ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CR-11-90000-199-00MO
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.
DECISION 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 .
Facts relating to the clubhouse and underlying the convictions for conspiracy to traffic in GHB
[ 22 ] On May 21, 2011 Mehrdad Bahman, John Neal, and Douglas Myles were convicted by a jury of conspiring to traffic in approximately 600 litres of GHB.
[ 23 ] The factual foundation for the convictions was that Merhdad Bahman received approximately 600 litres of GHB. He disputed that he had ordered the GHB and refused to pay the vendor for it. Mr. Neal and Mr. Myles became involved in the settlement of the dispute over the payment. They negotiated and facilitated payment by Mr. Bahman to the out of province vendor.
[ 24 ] The nature and location of the meetings to facilitate payment are relevant to the determination of this application for forfeiture as are the positions held by the offenders in the organization.
[ 25 ] At the relevant time Merhdad Bahman was a member of the Downtown Toronto chapter of the HAMC. John Neal was the President of the Downtown Toronto HAMC and Douglas Myles was a Vice-President.
[ 26 ] On May 31, 2006, Downtown Toronto HAMC held a meeting to discuss Mr. Bahman’s GHB debt, among other issues. The meeting was not held at the clubhouse. However, in order to receive directions to a first venue for the meeting, members had to go first to the Clubhouse.
[ 27 ] James Butler and John McMahon (Old Navy’s officers and shareholders) attended the May 31, 2006 meeting as did John Neal, Douglas Myles, Larry Pooler (Vice-President), and Rob Chen (Secretary). John Neal, Douglas Myles and Larry Pooler led the meeting.
[ 28 ] On September 27, 2006, there was an off-site officers’ meeting. The police agent, David Atwell, was an officer at that time. He testified that he did not know where the meeting was going to be held and was given directions to its location while in the Clubhouse.
[ 29 ] At the meeting, John Neal was present as was Douglas Myles. Payment of the GHB debt was again discussed.
[ 30 ] On September 28, 2006 the Downtown Toronto HAMC held a weekly “Church” meeting at the Clubhouse. At the meeting, John Neal told the members about the officers’ meeting held the night before.
[ 31 ] At the October 5, 2006 “Church” meeting held in the Clubhouse, Mr. Bahman announced to the members present that the debt had been resolved.
Facts relating to the clubhouse and underlying the conviction of Larry Pooler for trafficking in oxycodone
[ 32 ] On May 21, 2011, Larry Pooler was convicted by a jury of selling 50 Percodan pills to David Atwell for $150.
[ 33 ] The sale occurred on September 5, 2006 at the Clubhouse, just prior to the weekly “Church” meeting. While inside or just outside the Clubhouse, Mr. Pooler shook his vest, showed David Atwell two containers of drugs, and said “ I brought it, you still want it?”
[ 34 ] Larry Pooler was a Vice-President of the Downtown Toronto HAMC.
Facts relating to the clubhouse and underlying the conviction of Douglas Myles for the offence of trafficking in cocaine
[ 35 ] On May 21, 2011 Douglas Myles was convicted by a jury of trafficking cocaine. Mr. Myles supplied 1 kilogram of cocaine that David Blackwood, a member of the Downtown Toronto HAMC, sold to David Atwell.
[ 36 ] On February 7, 2007 Mr. Atwell spoke to Mr. Blackwood about the cocaine purchase at the clubhouse. Mr. Atwell asked Mr. Blackwood for a kilogram of cocaine. Blackwood said he would look into it.
[ 37 ] Mr. Atwell met Blackwood again on February 12, 2007 at the clubhouse, where they discussed Mr. Blackwood getting a kilogram of cocaine for $34,000.00.
[ 38 ] Mr. Blackwood subsequently sold the kilogram of cocaine to Mr. Atwell with Douglas Myles supplying the cocaine. The actual transaction was not conducted at or near the clubhouse.
Facts relating to the clubhouse and underlying the conviction of Lorne Campbell for the offence of trafficking in cocaine
[ 39 ] On January 27, 2010 Shaun Robinson entered a guilty plea to cocaine trafficking for selling a kilogram of cocaine to David Atwell.
[ 40 ] Lorne Campbell was convicted of conspiracy to traffic cocaine on May 21, 2011 for his role in this transaction.
[ 41 ] On February 12, 2007, David Atwell spoke to Shaun Robinson about purchasing a kilogram of cocaine at the Clubhouse after getting a ‘thumbs up’ from Lorne Campbell, indicating that it was okay to speak to Mr. Robinson. This conversation occurred just after a “church meeting” held in the Clubhouse.
