lower standard than due diligence.

When Mr. Deleo received the NOC letter on June 18, 2019 he called the tenants on numerous occasions without success. He attended the property to verify the illegal act was taking place. He spoke to his cousin, the real estate lawyer, found out he needed to fill out and serve L2 and N6 forms to begin the process of evicting his tenants, which he did, albeit not well. He waited 10 days he needed to wait, and changed the locks not once but twice in a matter of two weeks.

The court finds that Mr. Deleo took reasonable measures to prevent the activity as soon as he was made aware of the situation, yet he was unsuccessful at doing so, and as a result he was charged under the Act after the warrant was executed.

[26] The City argues that the Justice of the Peace erred in finding that the “reasonable measures” standard is a lower standard than the traditional due diligence standard of “all reasonable steps” as articulated in R. v. Sault Ste. Marie. The City argues that the term “reasonable measures” as found in s. 13(2) of the CCA is interchangeable with the traditional “all reasonable steps” due diligence standard found at common law.

[27] I disagree.

[28] The modern approach to statutory interpretation leads to the conclusion that a plain reading of s. 13(2) requires only “reasonable measures” as opposed to “all reasonable measures.” When considering the plain meaning of a statutory provision, the Supreme Court of Canada emphasized in R. v. I. (D.A.), 2012 SCC 5 at para. 26, “The first and cardinal principle of statutory interpretation is that one must look to the plain words of the provision. Where ambiguity arises, it may be necessary to resort to external factors to resolve the ambiguity.” In my view, the wording of s. 13(2) is not ambiguous and requiring a landlord to take only “reasonable measures” to prevent illegal activity is consistent with the object and scheme of the CCA.

[29] The terms “reasonable measures (or steps)” and “all reasonable measures (or steps)” are not foreign to regulatory or criminal law schemes. For example, in the sexual assault context, Parliament extends a defence to those accused persons claiming that they believed the complainant consented to the sexual activity, but only if the accused took “ reasonable steps , in the circumstances known to the accused at the time, to ascertain that the complainant was consenting” [Emphasis added.]: See s. 273.2(b) of the Criminal Code.

[30] In contrast, s. 150.1(4) of the Criminal Code provides a more limited defence in relation to sexual offences of children under the age of 16:

150.1(4) It is not a defence to a charge under section 151 or 152, subsection 160(3) or 173(2), or section 271, 272 or 273 that the accused believed that the complainant was 16 years of age or more at the time the offence is alleged to have been committed unless the accused took all reasonable steps to ascertain the age of the complainant. [Emphasis added.]

[31] As such, the legislature’s omission of “all” reasonable measures in s. 13(2) appears to be intentional. It is not only in line with the plain reading of the section but aligns harmoniously with the scheme of the CCA. The City argues that “it was time for the Respondent to get in the driver’s seat and take control of its property. An application to the Superior Court of Justice was the vehicle by which to achieve this aim.” This expectation, however, places a more onerous obligation on the Respondent than the legislation requires of landlords.

[32] First, it is important to note that the legislation mandates that “a police officer shall bar entry to all entrances to the premises until the final disposition of the charge” (s. 18(3) of the CCA – emphasis added). Clearly, the police failed to successfully do so in this case. If they had succeeded, there would have been no further contraventions of the CCA.

[33] Second, although s. 18(4) of the CCA provides an option for a landlord to seek re-entry to its premises by bringing an application to the Superior Court of Justice for an order to cease the property being barred, it is neither a mandatory nor exclusive option. Indeed, s. 18(3.1) provides a further avenue to re-enter the premises: that is, after the final disposition of the charge. In the circumstances of this case, it was open to the Justice of the Peace to find that a Superior Court of Justice application was likely to fail, and the only viable option left for the Respondent was to go to trial.

[34] Finally, if a landlord was expected to do more than take reasonable steps to prevent illegal activity, then the legislature could have included more express language as to the active participation required on the part of a landlord. For example, pursuant to s. 34(1) of the Liquor Licence Act, the legislature mandates that a licence holder must take an active role in removing persons that are contravening the law from their premises. The section reads:

Removing person from premises

34 (1) The holder of a licence or permit issued in respect of premises shall ensure that a person does not remain on the premises if the holder has reasonable grounds to believe that the person,

(a) is unlawfully on the premises;

(b) is on the premises for an unlawful purpose; or

(c) is contravening the law on the premises.

