Supreme Court of Canada

Citation: 2009 SCC 19, [2009] 1 S.C.R. 624

Date: 2009-04-17 Docket: 32204

Between:

Robin Chatterjee Appellant

and

Attorney General of Ontario Respondent

• and -

Attorney General of Canada, Attorney General of Quebec, Attorney General of Nova Scotia, Attorney General of Manitoba, Attorney General of British Columbia, Attorney General of Saskatchewan, Attorney General of Alberta, Attorney General of Newfoundland and Labrador, Criminal Lawyers’ Association (Ontario), Canadian Civil Liberties Association and British Columbia Civil Liberties Association Interveners

Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella and Rothstein JJ.

Reasons for Judgment: (paras. 1 to 55) Binnie J. (McLachlin C.J. and LeBel, Deschamps, Fish, Abella and Rothstein JJ. concurring)

Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] 1 S.C.R. 624

Robin Chatterjee Appellant

v.

Attorney General of Ontario Respondent

and

Attorney General of Canada, Attorney General of Quebec, Attorney General of Nova Scotia, Attorney General of Manitoba, Attorney General of British Columbia, Attorney General for Saskatchewan, Attorney General of Alberta, Attorney General of Newfoundland and Labrador, Criminal Lawyers’ Association (Ontario), Canadian Civil Liberties Association and British Columbia Civil Liberties Association Interveners

Indexed as: Chatterjee v. Ontario (Attorney General)

Neutral citation: 2009 SCC 19.

File No.: 32204.

2008: November 12; 2009: April 17.

Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella and Rothstein JJ.

on appeal from the court of appeal for ontario

Constitutional law — Division of powers — Property and civil rights — Criminal law — Provincial law providing for forfeiture of proceeds of unlawful activity — Whether provincial law in pith and substance criminal law and ultra vires province — Whether provincial law inoperative by reason of operational conflict with forfeiture or sentencing provisions of Criminal Code — Constitution Act, 1867, ss. 91(27), 92(13) — Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28, ss. 1, 2, 3, 6 — Criminal Code, R.S.C. 1985, c. C‑46, s. 462.37.

The police arrested C for breach of probation and, in a search of his car incidental to the arrest, discovered cash and items that not only were associated with the illicit drug trade but also smelled of marijuana but found no drugs. C was never charged with any offence in relation to the money, items, or with any drug related activity. The Attorney General of Ontario was granted an order under the Civil Remedies Act, 2001 (“CRA”) preserving the seized money and equipment. He then applied under ss. 3 and 8 of the CRA for forfeiture of the seized money as proceeds of unlawful activity. In response, C challenged the CRA’s constitutionality, arguing that the CRA’s forfeiture provisions were ultra vires the province because they encroach on the federal criminal law power. Both the applications judge and the Court of Appeal concluded that the CRA is a valid provincial legislation.

Held: The appeal should be dismissed. The CRA’s forfeiture provisions are constitutional.

The argument that the CRA is ultra vires is based on an exaggerated view of the immunity of federal jurisdiction in relation to matters of criminal law that may, in another aspect, be the subject of provincial legislation. Resort to a federalist concept of proliferating jurisdictional enclaves (or “interjurisdictional immunities”) was recently discouraged by this Court’s decisions in Canadian Western Bank v. Alberta and British Columbia (Attorney General) v. Lafarge Canada Inc. and should not now be given a new lease on life. A court should favour, where possible, the ordinary operation of statutes enacted by both levels of government. [2]

The evident purposes of the CRA are 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 private individuals and public institutions for the costs of past crime. The practical (and intended) effect is to take the profit out of crime and to deter its present and would‑be perpetrators. These are valid provincial objects. Crime creates costs to victims and to the public that would otherwise fall on the provincial treasury including health, policing resources, community stability and family welfare. It would be out of step with modern realities to conclude that a province must shoulder the costs to the community of criminal behaviour but cannot take legislative steps to suppress it. [3‑4] [18] [23]

Where there is a degree of overlap between measures enacted pursuant to the provincial power and measures taken pursuant to the federal power, it is necessary to identify the “dominant feature” of an impugned measure. If the dominant feature of the provincial enactment is in relation to provincial objects, as it is here, the law will be valid, and if the enactments of both levels of government can generally function without operational conflict they will be permitted to do so. In factual situations where operational conflict does occur, the conflict will be resolved by the doctrine of federal paramountcy. [29] [36]

The CRA is an enactment “in relation to” property and civil rights, and as such its provisions may incidentally “affect” criminal law and procedure without doing violence to the division of powers. The fact the CRA aims to deter federal offences as well as provincial offences and indeed offences committed outside Canada, is not fatal to its validity. On the contrary, the very generality of the CRA 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. While it is true that forfeiture may have de facto punitive effects in some cases, the CRA does not require an allegation or proof that any particular person committed any particular crime. Property may be forfeited under the CRA if, on a balance of probabilities, it is demonstrated that the property constituted the proceeds of crime in general without further specificity. [4] [30] [41] [46‑47]

C argues that the provisions of the CRA introduce an interference with the administration of the Criminal Code forfeiture provisions. If such operational interference were demonstrated, or if it were shown that the CRA frustrated the federal purpose underlying the forfeiture provisions of the Criminal Code, the doctrine of federal paramountcy would render inoperative the CRA to the extent of the conflict or interference. However, this is not the case. Where forfeiture is sought and refused in the criminal process, the various doctrines of res judicata, the issue estoppel and abuse of process are available to prevent the Crown from re‑litigating the sentencing issue. Given the flexibility of these remedies there is no necessary operational conflict between the Criminal Code and the CRA such as to render the latter inoperative in relation to federal offences generally. If in particular circumstances there arises a conflict between the forfeiture provisions of the Criminal Code and the CRA then to the extent that dual compliance is impossible the doctrine of paramountcy would render the CRA inoperable to the extent of that conflict, but only to that extent. [42] [49-53]

