ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.:
DATE: 20120607
B E T W E E N:
HER MAJESTY THE QUEEN Applicant - and - OLD NAVY PROPERTY CORPORATION Respondent
Faiyaz Alibhai, Tanit Gilliam and Jeremy Streeter, for the Applicant
Craig Bottomley and Ryan Naimark for the Respondent
HEARD: November 16 & 17, 2011, January 30, 2012
Forestell J.
JUDGEMENT ON FORFEITURE APPLICATION
The Application
[ 1 ] This application is brought by the Applicant pursuant to s.16(1) [1] of the Controlled Drugs and Substances Act , S.C. 1996, c. 19 (the “CDSA”) for the forfeiture of the property at 498 Eastern Avenue in the City of Toronto. [2] The Respondent Corporation owns 498 Eastern Avenue. James Butler and John McMahon are the corporation’s sole officers and sole shareholders [3] . They are both full patch members of the Downtown Toronto Hells Angels Motorcycle Club. The affidavit of Robert Petersen, filed by the Respondent states that the property was purchased in 1978 and held in trust for the Paradice Riders club by various members. From its purchase in 1978 until the “patchover” of the Paradice Riders to the Hells Angels in December 2000, the property was used as the clubhouse for the Paradice Riders. From 2000 until the property was restrained by order of Hockin J. on March 8, 2007, the property was used as the clubhouse for the Downtown Chapter of the Hells Angels Motorcycle Club (the “HAMC”). During that time it was held by various corporate entities, all controlled by the HAMC Downtown Toronto Chapter.
[ 2 ] The corporate documents show that John McMahon and James Butler jointly hold the 100 shares in the corporation in trust for “HAMC Toronto Ltd.” Neither Mr. McMahon nor Mr. Butler provided any affidavit evidence on this application. The nature of the trust and the beneficiaries of the trust are not disclosed on the evidence before me except by the evidence of Mr. Petersen. The affidavit of Robert Petersen states that the long-time members of the Downtown Toronto HAMC and former members of the Paradice Riders MC, including Mr. Petersen, are shareholders in the corporation as a result of paying dues to the clubs for a long period of time. Mr. Petersen in cross-examination testified that the members of the Downtown Toronto HAMC are the shareholders of the Old Navy Corporation. He said, “In the legal sense, no, but in a –the reality is yes we are.”
[ 3 ] The property was recently appraised at $600,000 to $700,000. There is a mortgage outstanding for about $41,000.00 held by a third party. That mortgage is in default.
[ 4 ] This application was brought at the conclusion of a seven month trial of five members of the HAMC. All five were found guilty of offences which are designated substance offences under s. 2(1) of the CDSA .
The Statutory Framework
[ 5 ] This application is brought pursuant to s.16(1) of the CDSA which provides as follows:
- (1) Subject to sections 18 to 19.1, where a person is convicted of a designated substance offence and, on application of the Attorney General, the court is satisfied, on a balance of probabilities, that any property is offence-related property and that the offence was committed in relation to that property, the court shall … order that the property be forfeited to Her Majesty in right of Canada and disposed of by such member of the Queen’s Privy Council for Canada as may be designated for the purposes of this subparagraph in accordance with the law.
[ 6 ] Subsection 2(1) of the CDSA defines offence-related property as follows:
“offence-related property” means… any property, within or outside Canada,
(a) by means of or in respect of which a designated substance offence is committed,
(b) that is used in any manner in connection with the commission of a designated substance offence, or
(c) that is intended for use for the purpose of committing a designated substance offence;
[ 7 ] Sections 19 and 19.1 of the CDSA provide relief from forfeiture. The relevant portions of those sections read as follows:
- (1) Before making an order under subsection 16(1) or 17(2) in relation to any property, a court shall require notice in accordance with subsection (2) to be given to, and may hear, any person who, in the opinion of the court, appears to have a valid interest in the property.
