CITATION: Ontario (Attorney General) v. $5,545 in Canadian Currency (In Rem), 2011 ONSC 2827
DIVISIONAL COURT FILE NO.: 10-DV-1575
DATE: 2011-05-13
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
CUNNINGHAM A.C.J., FERRIER and BRYANT J.J.
BETWEEN:
ATTORNEY GENERAL OF ONTARIO
Applicant/Respondent
– and –
$5,545 IN CANADIAN CURRENCY (IN REM)
Respondent/Applicant
Miriam Young and Troy Harrison, for the Applicant/Respondent
Bruce F. Simpson, for the Respondent/Applicant
HEARD: April 5, 2011
CUNNINGHAM, J., FERRIER J., BRYANT, J.
I. Facts
[1] On July 6, 2007, members of the Ottawa police force attended at Kirk Lavallie’s residence to arrest him for public mischief relating to a false report of a stolen credit card. The officers overheard Lavallie speaking with a third party on a cell phone while he was standing outside his residence. The officers believed that Lavallie was arranging a drug transaction at a gas station for the following day and decided not to arrest Lavallie for the public mischief offence.
[2] On the following morning of July 7, 2007, the police conducted surveillance on Lavallie. The officers observed Lavallie meet and speak with Michael Laronde at a gas station. Laronde walked to the rear of the gas station and spoke to two unidentified males who were seated in separate vehicles. Laronde then returned to speak with Lavallie. Lavallie removed his backpack, opened it and showed something inside the backpack to Laronde. Laronde then removed something from the backpack and put it into the pocket of his shorts. Laronde walked back to the rear of the gas station and spoke with the two unidentified males. The unidentified males left the gas station a short time later.
[3] Laronde then returned to speak with Lavallie and they waited together for about 10 minutes. Lavallie threw his backpack into the back of Laronde’s jeep and both left the gas station in their respective vehicles. The police followed the motorcycle and the jeep.
[4] The officers stopped the jeep, arrested Laronde, provided him his rights to counsel and cautioned him. The officers removed Lavallie’s backpack from the jeep. The police seized a bundle of bills in the amount of $5,000 from the backpack. Detective Carey opined in his affidavit that the bundle of money was consistent with drug trafficking. Later on when Lavallie returned to the traffic stop location, the police arrested and searched him. The police seized 2.4 grams of marihuana, 0.7 grams of hashish, $545 and a drug debt list.
[5] Initially, Lavallie and Laronde denied knowledge of the money found in the backpack. Subsequently, Lavallie claimed that the money was a partial payment from a third party purchaser of his motorcycle. The police performed an ION scan on five bills which showed a high exposure to cocaine and one bill showed an exposure to hashish.
[6] The police conducted a criminal records search of Lavallie and Laronde. Lavallie had been convicted of crimes of dishonesty, assault and drug related offences, including possession of 2.5 pounds of marihuana and operating a grow operation in 2003-2004. Laronde also has a criminal record for possession of and trafficking in marihuana.
II. Respondent’s Motion to Strike
[7] On September 26, 2007, the Attorney General made an application for forfeiture of $5,545 pursuant to the Civil Remedies Act, 2001, S.O. 2001, c. 28 (“CRA”) and rule 14.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The Attorney General claimed that the bundle of money was proceeds or instruments of unlawful activity. The supporting affidavit of Detective Rick Carey referred to Lavallie’s involvement in drugs and Lavallie and Laronde’s criminal records. On October 5, 2007, the Attorney General obtained a preservation order pursuant to sections 4 and 9 of the CRA.
[8] Counsel for Lavallie brought a motion to strike parts of the notice of application and those parts of Detective Carey’s affidavit relating to Lavallie’s prior criminal record and his involvement with drugs. Counsel argued that the motion was necessary to allow Lavallie to learn the case he has to meet and to enable him to file appropriate responding materials on the forfeiture application. Counsel for Lavallie submitted that the bad character evidence was inadmissible because it showed Lavallie’s propensity to engage in unlawful drug related activity.