[ 42 ] Shaun Robinson was a member of the Simcoe County Chapter of the Hells Angels.
[ 43 ] Lorne Campbell was a member of the Downtown Toronto Hells Angels.
Is the clubhouse offence-related property under s. 16(1) of the CDSA ?
[ 44 ] The question of whether property is offence-related property is properly considered in the larger context of the legislative scheme and its objectives. In Scotia Mortgage Corp. v. Leung , 2006 BCSC 846 , at paragraphs 18 -22 , Chief Justice Brenner of the British Columbia Supreme Court described both the process and intent of the forfeiture scheme set out under the CDSA :
“ Section 16 of the CDSA sets out the provisions dealing with the forfeiture of offence-related property. It was submitted by the Attorney General on this application and I agree that the overall intent of the forfeiture scheme is "to ensure that offence-related property is not returned to the offender and the interests of innocent third parties and persons with valid interests in the property are protected".
It is clear that the forfeiture scheme under the CDSA serves three purposes. First, forfeiture punishes the offender by taking away the property that was used in the commission of the designated substance offence. Second, forfeiture is a deterrent in the sense that it "raises the stakes" by imposing a "very real cost" to those who either use, or permit their property to be used, in the commission of a designated substance offence. Third, forfeiture ensures that the property is no longer available for continued use in criminal activities: (see Canada (Attorney General) v. Huynh , [2005] B.C.J. No. 2168, 2005 BCPC 431 .
After an offender has been convicted of a designated substance offence the Attorney General may apply for forfeiture of offence-related property. Under section 16(1) of the CDSA the court must order forfeiture where the Attorney General establishes on a balance of probabilities that the property is offence-related property in relation to which the designated substance offence was committed. Under section 16(2) the court may order forfeiture where the Attorney General establishes beyond a reasonable doubt that the property is offence-related property, although not in relation to the specific designated substance offence of which the offender has been convicted.
Section 19 of the CDSA addresses the rights of an innocent owner or other person who may have a valid interest in the offence-related property. Section 19 contemplates the return of restrained property that would otherwise be forfeited. The considerations for such a return take place in the context of the forfeiture hearing. Section 19(1) provides that any person appearing to have a valid interest in offence-related property is to receive notice of the forfeiture proceedings.
Subsection 19(3) of the CDSA provides for the return of property that would otherwise be forfeited to the lawful owner or the person lawfully entitled to possession of the property in circumstances where the owner or the person lawfully entitled to possession is not the offender or a person who acquired possession of the property from the offender for the purpose of avoiding forfeiture of the property, and where the owner or the person lawfully entitled to the possession of the property appears to be innocent of complicity or collusion with respect to the offence. Section 19(3) would apply in circumstances where the innocent person is a co-owner in the property, such as a joint tenant or a tenant-in-common.”
[ 45 ] Similarly, the applicable legal principles in the s. 16(1) analysis were summarized by Hill J. in R. v. Cook , 2010 ONSC 5155 () , [2010] O.J. No. 4413,at paras.39-45,as follows:
The C.D.S.A. procedures for the forfeiture of offence-related property are distinct and independent of conventional sentencing principles and concerns such as those set out in Part XXIII of the Criminal Code : Regina v. Craig , 2009 SCC 23 () , [2009] 1 S.C.R. 762 at paras. 48-9 .
While a forfeiture order may have a punitive impact on an offender, it is also aimed at taking offence-related property out of circulation and rendering it unavailable for future designated substance offences: Craig , at paras. 22, 44 . The forfeiture regime is also intended to confront organized crime as it focuses on the property itself and its role in past and future crime: Craig , at paras. 40-1 . In R. v. Wu , 2010 BCCA 366 at para. 36 , the court stated:
The purposes of the forfeiture provisions in the Controlled Drugs and Substances Act include taking the profit out of the production and trafficking of drugs. There is also a punitive aspect to the effect of a forfeiture order. There is also a preventive aspect, as the tools of the crime are removed from the criminal.
Pursuant to s. 16 of the C.D.S.A. , the applicant for forfeiture must demonstrate on a balance of probabilities that the designated substance offence was "committed in relation" to what is asserted to be offence-related property. The "committed in relation to" language anticipates proof of at least one of the connections described in paras. (a) to (c) of the s. 2 C.D.S.A. definition of "offence-related property".
