Paul Kim

This appeal concerned the interpretation of section 18.1 of the Civil Remedies Act, 2001, regarding court approval of settlements in forfeiture proceedings.

The Attorney General of Ontario sought approval for a settlement with an interested party (Rosa Norwood) for a payment from seized property proceeds, without a prior judicial determination that the property was tainted by unlawful activity.

The appellants (Michael Norwood's Estate and 947014 Ontario Inc.) argued this was an error.

The Court of Appeal held that a "settlement in relation to a proceeding under this Act" must relate to in rem property interests, which necessitates a prior finding that the property is proceeds or instruments of unlawful activity.

The court found the motion judge erred in approving the settlement without such a finding, as it purported to settle in rem interests of others without their rights being displaced.

The appeal was allowed, and the settlement approval order was set aside.

In a civil forfeiture proceeding, the interested party brought a motion to exclude seized currency from evidence, arguing that the search warrants for his residence and vehicle violated his section 8 Charter rights.

The court reviewed the Information to Obtain (ITO) and found that the police had established a fair probability that evidence of a crime would be found, based on the party's prior drug trafficking convictions, surveillance of hand-to-hand transactions, and the practice of separating drugs from cash.

The motion to exclude the evidence was dismissed, and costs were awarded to the Attorney General.

The Attorney General of Ontario sought an order for forfeiture of $163,015.29 held in a TD bank account, pursuant to the Civil Remedies Act, 2001, alleging the funds were proceeds of unlawful activity (fraud) or the account was an instrument of unlawful activity.

The account owner, Kamal Sehgal, opposed the application, asserting the funds were legitimately deposited through a Hawala system.

The court found that the majority of the funds ($141,965.29) were proceeds of unlawful activity and the account was an instrument of unlawful activity, rejecting Sehgal's explanation of a legitimate Hawala transaction due to lack of credible evidence and missing essential elements.

A portion of the funds ($21,050.29) was deemed legitimately owned by Sehgal and exempted from forfeiture, while the balance was forfeited to the Crown.

The Attorney General brought motions for a preservation order under the Civil Remedies Act, 2001 regarding $7,950.05 seized from an individual during a traffic stop and a subsequent search warrant execution, and for an order dispensing with service on that individual.

The court found that the Attorney General had made diligent but unsuccessful efforts to locate and serve the individual, making service impractical, and that dispensing with service was in the interests of justice.

The court also found reasonable grounds to believe the currency was the proceeds or an instrument of drug trafficking, and granted the preservation order, leaving any potential Charter issues regarding the continued detention of the funds to be decided at the forfeiture hearing.