[9] On April 14, 2008, the motions judge reasoned (paragraph 8):
I am of the opinion that the Moving Party’s objections to the contents of Detective Carey’s affidavit are not well founded. This is an in rem proceeding claiming forfeiture of the funds as proceeds of unlawful activity. The Moving Party is not on trial. Therefore, the fact that he has a criminal record for drug offences and his propensity to engage in unlawful and drug-related activity, both of which would normally be inadmissible in a criminal prosecution, are not bars to admissibility in this proceeding.
[10] Hackland J. dismissed the motion because the affidavit complied with rule 39.01(5) and was probative of whether the seized money was proceeds of criminal activity.
III. Motion for Leave to Appeal
[11] Counsel for Lavallie sought leave to appeal the order of Hackland J. On September 8, 2008, Thomson J. granted leave to appeal the order of the motions judge on the issue of the admissibility of Lavallie’s “record for drug offences and his propensity to engage in unlawful and drug related activity” in the forfeiture application. Since Thomson J. did not grant leave relating to striking portions of the application referring to bad conduct, it is unnecessary to deal with that issue.
[12] Counsel for Lavallie submits that evidence of Lavallie’s criminal record and past drug related activity is inadmissible because it is propensity evidence. Counsel for the Attorney General submits that evidence of Lavallie’s propensity is admissible if it is relevant and its probative value exceeds its prejudicial effect.
[13] Counsel for Lavallie and the Attorney General agree that the issue raised on the motion to strike raised a question of law and that the standard of review is correctness.
IV. Analysis and Decision
(1) The Purpose of the CRA
[14] The CRA is constitutionally valid civil legislation (Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] S.C.J. No. 19, at para. 4). The CRA requires a Superior Court Justice to make an order in rem forfeiting property to the Crown in right of Ontario if the property is proceeds of unlawful activity. Section 3(5) creates a 15 year limitation period commencing from the date the proceeds of unlawful activity were first acquired as a result of the alleged unlawful activity.
[15] The legislative purpose of the CRA includes: (1) preventing persons who engage in unlawful activities from keeping property that was acquired as a result of unlawful activities; and, (2) preventing property from being used to engage in certain unlawful activities (ss. 1(a) and 1(b)). In Chatterjee, supra, at paragraphs 4 and 23, the Supreme Court of Canada stated:
It is true that forfeiture may have de facto punitive effects in some cases, but its dominant purpose is to make crime in general unprofitable, to capture resources tainted by crime so as to make them unavailable to fund future crime and to help compensate individuals and public institutions for the costs of past crime.
In essence, therefore, the CRA creates a property-based authority to seize money and other things shown on a balance of probabilities to be tainted by crime and thereafter to allocate the proceeds to compensating victims of and remedying the societal effects of criminality. The practical (and intended) effect is also to take the profit out of crime and to deter its present and would-be perpetrators.
[16] The Attorney General has the onus of proof on a balance of probabilities to prove the property was proceeds of unlawful activity or an instrument of unlawful activity (s.16 of the CRA; Ontario (Attorney-General v. Lok, [2008] O.J. No. 3550).[^1]
(2) The Legislation re: Character
[17] Section 2 of the CRA defines “unlawful activity” as an act or omission that is an offence under an Act of Canada or Ontario. It defines “proceeds of unlawful activity” as:
property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity, whether the property was acquired before or after this Act came into force...
[18] Section 7(1) of the CRA defines an “instrument of unlawful activity” as:
property that is likely to be used to engage in unlawful activity that, in turn, would be likely to or is intended to result in the acquisition of other property ... and includes any property that is realized from the sale or other disposition of such property.
[19] Accordingly, property may be forfeited if it was acquired as a result of past unlawful activity or it is likely to be used for future unlawful activity. Thus, the CRA governs proceeds or instruments of retrospective and prospective unlawful activity.