Cases Cited

Applied: Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86; distinguished: Johnson v. Attorney General of Alberta, [1954] S.C.R. 127; considered: Bédard v. Dawson, [1923] S.C.R. 681; Switzman v. Elbling, [1957] S.C.R. 285; Attorney General for Canada and Dupond v. City of Montreal, [1978] 2 S.C.R. 770; Industrial Acceptance Corp. v. The Queen, [1953] 2 S.C.R. 273; R. v. Zelensky, [1978] 2 S.C.R. 940 rev’g in part (1976), 73 D.L.R. (3d) 596; referred to: Reference re Firearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783; Starr v. Houlden, [1990] 1 S.C.R. 1366; Scowby v. Glendinning, [1986] 2 S.C.R. 226; R. v. Morgentaler, [1993] 3 S.C.R. 463; Reference re Adoption Act, [1938] S.C.R. 398; Di Iorio v. Warden of the Montreal Jail, [1978] 1 S.C.R. 152; Martineau v. M.N.R., 2004 SCC 81, [2004] 3 S.C.R. 737; General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641; Reference re Validity of the Combines Investigation Act and of s. 498 of the Criminal Code, [1929] S.C.R. 409; Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), [1987] 2 S.C.R. 59; M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., [1999] 2 S.C.R. 961; Provincial Secretary of Prince Edward Island v. Egan, [1941] S.C.R. 396; Ross v. Registrar of Motor Vehicles, [1975] 1 S.C.R. 5; Ontario (Attorney General) v. Cole‑Watson, [2007] O.J. No. 1742 (QL); Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77.

Statutes and Regulations Cited

Canadian Charter of Rights and Freedoms.

Constitution Act, 1867, ss. 91(27), 92(13), (14), (15), (16), 93, 94A, 95.

Criminal Code, R.S.C. 1985, c. C‑46, ss. 11, 462.37, Part XII.2.

Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28 (now Civil Remedies Act, 2001), ss. 1, 2 “legitimate owner”, “proceeds of unlawful activity”, “property”, “unlawful activity”, 3, 4, 6, 8, 9, 15.5, 15.6.

Authors Cited

Gallant, Michelle. “Ontario (Attorney General) v. $29,020 in Canadian Currency: A Comment on Proceeds of Crime and Provincial Forfeiture Laws” (2006), 52 Crim. L.Q. 64.

Ontario. Ministry of the Attorney General. Civil Forfeiture in Ontario 2007: An Update on the Civil Remedies Act, 2001, 2007.

APPEAL from a judgment of the Ontario Court of Appeal (Labrosse, Sharpe and Rouleau JJ.A.), 2007 ONCA 406, 86 O.R. (3d) 168, 282 D.L.R. (4th) 298, 225 O.A.C. 40, 221 C.C.C. (3d) 350, 156 C.R.R. (2d) 94, [2007] O.J. No. 2102 (QL), 2007 CarswellOnt 3290, upholding a decision by Loukidelis J. (2005), 138 C.R.R. (2d) 1, [2005] O.J. No. 2820 (QL) (both sub nom. Ontario (Attorney General) v. $29,020 in Canada Currency), 2005 CarswellOnt 3008. Appeal dismissed.

Richard Macklin and James F. Diamond, for the appellant.

Robin K. Basu and James McKeachie, for the respondent.

Cheryl J. Tobias and Ginette Gobeil, for the intervener the Attorney General of Canada.

Jean‑Vincent Lacroix, for the intervener the Attorney General of Quebec.

Written submissions only by Edward A. Gores, Q.C., for the intervener the Attorney General of Nova Scotia.

Michael Conner, for the intervener the Attorney General of Manitoba.

J. Gareth Morley and Bryant A. Mackey, for the intervener the Attorney General of British Columbia.

Graeme G. Mitchell, Q.C., for the intervener the Attorney General for Saskatchewan.

Roderick Wiltshire and Donald Padget, for the intervener the Attorney General of Alberta.

Thomas G. Mills, for the intervener the Attorney General of Newfoundland and Labrador.

Paul Burstein and Louis P. Strezos, for the intervener the Criminal Lawyers’ Association (Ontario).

Bradley E. Berg and Allison A. Thornton, for the intervener the Canadian Civil Liberties Association.

David G. Butcher and Anthony D. Price, for the intervener the British Columbia Civil Liberties Association.

The judgment of the Court was delivered by

1Binnie J. — The question raised on this appeal is whether the Ontario Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28 (otherwise known as Civil Remedies Act, 2001 or CRA), which authorizes the forfeiture of proceeds of unlawful activity, is ultra vires Ontario because it encroaches on the federal criminal law power. In my view, the CRA is valid provincial legislation.

2The argument that the CRA is ultra vires is based in this case on an exaggerated view of the immunity of federal jurisdiction in relation to matters that may, in another aspect, be the subject of provincial legislation. Resort to a federalist concept of proliferating jurisdictional enclaves (or “interjurisdictional immunities”) was discouraged by this Court’s decisions in Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3, and British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86, and should not now be given a new lease on life. As stated in Canadian Western Bank, “a court should favour, where possible, the ordinary operation of statutes enacted by both levels of government” (para. 37 (emphasis in original)).

3The present appeal provides an opportunity to apply the principles of federalism affirmed in those recent cases. The CRA 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. The latter purpose falls squarely within provincial competence. Crime imposes substantial costs on provincial treasuries. Those costs impact many provincial interests, including health, policing resources, community stability and family welfare. It would be out of step with modern realities to conclude that a province must shoulder the costs to the community of criminal behaviour but cannot use deterrence to suppress it.

