ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-12-453536
DATE: 20120914

BETWEEN:

ATTORNEY GENERAL OF ONTARIO Applicant – and – $51,000.00 IN CANADIAN CURRENCY ( IN REM ) Respondent

Troy Harrison , Julia A. Evans , and Baaba Forson , Lawyers for the Applicant

Eric M. Wolfman , Lawyer for the Respondent Ved Dhingra

HEARD: July 9, 2012

b. p. o’marra j.

reasons for decision

background

[ 1 ] Ved Dhingra killed his estranged wife Kamlesh Dhingra. He was charged with second degree murder. The jury verdict was Not Criminally Responsible. Mr. Dhingra claims the insurance proceeds on his deceased wife. The Attorney General of Ontario has commenced a civil forfeiture application for those funds.

issues

1. Is the Attorney General entitled to a preservation order pending the forfeiture application?

2. Is Ved Dhingra entitled to legal fees on this application payable out of the fund?

3. Are Mr. Dhingra’s lawyers entitled to a solicitor’s lien on 25% of the proceeds?

the facts

[ 2 ] Ved Dhingra was the beneficiary on a life insurance policy for his wife Kamlesh Dhingra.

[ 3 ] Ved Dhingra killed his wife on June 15, 2006. He was charged with second degree murder.

[ 4 ] On February 5, 2008, the jury returned a verdict of Not Criminally Responsible.

[ 5 ] Mr. Dhingra was detained at Whitby Mental Health Centre. He was released on June 14, 2011.

[ 6 ] After the criminal trial in February of 2008, Mr. Dhingra’s adult son Paul applied to the insurer to have the proceeds paid to the estate.

[ 7 ] In 2009 the insurer applied to pay the proceeds into court given the competing claims.

[ 8 ] On February 2, 2009, the insurer obtained an order to pay the proceeds into court less a payment of $1500 as costs to the insurer. The insurer had claimed a lien for costs and fees.

[ 9 ] Ved Dhingra applied on November 20, 2010 to have the funds paid out of court to his benefit. Paul Dhingra opposed this on behalf of his mother’s estate.

[ 10 ] That application was adjourned on consent to March 29, 2011. On that date counsel for the estate sought a further adjournment. He had contacted the Civil Remedies for Illicit Activities (“the CRIA”) and York Regional Police in regard to a forfeiture application under the Civil Remedies Act . The application by Ved Dhingra was set for June 14, 2011.

[ 11 ] On May 27, 2011, counsel from the CRIA advised Ved Dhingra’s counsel that the Ministry was considering whether to commence a forfeiture application under the Civil Remedies Act .

[ 12 ] On May 31, 2011, counsel from the CRIA advised counsel for Ved Dhingra that the Ministry would attend the hearing and seek to intervene. Counsel for the Ministry did attend but did not seek to intervene.

[ 13 ] On June 16, 2011, the Applications judge denied the application of Ved Dhingra. The funds remained on deposit with the Superior Court.

[ 14 ] The CRIA did not apply for forfeiture or preservation between June 16, 2011 and December 7, 2011, when Ved Dhingra’s appeal was argued.

[ 15 ] On April 24, 2012, the Ontario Court of Appeal allowed the appeal of Ved Dhingra on the following terms:

a) The proceeds deposited with the court plus interest were to be paid to counsel in trust for the benefit of Ved Dhingra.

b) The application of the Order was stayed for 30 days to give the Attorney General time to consider whether to commence an application under the Civil Remedies Act .

[ 16 ] On May 11, 2012, counsel for Ved Dhingra agreed to accept service on behalf of his client of the application for forfeiture and preservation under the Civil Remedies Act .

[ 17 ] The retainer agreement between Ved Dhingra and his counsel provides that the firm receive 25% of the funds recovered.