(3) Where a court is satisfied that any person, other than
(a) a person who was charged with a designated substance offence, or
(b) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (a) under circumstances that give rise to a reasonable inference that the title or right was transferred for the purpose of avoiding the forfeiture of the property,
is the lawful owner or is lawfully entitled to possession of any property or any part of any property that would otherwise be forfeited pursuant to an order made under subsection 16(1) or 17(2) and that the person appears innocent of any complicity in an offence referred to in paragraph (a) or of any collusion in relation to such an offence, the court may order that the property or part be returned to that person. [emphasis added]
19.1 (3) Subject to an order made under subsection 19(3), if a court is satisfied that the impact of an order of forfeiture made under subsection 16(1) or 17(2) in respect of real property would be disproportionate to the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the criminal record, if any, of the person charged with or convicted of the offence, as the case may be, it may decide not to order the forfeiture of the property or part of the property and may revoke any restraint order made in respect of that property or part.
The Issues
[ 8 ] The Applicant submits that the clubhouse is offence-related property that must be forfeited to Her Majesty in Right of Canada. The Respondent argues that the clubhouse is not offence–related property as defined by the CDSA or, if it is, the Respondent is innocent of complicity and collusion, or, in the further alternative, forfeiture is disproportionate in light of the circumstances of the offences and the offenders.
[ 9 ] The issues to be determined therefore are:
Is the clubhouse offence related property?
Is the Respondent corporation innocent of complicity or collusion in the offences?
Would forfeiture be disproportionate in light of the nature and gravity of the offence, the circumstances of the offence and the criminal record of the offender or offenders?
Evidentiary Basis for the Application
[ 10 ] In support of the submission that the property is offence-related property as defined in the CDSA , the Applicant relies on the following:
The evidence at trial that supported the convictions entered against the five offenders;
The evidence at trial called to prove that the HAMC was a criminal organization, including: (a) the evidence of drug transactions between the police agent and other HAMC members who were separately tried; and, (b) the evidence of the police agent with respect to uncharged criminal conduct in the clubhouse; and,
The factual findings of trial judges in other proceedings, arising out of the same investigation, that the HAMC is a criminal organization.
[ 11 ] The Respondent takes the position that the evidence from the trial may not be relied upon on the application. Mr. Naimark, on behalf of the Respondent, argues that the evidence from the trial is hearsay on the application. He argues that all of the evidence, including the evidence which forms the foundation for the convictions at trial is inadmissible on the application and should be ignored.
[ 12 ] The argument that the evidence heard by me in the course of the trial is hearsay and may not be relied upon on the forfeiture application is without merit. Mr. Naimark argued that the trial proceedings are separate proceedings with different parties and therefore the evidence called at trial is hearsay. The evidence to be relied upon, he submitted, must be presented on the forfeiture hearing either through viva voce evidence or by affidavit.
[ 13 ] On this application, the Crown filed a lengthy application record which included significant portions of the trial transcript and portions of the intercepted communications. All of this material was available to the respondent. The factum of the Applicant made it clear that the applicant relied upon the trial evidence.
[ 14 ] Mr. Naimark, counsel for the respondent was aware of the basis for the application and raised no objection to the admissibility of any of the trial evidence. He made no reference to the ‘hearsay’ issue in relation to the trial evidence until final submissions when he argued the unfairness to the respondent of having to respond to evidence called at trial when the respondent was not a party.
[ 15 ] Pardu J. addressed this issue fully in her reasons in R. v. Hells Angels Motorcycle Corp. , 2009 53152 (ON SC) , [2009] O.J. No. 3503 (S.C.). In that case, the Respondent corporation argued that the forfeiture application judge could not rely on the findings and conclusions of the trial judge who convicted the accused on the ground that they were hearsay. Justice Pardu disagreed, and allowed the Crown to rely on this evidence. At paras. 12 and 13 she held:
The corporate Respondent was not a party to the proceedings instituted against the individual respondents, and has no standing to relitigate the factual findings of the trial judge, that Hells Angels chapters in Canada comprise a criminal organization, and that Hells Angels chapters in Canada use material containing the trademark to further the criminal purposes of the organization. As noted by Drapeau, C.J.N.B. in R. v. Faulkner , [2007] N.B.J. No. 212 (C.A.) , evidence in forfeiture proceedings following conviction "will, in the overwhelming majority of cases, consist entirely of the evidence produced at trial. Needless to say, that body of evidence should not feature any inadmissible hearsay"…
While the majority in R. v. Craig , supra , determined that forfeiture proceedings were to be treated separately from sentencing proceedings, and were, in that sense, distinct proceedings, all of the members of the Court relied upon the factual findings of the trial judge regarding the circumstances surrounding the commission of the offence to assess the merits of the forfeiture application, without any suggestion that a rehearing of those issues was necessary. As a matter of policy, sentencing proceedings were to be treated separately from forfeiture proceedings so that well off individuals with substantial assets available for forfeiture would not have that factor applied in mitigation of sentence.