4Moreover, the CRA method of attack on crime is to authorize in rem forfeiture of its proceeds and differs from both the traditional criminal law which ordinarily couples a prohibition with a penalty (see Reference re Firearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783) and criminal procedure which in general refers to the means by which an allegation of a particular criminal offence is proven against a particular offender. The appellant’s answer, however, is that the effect of the CRA in rem remedy just adds to the penalties available in the criminal process, and as such the CRA invalidly interferes with the sentencing regime established by Parliament. 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 private individuals and public institutions for the costs of past crime. These are valid provincial objects. There is no operational conflict between the forfeiture provisions of the Criminal Code, R.S.C. 1985, c. C-46, and the CRA. It cannot reasonably be said that the CRA amounts to colourable criminal legislation. Accordingly, I would dismiss the appeal.

I. Facts

5The appellant was stopped by York Regional Police on March 27, 2003, because his car had no front licence plate. A computer search showed the police that he was in breach of his recognizance, which required him to reside in Ottawa, some 400 kilometres away. When the appellant acknowledged that he was then living in Thornhill, just north of Toronto, the officers arrested him and, incidental to the arrest, searched his car. They discovered $29,020 in cash, as well as an exhaust fan, a light ballast and a light socket. According to police, all of these items smelled of marijuana, although no marijuana was found.

6The appellant was never charged with any offence in relation to the money, items, or any drug related activity. However, on May 13, 2003, the Attorney General of Ontario brought an interlocutory motion under ss. 4 and 9 of the CRA to preserve the seized money and equipment. A preservation order was granted.

7On May 16, 2003, the Attorney General brought an application under ss. 3 and 8 of the CRA for forfeiture of the seized money as proceeds of unlawful activity and of the items as instruments of unlawful activity. In response, the appellant challenged the CRA’s constitutionality: that challenge eventually led to this appeal.

II. Relevant Statutory Provisions

8Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28 (now Civil Remedies Act, 2001)

PART I

PURPOSE

Purpose

1. The purpose of this Act is to provide civil remedies that will assist in,

(a) compensating persons who suffer pecuniary or non‑pecuniary losses as a result of unlawful activities;

(b) preventing persons who engage in unlawful activities and others from keeping property that was acquired as a result of unlawful activities;

(c) preventing property, including vehicles as defined in Part III.1, from being used to engage in certain unlawful activities [added S.O. 2007, c. 13, s. 26]; and

(d) preventing injury to the public that may result from conspiracies to engage in unlawful activities.

PART II

PROCEEDS OF UNLAWFUL ACTIVITY

Definitions

2. In this Part,

“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);

“proceeds of unlawful activity” means 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, but does not include proceeds of a contract for recounting crime within the meaning of the Prohibiting Profiting from Recounting Crimes Act, 2002;

“property” means real or personal property, and includes any interest in property;

“unlawful activity” means an act or omission that,

(a) is an offence under an Act of Canada, Ontario or another province or territory of Canada, or

(b) is an offence under an Act of a jurisdiction outside Canada, if a similar act or omission would be an offence under an Act of Canada or Ontario if it were committed in Ontario,

whether the act or omission occurred before or after this Part came into force.

Forfeiture order

3. (1) In a proceeding commenced by the Attorney General, the Superior Court of Justice shall, subject to subsection (3) and except where it would clearly not be in the interests of justice, make an order forfeiting property that is in Ontario to the Crown in right of Ontario if the court finds that the property is proceeds of unlawful activity.

Legitimate owners

(3) 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.

Special purpose account

6. . . .

Other payments out of account

(3) Subject to the regulations made under this Act and after making the payments, if any, out of the account under subsection (2.1) [regarding payments for the Crown’s costs], the Minister of Finance may make payments out of the account described in subsection (1) for the following purposes:

1. To compensate persons who suffered pecuniary or non‑pecuniary losses, including losses recoverable under Part V of the Family Law Act, as a result of the unlawful activity.

2. To assist victims of unlawful activities or to prevent unlawful activities that result in victimization.

3. To compensate the Crown in right of Ontario for pecuniary losses suffered as a result of the unlawful activity, other than the costs described in subsection (2.1), but including costs incurred in remedying the effects of the unlawful activity.

4. To compensate a municipal corporation or a public body that belongs to a class prescribed by the regulations made under this Act for pecuniary losses that were suffered as a result of the unlawful activity and that are costs incurred in remedying the effects of the unlawful activity.

5. If, according to the criteria prescribed by the regulations made under this Act, the amount of money in the account is more than is required for the purposes referred to in paragraphs 1 to 4, such other purposes as are prescribed by the regulations.

Criminal Code, R.S.C. 1985, c. C-46

Forfeiture of Proceeds of Crime

462.37 (1) [Order of forfeiture of property on conviction] Subject to this section and sections 462.39 to 462.41, where an offender is convicted, or discharged under section 730, of a designated offence and the court imposing sentence on the offender, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime and that the designated offence was committed in relation to that property, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law.

(2) [Proceeds of crime derived from other offences] Where the evidence does not establish to the satisfaction of the court that the designated offence of which the offender is convicted, or discharged under section 730, 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 proceeds of crime, the court may make an order of forfeiture under subsection (1) in relation to that property.

(2.1) [Property outside Canada] An order may be issued under this section in respect of property situated outside Canada, with any modifications that the circumstances require.

Constitution Act, 1867

91. . . . [T]he exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next herein-after enumerated; that is to say, —

92. The Criminal Law, except the Constitution of Courts of Criminal Jurisdiction, but including the Procedure in Criminal Matters.

93. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next herein-after enumerated; that is to say, —

94. Property and Civil Rights in the Province.

95. The Administration of Justice in the Province, including the Constitution, Maintenance, and Organization of Provincial Courts, both of Civil and of Criminal Jurisdiction, and including Procedure in Civil Matters in those Courts.

96. The Imposition of Punishment by Fine, Penalty, or Imprisonment for enforcing any Law of the Province made in relation to any Matter coming within any of the Classes of Subjects enumerated in this Section.

97. Generally all Matters of a merely local or private Nature in the Province.

III. Judicial History

A. Superior Court of Justice (2005), [138 C.R.R. (2d) 1](https://www.canlii.org/en/on/onsc/doc/2005/2005canlii24251/2005canlii24251.html)

9The application judge declined to permit the appellant to challenge Part III of the CRA dealing with instruments of crime because, although some of the seized items were alleged to be instruments of crime, Mr. Chatterjee disclaimed ownership of them. Loukidelis J. also rejected a challenge under the Canadian Charter of Rights and Freedoms. Neither issue is pursued in this Court.

10Loukidelis J. concluded that the CRA had two purposes, namely, compensating the victims of unlawful activities and suppressing the conditions that lead to unlawful activities by removing incentives. The in rem nature of CRA proceedings distinguished them from criminal proceedings. The CRA does not create any criminal prohibitions, it simply refers to prohibitions created by other legislation. Further, he rejected the argument of a conflict between the CRA and the Criminal Code forfeiture provisions. The latter require a conviction and are part of the sentencing process. In his view, it would be ultra vires the federal Parliament to enact a forfeiture regime not tied to conviction and sentencing. Accordingly, the CRA relates almost entirely to property and civil rights in the province. To the extent that any of the impugned provisions fall outside the heading of property and civil rights, they fall under the administration of justice in the province, or are matters of local or private concern. The CRA, in his view, was accordingly intra vires and valid.

B. Court of Appeal (Labrosse, Sharpe and Rouleau JJ.A.), [2007 ONCA 406](https://www.minicounsel.ca/oca/2007/406), 86 O.R. (3d) 168

11In joint reasons the court upheld the judgment below including the exercise of the applications judge’s discretion not to deal with Part III of the CRA (“instruments of unlawful activity”). The court noted that civil forfeiture schemes appear in several Canadian provinces as well as foreign states. Such schemes often co-exist with conviction-based forfeiture regimes within the criminal law. CRA proceedings do not involve an allegation that a named individual has committed an offence. The CRA does not define or create any offence. It is not tied to the identification, charging, prosecution, conviction, or punishment of an offender. It does not seek to impose a penalty, fine, or other punishment, and does not provide for imprisonment.

12In the court’s view, the pith and substance of the CRA is to require the disgorgement of financial gains from unlawful activity, to compensate victims, and to suppress conditions leading to unlawful activity by removing financial incentives. The CRA therefore falls within the province’s power to legislate in relation to property and civil rights in the province and matters of a merely local or private nature in the province. Provincial civil remedies for criminal offences do not conflict with the Criminal Code, because Parliament expressly preserved such remedies in s. 11 of the Criminal Code. Further, suppression of conditions likely to favour the commission of crimes falls within provincial competence.

13The subject of forfeiture of the proceeds of crime has both a federal criminal aspect and a provincial aspect. The CRA approaches that subject from an area of valid provincial competence — disgorgement of wrongful gains, compensation and crime suppression. The CRA is valid provincial legislation. The appeal was therefore dismissed.

IV. Issue

14The Chief Justice stated the following constitutional question:

Are ss. 1 to 6 and ss. 16 to 17 of the Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28, ultra vires the Province of Ontario on the ground that they relate to a subject matter which is within the exclusive jurisdiction of the Parliament of Canada under s. 91(27) of the Constitution Act, 1867?

On the hearing of the appeal the appellant narrowed his challenge to argue that the CRA is ultra vires to the extent it provides for forfeiture of the proceeds of federal offences because to that extent the CRA is in pith and substance criminal law.

V. Analysis

15Crime imposes significant costs at every level of government: federal, provincial and municipal. Impaired driving is a Criminal Code offence but carnage on the roads touches numerous matters within provincial jurisdiction including health, highways, automobile insurance and property damage. The cost associated with drug abuse is another example. Each level of government bears a portion of the costs of criminality and each level of government therefore has an interest in its suppression. The appellant’s argument is, however, that the CRA adopts a method of fighting crime and compensating its victims that is not constitutionally permissible in relation to federal offences. The forfeiture of property tainted by crime in relation to federal offences, he says, “encroaches directly on the federal government’s exclusive jurisdiction over criminal law and is ultra vires” (A.F., at para. 4). It is apparent that provincial objectives can become so entangled in the enforcement of criminal law as to be declared ultra vires. In Starr v. Houlden, [1990] 1 S.C.R. 1366 (the Patti Starr Inquiry), for example, it was held that provincial terms of reference for a judicial inquiry into a provincial fundraising scandal were ultra vires as constituting a substitute police investigation and preliminary inquiry in which the targets were made compellable witnesses. See also Scowby v. Glendinning, [1986] 2 S.C.R. 226. The appellant’s contention that the CRA is an invalid attempt to increase the penalty for federal offences therefore requires careful scrutiny.

A. Determination of the Pith and Substance

16The first step in a constitutional challenge is to determine “the matter” (to track the language of the Constitution Act, 1867) in relation to which the impugned law is enacted. What is the essence of what the law does and how does it do it? “[T]wo aspects of the law must be examined: the purpose of the enacting body, and the legal effect of the law” (Reference re Firearms Act, at para. 16). This exercise is traditionally known as determining the law’s “pith and substance”. It may include not only the impugned Act but also external material surrounding its passage, including Hansard. 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.