[20] Section 2 also defines a “legitimate owner”:
legitimate owner means, with respect to property that is proceeds of unlawful activity, a person who did not, directly or indirectly, acquire the property as a result of unlawful activity committed by the person, and who,
(a) was the rightful owner of the property before the unlawful activity occurred and was deprived of possession or control of the property by means of the unlawful activity,
(b) acquired the property for fair value after the unlawful activity occurred and did not know and could not reasonably have known at the time of the acquisition that the property was proceeds of unlawful activity, or
(c) acquired the property from a person mentioned in clause (a) or (b).
Section 3(3) of the CRA provides:
If the court finds that property is proceeds of unlawful activity and a party to the proceeding proves that he, she or it is a legitimate owner of the property, the court, except where it would clearly not be in the interests of justice, shall make such order as it considers necessary to protect the legitimate owner’s interest in the property.
[21] The CRA also contains evidentiary provisions concerning proof of past criminal activity. Subsection 17(1) states that proof that a person was convicted or found guilty of an offence is proof the person committed the offence. Subsection 17(2) further provides that it is permissible to find that an offence has been committed even if no person has been charged with the offence or a person charged has been acquitted or if the charge was stayed or withdrawn.
[22] The above sections contemplate that evidence of good and bad character may be admissible in a forfeiture application.
(3) Evidence of Bad Character
[23] The Attorney General applied for forfeiture of the bundle of money seized by the police pursuant to sections 3 and 8 of the CRA on the ground that the money is proceeds or an instrument of unlawful activity. Section 2 of the CRA stipulates that a contravention of the Criminal Code, R.S.C. 1985, c. C-46 as am. or the Controlled Drugs and Substances Act, S.C. 1996, c. 19, as am. is “unlawful activity.” Thus, Lavallie and Laronde’s criminal convictions and drug related activity is evidence of past “unlawful activity” (R. v. Lepage, [1995] 1 S.C.R. 654 at paras. 36-37, 55; R. v. Handy, 2002 SCC 56, [2002] 2 S.C.R. 908 at paras. 87-89).
[24] Lavallie claims that he is the “legitimate owner” of the bundle of money which he acquired as a down payment on the sale of his motor cycle. The drug debt list and the five bills showing high exposure to cocaine and one bill showing exposure to hashish is evidence of bad character tending to prove that the money seized by the police is proceeds of unlawful drug activity (R. v. Caccamo (1973), 11 C.C.C. (2d) 249 (Ont. C.A.), aff’d 1975 11 (SCC), [1976] 1 S.C.R. 786, S.C.J. No. 58; R. v. Lepage, supra at paras. 36-37, 55; R. v. Handy, supra at paras 87-79. Lavallie and Laronde’s drug convictions and related activity is relevant to the material issue of whether the bundle of money is proceeds or an instrument of unlawful activity or that Lavallie is the legitimate owner of the money. Relevant evidence is admissible unless it is barred by an exclusionary rule of evidence or its prejudicial effect outweighs its probative value.
[25] The exclusionary character evidence rule prohibits the admission of evidence of discreditable conduct. Wigmore defines character as a person’s disposition — i.e., a trait or group of traits, or sum of her or his traits, or the person’s actual moral or psychical disposition (1A Wigmore, Evidence (Tillers rev., 1983), s. 52, at 1147, 1148. Wigmore's definition of character was adopted by Martin J.A. in R. v. McMillan (1975), 7 O.R. (2d) 750, [1975] O.J. No. 2247 (C.A.), aff’d (sub nom. McMillan v. R.) 1977 19 (SCC), [1977] 2 S.C.R. 824, [1977] S.C.J. No. 32. Thus understood, the evidence of disposition or propensity of a person is to show a doing or not doing of an act or thinking in a way that is consistent with her or his character (1A Wigmore, Evidence (Tillers rev., 1983), s. 54.1, at 1152).