[ 16 ] In R. v. Hells Angels Motorcycle Corp. , the forfeiture application followed a trial by judge alone (not Pardu J.) and factual findings were available to Pardu J. on the application. In the case before me, the trial was by way of judge and jury. The decision in R. v. Hells Angels Motorcycle Corp. , does not specifically address the issue of factual findings after a jury trial. In my view, in forfeiture proceedings, as in other post-conviction proceedings, the trial evidence is available to the judge without there being any requirement for the applicant to recall the evidence. In post-conviction proceedings following a jury verdict however, the available findings are circumscribed by the verdicts.
[ 17 ] In R. v. Ferguson , 2008 SCC 6 () , [2008] S.C.J. No 6, at paras. 17-18 , the Supreme Court of Canada set out the principles governing the fact-finding function of a sentencing judge following a verdict of guilty as follows:
Two principles govern the sentencing judge in this endeavour. First, the sentencing judge “is bound by the express and implied factual implications of the jury’s verdict.” The sentencing judge “shall accept as proven all facts, express or implied, that are essential to the jury’s verdict of guilty…and must not accept as fact any evidence consistent only with a verdict rejected by the jury”.
Second, when the factual implications of the jury’s verdict are ambiguous, the sentencing judge should not attempt to follow the logical process of the jury, but should come to his or her own independent determination of the relevant facts. In so doing, the sentencing judge may “find any other relevant fact that was disclosed by the evidence at the trial to be proven.” To rely upon an aggravating fact, or previous conviction, the sentencing judge must be convinced of the existence of that fact or conviction beyond a reasonable doubt; to rely upon any other relevant fact, the sentencing judge must be persuaded on a balance of probabilities. It follows from the purpose of the exercise that the sentencing judge should find only those facts necessary to permit the proper sentence to be imposed in the case at hand. The judge should first ask what the issues on sentencing are and then find such facts as are necessary to deal with those issues. [citations omitted]
[ 18 ] A finding on sentence must be consistent with the jury verdict. In my view, a finding on forfeiture must also be consistent with the jury verdict.
[ 19 ] Therefore, I find that the evidence called at trial in support of the findings of guilt is admissible at the forfeiture hearing and that I must, as I did in sentencing the offenders, rely on the trial evidence to make the relevant factual findings on the application. Those findings must be consistent with the verdicts.
[ 20 ] For the reasons set out below, I am satisfied on a balance of probabilities that the clubhouse is offence- related property based on the evidence relating to the offences tried before this court. It is therefore not necessary for me to decide whether the other separately tried or uncharged offences or findings in other proceedings could be properly considered in determining this issue. I have not relied upon them, nor have I relied upon the hearsay or opinion evidence contained in the affidavit of Anne Goodwin in deciding any issue in this application.
[ 21 ] In these reasons, I will set out the facts underlying the relevant convictions, my reasons for concluding that the facts support a finding that on a balance of probabilities that the clubhouse is offence-related property and finally whether the Respondent is entitled to relief from forfeiture under section 19 or 19.1 of the CDSA .
... (continues exactly as in source through paragraphs [22]–[76])
Forestell J.
Released: June 7, 2012
[1] The application was originally brought under 462.37 and 490.1 of the Criminal Code , R.S.C., 1985, c. C-46 as well as s. 16(1) and 16(2) of the CDSA . In argument and in its final factum, the Applicant relied only on s.16(1) of the CDSA.
[2] The legal description of the property is : Lot 68, Plan 416, City East, City of Toronto, property identifier (PIN) number 21055-0236 (R).
[3] See corporate documents, Exhibit “A” to the May 25, 2010 affidavit of Anne Goodwin.