17As its name suggests, the Civil Remedies Act, 2001, enacts civil remedies in relation to property tainted by crime. Its purpose, as stated in s. 1:

The purpose of this Act is to provide civil remedies that will assist in,

(a) compensating persons who suffer pecuniary or non-pecuniary losses as a result of unlawful activities;

(b) preventing persons who engage in unlawful activities and others from keeping property that was acquired as a result of unlawful activities;

(c) preventing property, including vehicles as defined in Part III.1, from being used to engage in certain unlawful activities [added in 2007, c. 13, s. 26]; and

(d) preventing injury to the public that may result from conspiracies to engage in unlawful activities.

While the Court is not bound by a purpose clause when considering the constitutional validity of an enactment, a statement of legislative intent is often a useful tool, particularly where it is apparent, as in this case, that the machinery created by the CRA corresponds to what is required to achieve the stated purposes. Purposes (a) and (b) contemplate the re-distribution of property tainted by crime. (Purpose (c) relates to the instruments of crime and is not before us.) Purpose (d) is directed to the prevention of crime-related injuries. It is suggested that the reference to “conspiracies” in (d) indicates a focus on combatting organized crime, and the appellant cites some extracts from Hansard to that effect. This, he says, entangles the CRA in criminal law. However, the province has good reason to deter organized crime, provided it stays within areas of provincial competence. There is nothing in the provisions of the CRA that are before us on this appeal that go beyond the redistribution of property tainted by crime, including federal crimes of all descriptions.

18The internal evidence of purpose thus suggests a credible intent to recover from the proceeds of crime found in Ontario the costs to victims and to the public of criminality that would otherwise fall on the provincial treasury. Forfeiture is the transfer of property from the owner to the Crown. Forfeiture does not result in the conviction of anybody for any offence. On its face, therefore, the CRA targets property rights.

19In terms of the effects of the CRA, the Court in determining its pith and substance will look at “how the legislation as a whole affects the rights and liabilities of those subject to its terms” (R. v. Morgentaler, [1993] 3 S.C.R. 463, at p. 482). When appropriate, as well, a reviewing court will look beyond the legal effect — beyond the statute’s “four corners” — to examine “the actual or predicted practical effect of the legislation in operation” (Morgentaler, at p. 483). The record shows that as of August 2007 approximately $3.6 million in property has been ordered forfeited under the CRA of which approximately $1 million had been paid out to direct victims, $900,000 had been paid in grants to various bodies on victims’ issues, including the Peel Police Internet Child Exploitation Unit, leaving $1.7 million in special CRA accounts. Forfeited property included approximately $500,000 in property involved in marijuana grow operations, a Hamilton crack house (the ownership of which was then transferred to the City), vehicles involved in street racing contrary to the Highway Traffic Act, R.S.O. 1990, c. H.8, and approximately $1 million in cash involved in fraud or money laundering: Civil Forfeiture in Ontario 2007: An Update on the Civil Remedies Act, 2001 (2007).

20Criminal “taint” of property has many sources. Section 2 of the CRA defines “unlawful activity” as “an act or omission that . . . is an offence under an Act of Canada, Ontario or another province or territory”. The definition also extends to offences in jurisdictions outside Canada provided the conduct there would be an offence if committed in Ontario. It is significant that the CRA throws its “crime” net so widely. There is no singling out of offences in any particular jurisdiction, including federal offences in Canada. This suggests the province was concerned with the deleterious effects of crime in general rather than attempting in a colourable way to tack a penalty onto the federal criminal sentencing process.

21Proceeds of crime are defined as “property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity” (s. 2). The forfeiture proceedings are initiated by an application or action under the ordinary civil rules of the province. Proceedings are taken in rem against the property itself and can be initiated without joining the owners or possessors as defendants (who of course may be added as parties at a later date — see now ss. 15.5 and 15.6). The Attorney General as applicant is not required to prove any particular offence against any particular offender. Initially these proceedings were styled Attorney General of Ontario v. $29,020 in Canada Currency, Exhaust Fan, Light Ballast, Light Socket (in Rem) and Robin Chatterjee, but Mr. Chatterjee was before the court as a property claimant, not as an accused.

22The rest of the statutory machinery may be briefly described. Forfeiture “shall” be ordered unless it is not in the interest of justice to do so or a legitimate owner comes forward (s. 3(3)). Legitimate owners may bring any claims to the property within a 15-year limitation period (s. 3(5)). The proceeds of the forfeiture are deposited into a separate provincial revenue account (s. 6(1)), out of which a court may order Crown’s costs to be paid (s. 6(2.1)). The money left in the account may be directed to compensate persons who have suffered losses as a result of the unlawful activity, victims of general unlawful activity, the Crown in right of Ontario, municipal corporations or other public bodies in respect of their losses flowing from the unlawful activity or (if there is money left over) for such other purpose as may be prescribed by regulation (s. 6(3)).

23In 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.

B. Assignment to Heads of Legislative Power

24Once the “pith and substance” is ascertained, it is necessary to classify that essential character of the law by reference to the provincial and federal “classes of subjects” listed in ss. 91 and 92 (or, in an appropriate case, ss. 93, 94A and 95) to determine if the law comes within the jurisdiction of the enacting legislature. Clearly, the CRA relates to property but, of course, much of the Criminal Code is dedicated to offences involving property. To characterize a provincial law as being in pith and substance related to property is therefore just a starting point. A good deal of overlap in measures taken to suppress crime is inevitable:

Moreover, while, as subject matter of legislation, the criminal law is entrusted to the Dominion Parliament, responsibility for the administration of justice and, broadly speaking, for the policing of the country, the execution of the criminal law, the suppression of crime and disorder, has from the beginning of Confederation been recognized as the responsibility of the provinces . . . . [Emphasis added.]