[ 18 ] The forfeiture hearing under the Civil Remedies Act is currently set to proceed on September 25, 2012. There may be an adjournment request to accommodate the schedule of counsel for Ved Dhingra.

position on behalf of ved dhingra

[ 19 ] Ved Dhingra opposes the preservation order on the following basis:

1. It is not reasonable to believe that these insurance funds are proceeds of unlawful activity.

2. It is not in the interests of justice to grant the preservation order. This is based in part on the delay by the Attorney General in making the application.

[ 20 ] Ved Dhingra seeks the following relief if a preservation order is issued:

1. Payment of his legal fees out of the fund.

2. A declaration that his counsel have a solicitor’s lien on 25% of the funds based on his retainer agreement.

the law

[ 21 ] The Civil Remedies Act allows the Attorney General of Ontario to initiate in rem proceedings in the Superior Court to preserve and forfeit proceeds and instruments of unlawful activity. It creates a civil forfeiture scheme and is not part of the criminal process.

Civil Remedies Act , ss. 3, 4, 9 and 15.6.

[ 22 ] The proceedings do not seek to establish fault for a person. An offence may be found to have been committed even if no person has been charged with the offence, or a person was charged with the offence but the charge was withdrawn or stayed or the person was acquitted of the charge.

Civil Remedies Act. , s. 17(2).

[ 23 ] Proof that a person was convicted, found guilty or found not criminally responsible on account of mental disorder in respect of an offence is proof that the person committed the offence.

Civil Remedies Act , 17(1).

[ 24 ] Proceeds of unlawful activity is defined as property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity.

Civil Remedies Act , s. 2.

[ 25 ] The two part test for granting a preservation order is as follows:

1. Reasonable grounds to believe the property is a proceed or instrument of unlawful activity; and

2. where such grounds exist the court shall make the order unless it is “clearly not in the interest of justice to make the order”.

Civil Remedies Act , ss. 4(2) and 9(2)

[ 26 ] The “clearly not in the interests of justice” exception is a narrow one. It should be granted only where the party seeking relief from forfeiture has shown that forfeiture would be “manifestly harsh” or “draconian”.

Ontario (Attorney General) v. 8477 Darlington Cresent et al ., 2011 ONCA 363 , [2011] O.J. No. 2122 (C.A.) at paras. 84 , 85.

Proceeds of Unlawful Activity

[ 27 ] Counsel for Ved Dhingra submits that the Civil Remedies Act targets proceeds of organized crime and not insurance payable as a result of the “accidental” death of Kamlesh Dhinga.

[ 28 ] There is nothing in the Civil Remedies Act that limits its application to organized crime.

[ 29 ] Proceeds of unlawful activity are very broadly defined in the Civil Remedies Act .

Effect of NCR Verdict

[ 30 ] The Civil Remedies Act specifically provides that a verdict of not criminally responsible on account of mental disorder is proof that the person committed the offence.

[ 31 ] Kamlesh Dhingra did not die by accident. She was stabbed multiple times in the neck and torso by Ved Dhingra.

[ 32 ] The killing of Kamlesh Dhingra was not legally justified or lawful.

[ 33 ] Homicide is culpable or not culpable. Homicide that is not culpable is not an offence.

Criminal Code , s. 222(2) (3).

[ 34 ] If the killing of Kamlesh Dhingra was not proven culpable Ved Dhingra was entitled to an acquittal. He would be free of condition or restrictions on his freedom.

[ 35 ] The verdict of NCR is premised on proof of an offence. The consequences include significant conditions and restrictions of Ved Dhingra’s liberty interests. NCR findings are unique defences in criminal law.

R. v. Bouchard-Lebrun 2011 SCC 58 , [2011] 3 S.C.R. 575 at para. 53 .

[ 36 ] By long-standing principle of criminal law no person who commits an offence while suffering a mental disorder may be convicted. The offence is proven but the accused is not convicted.

Criminal Code , s. 672.35.

[ 37 ] The contractual obligation of the insurer to pay was triggered by the unlawful killing of Kamlesh Dhingra by Ved Dhingra. It is that relationship that engages the provisions of the Civil Remedies Act .