[ 46 ] The authors of the legal text Money Laundering & Proceeds of Crime describe the breadth of the CDSA definition of offence-related property as follows:
“The reach of offence-related property in both the Criminal Code and the Controlled Drugs and Substances Act is extremely broad, in terms of both the definition’s linguistic and geographic scope. … It is difficult to imagine anything in any way related to the commission (or intended commission) of a criminal offence that would not be caught in the definition’s dragnet.”
This characterization of offence-related property has been adopted in R v Adamson , 2007 BCSC 745 () at para 53 , and in R v Nikitczuk , 2009 29911 (Ont SCJ) at para 16 .
[ 47 ] The Supreme Court of Canada in R. v. Craig , 2009 SCC 23 () , [2009] 1 S.C.R. 762, considered the legislative history of the relevant sections of the CDSA and the definition of offence-related property in the context of the remedial sections of the legislation. Abella J. writing for the majority acknowledged the expansive definition of offence-related property enacted as part of the 2001 amendments to the legislation. She observed that s. 19.1(3) proportionality test was adopted “to counterbalance the potentially harsh effects of extending the definition of offence-related property without qualification to all real property.” (paragraph 22)
[ 48 ] While s. 16(1) requires not only that the property be ‘offence-related property” but also that the offence be committed ‘in relation to the property’, the courts have interpreted “in relation to” to mean merely that the property is connected to the offence. It need not be ‘integral’ to the offence. (See R. v. Cook , supra , R. v. Kopp , 2011 MBPC 74 , R. v. Paziuk , 2007 SKCA 63 .)
[ 49 ] I am satisfied that the clubhouse of the Downtown Toronto HAMC is captured by the definition of offence-related property in s.2(1) of the CDSA .
[ 50 ] The clubhouse was the location for the sale of oxycodone by Larry Pooler to Dave Atwell. It was the location used for significant discussions between Mr. Blackwood and David Atwell in the sale of cocaine by Douglas Myles to David Atwell. It also played a role, albeit to a lesser extent, in the conspiracy for which Lorne Campbell was convicted.
[ 51 ] The clubhouse was a critical link in the arrangement of the meetings on May 31 st and September 27, 2006 at which Messrs. Neal, Myles and Bahman conspired to traffic in GHB.
[ 52 ] With the exception of the oxycodone transaction, money and drugs did not change hands at the clubhouse. The explicit discussions of price and quantity of drugs did not occur at the clubhouse. However, the clubhouse was the hub for the networking of the offenders convicted in the trial before me. All were members of the club. Mr. Neal, Mr. Myles and Mr. Pooler were executives of the club. The connection between the participants in the relevant criminal transactions was the Downtown Toronto HAMC. The clubhouse was the physical headquarters for the Downtown Toronto HAMC. The clubhouse, as a meeting place for the participants, facilitated the networking and discussions necessary to the trafficking activities. The extent to which the clubhouse was used varied in each offence but the clubhouse was “used in connection with the commission” of each of the designated substance offences set out above.
[ 53 ] In considering the fact that each of the offenders convicted in the trial before me was a member of the HAMC or, in the case of Mr. Neal, Mr. Pooler and Mr. Myles, a member of the executive of the Downtown Toronto HAMC, I am not making a finding that the offences were committed in association with a criminal organization. Such a finding would not be consistent with the jury verdicts. I do find that all of the offenders were members of the same organization and that three held executive positions in that organization. This finding is relevant in assessing the role of the property in the offences.
[ 54 ] The relationship between the co-conspirators in the GHB conspiracy was that they were members of the same club. This was the relationship that brought them together. The meetings of the club were used to further the GHB conspiracy. The clubhouse was the starting point for the arrangement of the significant meetings.
[ 55 ] The relationship between Mr. Atwell, Mr. Myles and Mr. Blackwood was that they were all members of the Downtown Toronto HAMC. Mr. Atwell and Mr. Myles held executive positions. The discussion of the amount and the price between Mr. Atwell and Mr. Blackwood occurred at the clubhouse.
[ 56 ] The relationship between Mr. Pooler and Mr. Atwell was that they were members of the Downtown Toronto HAMC. Mr. Pooler also held an executive position. The transaction occurred inside or just outside the clubhouse.