Idem

(2) The holder of a licence or permit may request a person referred to in subsection (1) to leave the premises immediately and if the request is not forthwith complied with may remove the person or cause the person to be removed by the use of no more force than is necessary.

Order to vacate premises

(3) If there are reasonable grounds to believe that a disturbance or breach of the peace sufficient to constitute a threat to the public safety is being caused on premises for which a licence or permit is issued, a police officer may require that all persons vacate the premises.

Duty to ensure premises vacated

(4) The holder of the licence or permit for premises that are required to be vacated under subsection (3) shall take all reasonable steps to ensure that the premises are vacated.

[Emphasis added.]

[35] There is a clear distinction between the degree of participation required under the CCA (i.e., “permit” under s. 13(1) denotes passive activity) and the Liquor Licence Act (i.e., “ensure” under s. 34(1) denotes active participation). Furthermore, s. 13(2) of the CCA provides a defence for those landlords that take “reasonable measures,” while s. 34(4) of the Liquor Licence Act mandates that a licence holder “shall take all reasonable steps to ensure that the premises are vacated.”

[36] No doubt, CAFÉ behaved with no regard for the law. In view of that evidence, the Justice of the Peace found that the Respondent was not a willing, or even a passive, participant to CAFÉ’s brazen acts of defiance. In my view, the Justice of the Peace had a sufficient basis on the evidence before her to make that finding.

Conclusion

[37] Returning to s. 273.2(b) of the Criminal Code, the Supreme Court of Canada in R. v. Barton, 2019 SCC 33 provided some guidance as to what constitutes “reasonable steps” as a precondition to the defence of honest but mistaken belief in communicated consent. The majority of the Court held at para. 104:

Section 273.2(b) imposes a precondition to the defence of honest but mistaken belief in communicated consent — no reasonable steps, no defence. It has both objective and subjective dimensions: the accused must take steps that are objectively reasonable, and the reasonableness of those steps must be assessed in light of the circumstances known to the accused at the time…Notably, however, s. 273.2 (b) does not require the accused to take “all” reasonable steps, unlike the analogous restriction on the defence of mistaken belief in legal age imposed under s. 150.1(4) of the Code…

[38] The majority of the Court further held at para. 106:

Keeping in mind that “consent” is defined under s. 273.1(1) of the Code as “the voluntary agreement of the complainant to engage in the sexual activity in question”, what can constitute reasonable steps to ascertain consent? In my view, the reasonable steps inquiry is highly fact-specific, and it would be unwise and likely unhelpful to attempt to draw up an exhaustive list of reasonable steps or obscure the words of the statute by supplementing or replacing them with different language.

[39] In the case at bar, the Justice of the Peace considered the steps that the Respondent took to try to prevent CAFÉ’s illegal activity. The Justice of the Peace considered the Respondent’s actions through a subjective and objective lens in the highly fact-specific context before her. She found CAFÉ’s actions to be “bizarre and unusual” and that “no one could have predicted that a tenant would behave with as complete and utter blatant disregard for the law.” In the end, she was satisfied that the Respondent took reasonable steps to prevent the illegal activity. I see no error in this approach or in her findings.

[40] The appeal is dismissed.

Released: June 3, 2024 Signed: Justice Rondinelli

[1] I am cognizant of the fact that in an earlier unreported decision, Toronto (City) v. Ghelichkani, dated January 25, 2023, I noted that s. 13(2) of the CCA sets out a statutory due diligence defence. I was wrong in making such a statement. That decision was rendered orally on the same day of the appeal hearing. The issue of whether s. 13(2) of the CCA set out a statutory due diligence defence was neither thoroughly argued by the parties nor thoroughly analysed by the court. The substance of that decision turned on the lack of any reasonable steps taken by the landlord in preventing the illegal activities of CAFÉ. As such, Ghelichkani cannot stand as supporting the view that s. 13(2) of the CCA is a statutory due diligence defence.

[2] Penalties for a contravention under s. 18(1) of the CCA are set out in s. 23(2) of the CCA:

23(2) An individual who is convicted for contravening section 6 or 13 is liable,

(a) on a first conviction in respect of the section, to a fine of at least $10,000 and not more than $250,000 or to imprisonment for a term of not more than two years less a day, or both; and

(b) on a subsequent conviction in respect of the section, to a fine of at least $5,000 and not more than $100,000 for each day or part of a day on which the offence occurs or continues or to imprisonment for a term of not more than two years less a day, or both.