[ 38 ] At the preservation stage the court is only being asked to protect the property pending a determination of the case on the merits. It follows that the “clearly not in the interests of justice” exception should be even more narrowly applied.

Delay in Bringing Preservation and Forfeiture Applications

[ 39 ] Counsel for Ved Dhingra submits there has been inordinate delay in bringing the application under the Civil Remedies Act . The CRIA were clearly aware of the civil dispute between Ved Dhingra and his son Paul on behalf of the estate. The Ministry stayed on the sidelines until after the Court of Appeal ruling in April of 2012.

[ 40 ] Counsel for Ved Dhingra submits that the long delay before active involvement by the CRIA is inconsistent with their present claim that the proceeds are from unlawful activity.

[ 41 ] Even though the Attorney General of Ontario was not a party or intervenor on the prior litigation the Court of Appeal chose to stay the operation of its order to allow the Ministry to consider an application under the Civil Remedies Act .

Dhingra v. Dhingra Estate (2012) 2012 ONCA 261 , 109 O.R. (3d) 641 (O.C.A.)

[ 42 ] At this preservation stage I cannot find that the delay alone, or in conjunction with other factors, is such that it would “clearly not be in the interests of justice” to make the order. The test is a narrow one at this stage. Counsel will be free to advance this issue at the forfeiture application.

Application for Legal Expenses to be Disbursed out of Insurance Proceeds

[ 43 ] A person who claims an interest in preserved property may apply for reasonable expenses to be paid out of the property. Such an application is premised on full and complete financial disclosure by the applicant.

Civil Remedies Act , s. 5 (1) (2).

Ontario (Attorney General ) v. Le [2007] No. 4426 (Ont. Div. Crt.) at para. 21, 22, 23.

[ 44 ] Mr. Dhingra was cross-examined on the affidavit he filed in support of the s. 5 application. He undertook to provide copies of various documents but so far has failed to produce them.

[ 45 ] Unless and until he produces those further financial records he is not entitled to relief under s. 5 of the Civil Remedies Act . He is at liberty to renew his application based on a full record of his financial situation.

Application by Law Firm for Declaration that they are Entitled to 25% of Preserved Fund

[ 46 ] This is based on the retainer agreement between Ved Dhingra and his lawyers. The claim is for fees, costs and disbursements incurred on the original application and appeal.

Solicitors Act , R.S.O. 1990, c-S. 15 s.34(1).

[ 47 ] The Civil Remedies Act provides protection for legitimate owners of property found to be proceeds of unlawful activity.

Civil Remedies Act , s. 2, 3(2).

[ 48 ] The Civil Remedies Act does not refer to such applications at the preservation stage.

Civil Remedies Act , ss. 4 and 9.

[ 49 ] The potential interest of the law firm should be addressed when the forfeiture application is heard.

result

1. Application granted for preservation order pursuant to s. 4(1) of the Civil Remedies Act related to the proceeds of the Accident Insurance Plan payable on the death of Kamlesh Dhingra.

2. Application by Ved Dhingra pursuant to s. 5 of the Civil Remedies Act is dismissed. He is at liberty to renew that application upon providing full financial disclosure.

3. Application by Oster, Wolfman for declaration of solicitor’s lien is reserved to be dealt with by Justice who hears forfeiture application.

4. Costs are reserved to be dealt with at conclusion of the forfeiture application.

[ 50 ] I am grateful to counsel for both parties for their helpful submissions on this tragic case.

B. P. O’Marra J.

Released: September 14, 2012

Ontario (Attorney General) v. $51,000 CDN ( in rem ), 2012 ONSC 4958

COURT FILE NO.: CV-12-453536

DATE: 20120914

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ATTORNEY GENERAL OF ONTARIO Applicant – and – $51,000.00 IN CANADIAN CURRENCY ( IN REM ) Respondent

REASONS FOR DECISION

B. P. O’Marra J.

Released: September 14, 2012