[26] In Mood Music Publishing Co. v. De Wolfe Ltd., [1976] 1 All E.R. 763 (C.A.), Lord Denning set out a test for the admissibility of similar fact evidence in civil cases (supra, at 766):
The criminal courts have been very careful not to admit such evidence [similar fact evidence] unless its probative value is so strong that it should be received in the interests of justice: and its admission will not operate unfairly to the accused. In civil cases the courts have followed a similar line but have not been so chary of admitting it. In civil cases the courts will admit evidence of similar facts if it is logically probative, that is, if it is logically relevant in determining the matter which is in issue; provided that it is not oppressive or unfair to the other side; and also that the other side has fair notice of it and is able to deal with it.
Lord Denning noted that these principles were well settled in the case law: Brown v. Eastern & Midland Railway Co. (1889), 22 Q.B.D. 391(C.A.); Moore v. Ransome’s Dock Committee (1898), 14 T.L.R. 539 (C.A.); Hales v. Kerr, [1908] 2 K.B. 601 (D.C.).
[27] The Ontario Court of Appeal in Greenglass v. Rusonik, [1983] O.J. No. 40 at paras. 42-48, the Divisional Court of Ontario in Bartashunas v. Psychology Examiners, [1992] O.J. No. 1845 and the British Columbia Court of Appeal in G. (J.R.I.) v. Tyhurst 2003 BCCA 224, [2002], 226 D.L.R. (4th) 447 have acknowledged that similar fact evidence can be admissible in civil proceedings.
[28] In R. v. Handy, supra at para. 55, Justice Binnie held:
Similar fact evidence is thus presumptively inadmissible. The onus is on the prosecution to satisfy the trial judge on a balance of probabilities that in the context of the particular case the probative value of the evidence in relation to a particular issue outweighs its potential prejudice and thereby justifies its reception.
[29] Courts have recognized that the admission of evidence of similar acts in civil proceedings may create moral and reasoning prejudice against the opposite party (G. (J.R.I.) v. Tyhurst, supra, at paras. 49-50; Bartashunas v. Psychology Examiners, supra; Cammack v. Martins Estate (2002), 63 O.R. (3d) 47, [2002] O.J. No. 4991, at para. 15 (S.C.J.). In the subject case, there is no danger that the evidence of Lavallie and Laronde’s criminal convictions for drug offences and drug related activity will create a multiplicity of incidents or distract the application judge from deciding the matter on its merits.
[30] We find that the similar fact evidence is admissible in light of the issues in dispute, the nature of the discreditable conduct, the inferences sought to be drawn from the evidence of similar acts and the nexus between the discreditable evidence on other occasions and the act in question. Accordingly, we dismiss the appeal.
[31] Leave was limited to Lavallie and Laronde’s record for drug offences and their propensity to engage in drug related activity. The application judge will determine the admissibility of the other evidence of discreditable conduct at the hearing of the merits of the application.
[32] Failing agreement on costs, the Respondent to file written submissions within 14 days, the Appellant within a further 7 days, in the Divisional Court at Ottawa.
Justice A. Bryant
Associate Chief Justice D. Cunningham
Justice L. Ferrier
Released: May 13, 2011.
CITATION: Ontario (Attorney General) v. $5,545 in Canadian Currency (In Rem), 2011 ONSC 2827
DIVISIONAL COURT FILE NO.: 10-DV-1575
DATE: 2011-05-13
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
CUNNINGHAM A.C.J., FERRIER and BRYANT J.J.
BETWEEN:
ATTORNEY GENERAL OF ONTARIO
Applicant/Respondent
– and –
$5,545 IN CANADIAN CURRENCY (IN REM)
Respondent/Applicant
ENDORSEMENT
Cunningham A.C.J.
Ferrier J.
Bryant J.
Released: May 13, 2011
[^1]: Section 16 states: “Except as otherwise provided in this Act, findings of fact in proceedings under this Act shall be made on the balance of probabilities.”