[ 57 ] Based on the connection of the offenders to the property through their membership and positions in the club and the role played by the property in each of the offences, I am satisfied that the applicant has proven, on a balance of probabilities that the clubhouse is offence-related property and that the designated substance offences of conspiracy to traffic in GHB, trafficking in cocaine, trafficking in oxycodone and conspiracy to traffic in cocaine were committed in relation to the property.
Is the Respondent corporation a person ‘other than the person charged’ and innocent of complicity or collusion in the offences? ( s. 19(3) CDSA )
[ 58 ] Under s. 19(3), the onus is on the Respondent to prove on a balance of probabilities that it is the lawful owner of the property, that it is not the ‘person charged’ and that it does not appear complicit or guilty of collusion. (see R. c. Normandin , [2009] J.Q. no 3681 at para. 69 , R. c. Leblanc 1999 13333 (QC CA) , [1999] J.Q. no 4294 (Que. C.A.)at paras. 42 &43 ; R v. Sankar [2012] O.J. No. 1559 (S.C.) at paras. 15-18 )
[ 59 ] If the Respondent satisfies this onus, the court has the discretion to order that property that would otherwise be forfeited be returned to the respondent.
[ 60 ] The Respondent corporation is not at arm’s length to the offenders. The evidence before me from Mr. Petersen is that the corporation holds the property in trust for the members of the Downtown Toronto HAMC. Mr. Petersen testified that the members are the de facto shareholders of the corporation. The long term members of the club are entitled to a share of the property on the basis of the dues that they have paid over the years. It follows that those members with less time in the club hold a smaller stake in the property.
[ 61 ] John Neal, Douglas Myles have been long term members of the Downtown Toronto HAMC. Merhdad Bahman and Lorne Campbell were members of the club.
[ 62 ] The evidence before me on this application shows that the respondent is the lawful owner of the property. It does not satisfy me that the corporation is separate from the ‘persons charged.’ The persons convicted in this case are all de facto shareholders in the corporation on the evidence of Mr. Petersen. Even if I were satisfied that the corporation was sufficiently separate from the offenders to be viewed as a ‘person, other than the person charged’, the respondent has failed to prove on a balance of probabilities that the corporation does not appear to be complicit or guilty of collusion in the offences. The evidence of Mr. Petersen is that the corporation is controlled by the Downtown Toronto HAMC. The president and two vice-presidents of the club have been convicted of offences in this proceeding. The three held positions of authority and as long term members are inferentially powerful shareholders. No evidence was led as to the directing minds of the corporation, the beneficial owners of the shares or the governance of the corporation.
[ 63 ] Therefore, the Respondent has not shown entitlement to relief from forfeiture under s. 19(3) of the CDSA .
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?( s. 19.1(3) CDSA )
[ 64 ] The burden of proof is also on the Respondent under s. 19.1(3) to show entitlement to relief from forfeiture based on disproportionality. I am required to consider the three enumerated factors in s. 19.1(3) in analyzing this issue: the nature and gravity of the offences, the circumstances surrounding the commission of the offences and the criminal records, if any, of the offenders.
[ 65 ] Abella J. in R. v. Craig , supra, explained the considerations relevant to the three enumerated factors at paragraphs 56-5,as follows:
What, then, should a judge consider under s. 19.1(3) ? The nature and gravity of the offence could include the character and quantity of the substance involved, the level of sophistication of the crime and the extent to which the commercial production or distribution of drugs was involved.
The second factor, the circumstances surrounding the commission of the offence, might include consideration of the offender's role in the commission of the offence, the nature of the property and the manner in which it was used in the offence, risks to the security or safety of the community, whether the property was used in a manner that detrimentally affected its legitimate use and enjoyment, whether the property was fortified or otherwise adapted to accommodate the grow operation, the extent of the offender's involvement in organized crime and whether the property itself was held by a criminal organization. The criminal record of the offender is self-explanatory. It will be of particular relevance if the prior offences were drug related.
Nature and Gravity of the Offences
[ 66 ] The offences in this case were serious. With respect to the GHB and the cocaine offences, there were significant quantities involved. There was a high level of sophistication in the GHB transaction with drugs and money exchanged across provincial boundaries. There were, during the course of negotiations, discussions concerning the potential for violence if the dispute was not resolved.
[ 67 ] These were all purely commercial enterprises.
Circumstances surrounding the commission of the offences
[ 68 ] The ‘circumstances surrounding the commission of the offences’ includes a consideration of the nature of the property. This property is neither residential nor commercial. It has been used since 1978 as a clubhouse for a motorcycle club.