(Reference re Adoption Act, [1938] S.C.R. 398, at p. 403 (per Duff C.J.). See also Di Iorio v. Warden of the Montreal Jail, [1978] 1 S.C.R. 152, at pp. 207 and 213 (per Dickson J.).)

C. The Provincial Aspect

25As stated, the CRA fits neatly into the provincial competence in relation to Property and Civil Rights in the Province (Constitution Act, 1867, s. 92(13)) or Matters of a merely local or private Nature in the Province (s. 92(16)). The Attorneys General rely on Martineau v. M.N.R., 2004 SCC 81, [2004] 3 S.C.R. 737, for the proposition that “civil mechanisms include the seizure as forfeit of goods and conveyances” (para. 27).

26Our jurisprudence offers many examples of the interplay between provincial legislative jurisdiction over property and civil rights and federal legislative jurisdiction over criminal law and procedure. In Bédard v. Dawson, [1923] S.C.R. 681, for example, the Court upheld the validity of a provincial law that authorized a judge to close a “disorderly hous[e]” for up to one year. The Court held that the law was directed to the enjoyment of property rights not criminal law. Duff J. (later C.J.C.) held that “[t]he legislation impugned seems to be aimed at suppressing conditions calculated to favour the development of crime rather than at the punishment of crime” (p. 684). Idington J., in words relevant to the disposition of the present appeal, said that:

As to the argument addressed to us that the local legislatures cannot legislate to prevent crime, I cannot assent thereto for in a very wide sense it is the duty of the legislature to do the utmost it can within its power to anticipate and remove, so far as practicable, whatever is likely to tend to produce crime; . . . [Emphasis added; p. 684.]

27In Switzman v. Elbling, [1957] S.C.R. 285, this Court struck down a Quebec law providing for the closure of houses in which socialism or bolshevism were said to be propagated (known popularly as the “Padlock law”). Kerwin C.J. and Nolan and Cartwright JJ. distinguished Bédard. Unlike in Bédard, the impugned statute in Switzman was only superficially concerned with the control and enjoyment of property; in their view its dominant purpose was to criminalize and punish the propagation of communism. By contrast, the CRA does not define a new offence or clearly take aim at any particular category of criminal conduct. (Rand and Abbott JJ. held in Switzman that the Padlock Law’s dominant purpose was to suppress the dissemination of political views, an issue which, however important, has no role in the CRA vires debate.)

28In Attorney General for Canada and Dupond v. City of Montreal, [1978] 2 S.C.R. 770, the Court upheld a municipal ordinance regulating public demonstrations with a view to the prevention of “conditions conducive to breaches of the peace and detrimental to the administration of justice” (p. 791). The Court held the municipal law to be in relation to “Matters of a merely local or private Nature” under s. 92(16) and stated at p. 792 that “[i]t is now well established that the suppression of conditions likely to favour the commission of crimes falls within provincial competence”, citing Bédard and Di Iorio v. Warden of the Montreal Jail. The Attorney General of Ontario also argues that the CRA in a sense operates as a substitute for civil litigation by victims against criminal offenders, a notoriously difficult and costly exercise.

29The question, however, is at what point does a provincial measure designed to “suppress” crime become itself “criminal law”? There will often be a degree of overlap between measures enacted pursuant to the provincial power (property and civil rights) and measures taken pursuant to the federal power (criminal law and procedure). In such cases it is necessary for the Court to identify the “dominant feature” of an impugned measure. If, as is argued by the Attorneys General here, the dominant feature of the CRA is property and civil rights, it will not be invalidated because of an “incidental” intrusion into the field of criminal law.

30For the reasons that follow I agree 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. As noted by Dickson C.J. in General Motors of Canada Ltd. v. City National Leasing, [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.”

D. The Federal Aspect

31The appellant’s argument is that the CRA, properly analyzed, is in pith and substance an enactment in relation to the criminal law. It imposes an additional penal regime in relation to federal offences that supplements, and may on occasion, conflict with the federal forfeiture provisions of Part XII.2 of the Criminal Code. The first argument leads to a conclusion that the CRA is ultra vires. The second argument would lead to the conclusion that the CRA is rendered inoperative in relation to federal offences only by reason of operational conflict which must be resolved in favour of the federal law by virtue of the doctrine of paramountcy.

32The appellant argues that Bédard must be read in light of the Court’s later decisions in Industrial Acceptance Corp. v. The Queen, [1953] 2 S.C.R. 273, and Johnson v. Attorney General of Alberta, [1954] S.C.R. 127. In the Industrial Acceptance case the Court upheld the federal forfeiture provisions contained in the Opium and Narcotic Drug Act, 1929, S.C. 1929, c. 49, on the ground that it “provides for the forfeiture of property used in the commission of a criminal offence and is, therefore, legislation in relation to criminal law” (p. 275). This decision is of limited interest in the present appeal as no one contests the validity of the federal law. Co-operative federalism recognizes that overlaps between provincial and federal laws are inevitable:

Matters, however, which in one aspect and for one purpose fall within the jurisdiction of a province over the subjects designated by one or more of the heads of s. 92, may in another aspect and for another purpose, be proper subjects of legislation under s. 91, and in particular under head 27.

(Reference re Validity of the Combines Investigation Act and of s. 498 of the Criminal Code, [1929] S.C.R. 409, at p. 413)

The mere existence of a valid federal law bearing some similarities to the challenged provincial law does not, without more, demonstrate the invalidity of the latter.