[ 69 ] Based on the evidence before me at trial and the testimony of Mr. Petersen in cross-examination on his affidavit on this application, the clubhouse is fortified. To describe it as a ‘bunker’ is not an overstatement. A summary of the security measures in place at the clubhouse is set out at paragraph 43 of the Applicant’s factum as follows:
• The Clubhouse had a thick metal door that was double locked with multiple deadbolts;
• A solid steel door was behind the main door and could slide across it;
• A cement wall directly in front of the main door blocked direct access to the main entrance;
• Several cement posts protected the Clubhouse’s entrance;
• A camera and monitor connected to the front door allowed members to see activity in front of it;
• Additional cameras patrolled the Clubhouse’s perimeter and enabled members to see people arriving on and exiting the property;
• There were no windows on the Clubhouse’s main floor;
• The Clubhouse’s mailbox was see-through plexiglass, so its contents could be easily identified; and
• The property was gated and surrounded by fencing.
[ 70 ] The extent to which the property was used in the commission of the offences is also a factor to be considered under s. 19.1(3). I have considered the existence of a rule for the Downtown Toronto HAMC prohibiting engaging in criminal activity at the clubhouse. While the rule exists, I find that the rule effectively prohibits overt or easily detectable criminal activity but it does not prohibit criminal activity. I rely on the discussion between Douglas Myles and David Atwell on February 27, 2007 when Mr. Myles reprimanded Mr. Atwell for discussing drug activity using words rather than symbols. I find that the rule against criminal activity at the clubhouse was directed at preventing detection of criminal activities and the resulting potential for forfeiture of the clubhouse. The rule was not directed at prohibiting criminal activity at the clubhouse. As such it does not assist the respondent in establishing entitlement to relief from forfeiture.
[ 71 ] In considering the circumstances surrounding the commission of the offences I have also considered the evidence of Mr. Petersen that he was unaware of the offences as they occurred. He testified that he was of the belief that most members would have been unaware of the discussions of drug deals that occurred in or near the clubhouse. Based on this evidence the respondent asserts that the majority of the membership would have been unaware of the drug transactions.
[ 72 ] I do not find that the evidence supports this assertion. Those members who dealt with Mr. Atwell were aware of his drug trafficking activities. Those who attended the GHB meeting were aware of the GHB debt and the attempts to resolve it. Those who voiced concerns to Douglas Myles about Mr. Atwell’s open discussion of criminal offences at the clubhouse were aware of the criminal activity. The members of the club are the de facto owners of the property. The Respondent has not shown that the ‘owners’ of the property were unaware of the criminal activities at the clubhouse. To the contrary the evidence supports the conclusion that the majority of the members were aware of the criminal activity that forms the foundation for my finding that the clubhouse is offence-related property.
Criminal Records
[ 73 ] Three of the five offenders were first offenders before their convictions before this court. Lorne Campbell and Douglas Myles had criminal records.
Conclusion on s. 19.1(3) relief from forfeiture
[ 74 ] I am not satisfied that the impact of an order for the full forfeiture of the property would be disproportionate to the nature and gravity of the offences, the circumstances surrounding the commission of the offences and the criminal records of the offenders. While the criminal records of the offenders are not a significant factor, the nature and gravity of the offences and the circumstances surrounding the commission of the offences support an order of full forfeiture. The property is not residential or commercial property. It has been used to commit offences and is fortified and secured in a manner to enable occupiers of the property to commit offences. There is no basis for relief from forfeiture, in full or in part, in the circumstances of this case.
Conclusion
[ 75 ] The Applicant has met its onus of proving on a balance of probabilities that the Downtown Toronto HAMC clubhouse at 498 Eastern Avenue in Toronto is offence related property as defined in the CDSA and that the designated substance offences were committed in relation to the property. The Respondent has resisted the application but has not shown entitlement to relief from forfeiture under s. 19(3) as an innocent third party nor under s. 19.1(3) on the basis that forfeiture would be disproportionate to the nature and gravity of the offences, the circumstances surrounding the commission of the offences and the criminal records of the offenders.
[ 76 ] I therefore order that the property be forfeited.
Forestell J.
Released: June 7, 2012
COURT FILE NO.: CR-11-90000-199-00MO
DATE: 20120607
ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N:
HER MAJESTY THE QUEEN Applicant - and - OLD NAVY PROPERTY CORPORATION Respondent
DECISION ON FORFEITURE APPLICATION 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.