33Johnson, on the other hand, did involve an attack on the vires of a provincial statute on the basis that it trenched on the federal criminal law power. In that case, the Court (in a 4-3 split) declared invalid the Alberta Slot Machine Act, R.S.A. 1942, c. 333, which had laid down that “[n]o slot machine shall be capable of ownership, nor shall the same be subject of property rights within the Province”. The Alberta definition of a slot machine included devices which, under the Criminal Code, were deemed to be the means for playing a game of chance. The police were authorized to cause a summons to be issued to the occupant to appear before a justice of the peace to show cause (if possible) why the machine should not be considered a slot machine. Failing to do so resulted in the forfeiture of the slot machine to the provincial Crown.

34Johnson is distinguishable on a number of grounds. The deciding vote was cast by Rand J., whose main reason for striking down the legislation was that it conflicted with the gaming house provisions in the Criminal Code. In the alternative, the provisions — though dealing on their face with property in the province — were in reality directed against gambling, a “public or community evil” (p. 137) and as such must perforce be criminal law.

35As to the main argument, Rand J. wrote that the field of slot machines was “already occupied by the Criminal Code” (p. 135). “An additional process of forfeiture by the province”, he continued, “would both duplicate the sanctions of the Code and introduce an interference with the administration of its provisions” (p. 138). Rand J.’s “occupying the field” reasoning has been rendered obsolete by subsequent case law which makes it clear that a federal law touching on a “matter” does not in general create a negative inference ousting the operation of a provincial law otherwise valid in relation to provincial objects. On the contrary, s. 11 of the Criminal Code provides that “[n]o civil remedy for an act or omission is suspended or affected by reason that the act or omission is a criminal offence.”

36If the dominant purpose of the provincial enactment is in relation to provincial objects, the law will be valid, and if the enactments of both levels of government can generally function without operational conflict they will be permitted to do so. In factual situations where operational conflict does occur, the conflict will be resolved by the restrained view of federal paramountcy established by Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161, where it was said at p. 191:

In principle, there would seem to be no good reasons to speak of paramountcy and preclusion except where there is actual conflict in operation as where one enactment says “yes” and the other says “no”; “the same citizens are being told to do inconsistent things”; compliance with one is defiance of the other.

See also Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), [1987] 2 S.C.R. 59; M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., [1999] 2 S.C.R. 961, at paras. 40-41; Lafarge Canada, at paras. 75-77. To the extent Rand J. considered dominant the criminal law aspect of the Alberta Slot Machine Act, it should be remembered that the person suffering forfeiture — the keeper of the slot machine — had also committed the gaming house offence. This “match” helped the Court conclude in Johnson that the provincial forfeiture, in pith and substance, was punishment for a crime. The same is not true of CRA forfeiture.

37The other judges in the Johnson majority agreed that the forfeiture was designed to supplement punishment, and that this made it criminal law in pith and substance. They also felt that legislation in relation to gaming was classic criminal law, because of the relation to public morality. The three dissenting judges would have upheld the provincial law, citing Bédard.

38The appellant and the interveners supporting him invoke Industrial Acceptance and Johnson as authorities for the proposition that “[f]orfeiture, in the context of property tainted by crime, is punishment” (A.F., at para. 44) but, in my view, neither case read in light of our subsequent jurisprudence supports such a broad proposition.

39Indeed R. v. Zelensky, [1978] 2 S.C.R. 940, shows that it is the federal provisions purporting to attach property consequences to the sentencing process, not the provincial forfeiture provisions, that push the boundary of legislative competence. The Manitoba Court of Appeal in Zelensky had invalidated what was then s. 653 of the Criminal Code on the basis that compensation orders constituted an “unwarranted invasion of provincial jurisdiction”, and did “not become valid because of the objective in preventing a criminal from profiting from his crime” ((1976), 73 D.L.R. (3d) 596, at p. 618). On appeal to this Court, however, Laskin C.J. was prepared to uphold the validity of the Criminal Code compensation provisions because he considered them to be part of the sentencing process:

I wish to dwell further on the course of proceedings in this case in order to provide some guidance to trial judges on the proper application of s. 653 and in order to make clear that s. 653 is not to be used in terrorem as a substitute for or a reinforcement for civil proceedings. Its validity is based, as I have already said, on its association with the sentencing process, and its administration in particular cases must be limited by that consideration. [Emphasis added; p. 962.]

Pigeon J., writing for three judges in dissent, would have struck down the Criminal Code provisions on the basis that a “compensation order is nothing but a civil judgment” (p. 984). There is nothing in the judgment to deny that a forfeiture measure which is independent of the sentencing process would be squarely within the provincial competence.

E. Overlapping Effects

40The Constitution permits a province to enact measures to deter criminality and to deal with its financial consequences so long as those measures are taken in relation to a head of provincial competence and do not compromise the proper functioning of the Criminal Code including the sentencing provisions. In Provincial Secretary of Prince Edward Island v. Egan, [1941] S.C.R. 396, it was held that a province could validly impose automatic suspension of a provincial driver’s licence after conviction for impaired driving under the Criminal Code. In Ross v. Registrar of Motor Vehicles, [1975] 1 S.C.R. 5, the Court upheld the automatic provincial licence suspension following a conviction for impaired driving even though the sentencing judge in the criminal case had purported to allow Ross to continue to drive on an intermittent basis.

There is no general bar to a province’s enacting civil consequences to criminal acts provided the province does so for its own purposes in relation to provincial heads of legislative power.

41In Egan and Ross, the provincial laws were clearly aimed at deterring impaired driving, notwithstanding its status as a federal offence, and with good reason. Drunk drivers create public safety hazards on provincial highways and their accidents impose costs by way of examples on the provincial health system and provincial police and highway services. Similarly, the fact the CRA aims to deter federal offences as well as provincial offences and indeed offences committed outside Canada, is not fatal to its validity. On the contrary, its 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.

F. Interference With the Criminal Code Forfeiture Provisions

42The argument arises in this case, as it did in Johnson, that the provisions of the provincial Act should be set aside as they “introduce an interference with the administration of [the Criminal Code forfeiture] provisions” (p. 138). If such operational interference were demonstrated, of course, or if it were shown that the CRA frustrated the federal purpose underlying the forfeiture provisions of the Criminal Code, the doctrine of federal paramountcy would render inoperative the CRA to the extent of the conflict or interference (Canadian Western Bank, at paras. 98-102).

43Consideration must therefore be given to Part XII.2 of the Criminal Code which in s. 462.37(1) provides as follows:

. . . where an offender is convicted, . . . of a designated offence and the court imposing sentence on the offender, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime and that the designated offence was committed in relation to that property, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law.

44The Criminal Code also provided that if the court is satisfied beyond a reasonable doubt that the property in question represents the proceeds of crime, the court may order forfeiture even without a showing that the offence was committed in relation to that property (s. 462.37(2)).

45Parliament’s legislative authority to bring about property consequences that are not directly connected with the offence for which an accused is being sentenced is not before the Court. I do not suggest any infirmity with any aspect of Criminal Code forfeiture. I say only that we have heard no argument on these provisions.

46On the other hand, we have had the benefit of ample argument on the vires of the CRA and it is clear that its provisions are not part of any “sentencing process”. The CRA does not require an allegation or proof that a particular person committed a particular crime. For example, a drug dealer might, in a fit of conscience, gift the proceeds of a drug sale to a charity. Under the CRA, the money would constitute the proceeds of unlawful activity, and the charity would not be a “legitimate owner” within the scope of s. 2 because the charity would have acquired the property after the unlawful activity occurred and would not have given “fair value” for it. The money would, thus, be subject to forfeiture. In the present case, the CRA judge could have accepted wholeheartedly the appellant’s claim that he was entirely innocent of any involvement with marijuana cultivation, yet still ordered forfeiture.

47Even when the owner has gained the property by means of crime, the CRA forfeiture proceeding does not require, and may not involve, identifying the owner with a particular offence. This would be the case, for example, if cash were seized from a gang safe house. In such a case, the Attorney General may be able to show on a balance of probabilities that money constituted the proceeds of crime in general without identifying any particular crime or criminal.

G. Interference in the Sentencing Process

48Nevertheless the appellant argues that the CRA does in some situations couple a de facto penalty to Criminal Code prohibition. Often, he says, the owner of the forfeited property will indeed be the person suspected (even if not convicted) of committing the crime which taints the property. Nevertheless, as pointed out in Martineau, it may not be punishment to deprive a person of illegally obtained property — “[i]f the offender were not the actual owner of the seized property, he or she would not, in principle, be punished by the forfeiture thereof” (para. 36).

49The concern has been that the federal forfeiture provisions will be displaced by the CRA with its lower threshold of proof: see M. Gallant, “Ontario (Attorney General) v. $29,020 in Canadian Currency: A Comment on Proceeds of Crime and Provincial Forfeiture Laws” (2006), 52 Crim. L.Q. 64, at p. 83. This may be true, but where no forfeiture is sought in the sentencing process, I see no reason why the Attorney General cannot make an application under the CRA. Where forfeiture is sought and refused in the criminal process, a different issue arises.

50The appellant points to Ontario (Attorney General) v. Cole-Watson, [2007] O.J. No. 1742 (QL) (S.C.J.), where an accused who had $20,000 in cash in his possession when arrested was acquitted of knowing possession of the proceeds of crime (Criminal Code, s. 354). During sentencing on other offences, the trial judge made an order under s. 490 of the Criminal Code that the money be returned to the mother of the accused for whom the accused claimed he had received the money for deposit. The Crown declined to return the money or appeal the order, and instead brought a CRA application for forfeiture of the money as criminal proceeds. The CRA court considered the Attorney General’s claim to be a collateral attack on the criminal court judge’s order and dismissed the CRA application.

51I believe the various doctrines of res judicata, issue estoppel and abuse of process are adequate to prevent the prosecution from re-litigating the sentencing issue. Detailed consideration must await a case where the clash of remedies is truly in issue. Reference may be made, however, to Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77. In that case, in the context of civil proceedings launched in the wake of a criminal conviction, the Court said that it is an abuse of process “where the litigation before the court is found to be in essence an attempt to relitigate a claim which the [criminal] court has already determined” (para. 37).

52Accordingly, procedural options are available where a CRA judge considers that the conduct of the Attorney General is abusive of the processes of the Court. Furthermore, if in particular circumstances a conflict arises with the CRA to the extent that dual compliance is impossible, then the doctrine of paramountcy would render the CRA inoperable to the extent of the conflict.

VI. Disposition

53In summary, the CRA is valid provincial legislation. It does not “introduce an interference with the administration of [the Criminal Code] provisions” within the scope of the mischief identified by Rand J. in Johnson. Given the flexibility of the remedies potentially available where CRA proceedings are initiated by the Crown after an unsuccessful claim for forfeiture under s. 462.37, I conclude that there is no necessary operational conflict between the Criminal Code and the CRA such as to invalidate the latter.

54In my opinion the CRA is valid. I would dismiss the appeal. The application judge found that this was a test case and that, as a result, there should be no order as to costs. The Court of Appeal agreed. We are of a similar view and make no order as to costs.

55The constitutional question should be answered as follows:

Are ss. 1 to 6 and ss. 16 to 17 of the Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28, ultra vires the Province of Ontario on the ground that they relate to a subject matter which is within the exclusive jurisdiction of the Parliament of Canada under s. 91(27) of the Constitution Act, 1867?

Answer: No.