ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: C-974-09
DATE: 2012-12-21

BETWEEN:

Attorney General of Onatrio Applicant – and – $138,650 in Canada Currency ( In Rem ) Respondent

Dan Phelan, for the Applicant

Richard M. Van Buskirk, for Dara Waledkhani, Qamarnaz Amiri, Golzar Waledkhani, Arman Waledkhani, Loqman Waledkhani and Ezat Hosseini

HEARD: December 11, 2012

THE HONOURABLE MR. JUSTICE G.A. CAMPBELL

reasons for judgment

ON THE APPLICATION FOR A FORFEITURE ORDER

UNDER THE civil remedies act , 2001

Facts

[ 1 ] The Waledkhani family are of Kurdish descent and were dispossessed from Iran during the Iran/Iraq war in or about 1980. They remained in a refugee camp in Iraq until they arrived in Canada as refugees on or about June 13, 2002. The family consists of father, Dara, age 49 and mother, Qamarnaz, age 45, paternal grandmother, Ezat, age 71 and five children, son Hewa, age 25, daughter Golzar, age 27, a son, Arman, age 23, a son Loqman, age 20 and Shahla, age 14. Most of the children were minors and attended school during the years between 2002 and 2009.

[ 2 ] During the Summer of 2002 and 2003, the family worked on area farms picking fruit and vegetables for cash wages. Although I am not one that does, if the family is to be believed they claim to have saved $50,000 cash by the end of 2003. Dara started receiving payments from Ontario Works in 2004, then, for medical reasons, he began receiving Ontario Disability Support Plan benefits in 2005.

[ 3 ] The grandmother, Ezat, also began receiving Ontario Works payments in 2003. She also then started receiving Ontario Disability Support Plan benefits in 2005.

[ 4 ] The respondent family claims that all of the $138,650.00 seized by the police on April 9, 2009, (at the conclusion of an extensive cocaine trafficking investigation involving the son Hewa Waledkhani) was money that the family had “saved” for the future education of the children and to buy a house.

[ 5 ] The currency was seized during an execution of a search warrant at 1064 Courtland Avenue, Unit E, Kitchener, which is a social housing residence then occupied by the family. Of the $138,650, $22,650 was found wrapped in bundles under the bed in the master bedroom occupied by the father and the mother. Also in the same bedroom, a police drug detecting dog “indicated on” a locked safe which was taken into police custody and eventually opened, revealing $116,000, also wrapped in bundles. Under forensic examination, one of Mr. Hewa Waledkhani’s fingerprints was found on the inside surface of the safe door.

[ 6 ] Despite Mr. Van Buskirk’s attempts to confuse that fact by claiming that the safe had two parts to it, (an “outside” and an “inside” part) he eventually retracted that description when he was confronted with the pictures that the safe had no such separate compartments. He conceded that for a person to gain access to the inside of the safe one would have to be given (or to know) the combination, as well as possess a key to open it. The respondent parents allege that only they had keys to the safe, but the fact that the thumbprint of the convicted drug dealer, Hewa, was on the inside of the safe convinces me beyond doubt that Hewa had access to the safe and was either putting money into the safe or taking money out of the safe as proceeds from or to facilitate purchases for his drug dealing enterprise.

[ 7 ] It is a fact that Hewa had been a drug dealer since before 2005, when he received two convictions for possession for the purpose of trafficking, contrary to the C.D.S.A. , section 5(2). As a result, he was sentenced to four months in jail, plus 31 days pre-sentence custody plus 18 months probation. Hewa was also convicted in 2006 for assault, contrary to s. 266 of the Criminal Code .

[ 8 ] As a result of an extensive police investigation and surveillance in 2008 and into 2009, police concluded that although Hewa was unemployed, he was intricately involved with a group of individuals alleged to be dealing drugs and in possession of firearms.

[ 9 ] The police investigation became more intense in January 2009 when Hewa left Ontario due to a shooting incident in which he was a “person of interest”. He returned to Ontario in late February or early March 2009, when the police again took up active surveillance on Hewa and another drug associate, Amritt. The intense, continuous surveillance continued during the balance of the month of March and into April. On April 8, 2009, Hewa and Amritt were arrested while in possession of 67 grams of cocaine, digital scales and some marijuana. Prior to his arrest, (during the month of March and early April) Hewa was observed accessing the 1064 Courtland Avenue complex on many occasions. The messages sent and received on the various telephones used by Hewa from February 5th to April 8th (the date of his arrest), clearly prove that Hewa was living at 1064 Courtland Avenue and was having regular contact with his father and extended family, despite their later statements that he was not living there and that they had “disowned” him in 2007.

[ 10 ] Indeed, in early March, Dara transferred ownership of a car he owned to Hewa, one of a fleet of used vehicles owned by Dara between 2002 and 2012.

[ 11 ] I disbelieve the respondents’ evidence as it is contradicted entirely by the evidence collected by the police, not the least of which include that: there was an “empty” front bedroom that the family allege was used “for playing, watching TV” but contained a bed; much of Hewa’s clothing; a hidden digital scale (which none of the family acknowledged or could explain); Hewa’s income tax returns; grandmother Ezat and two of the other adult boys slept in another small bedroom, leaving the front bedroom available for Hewa; Loqman gave a statement to the police on the day of the seizure that that front room was Hewa’s room but that he slept there rarely; Hewa’s driver’s licence disclosed 1064 Courtland as his home address; and lastly, that two of Hewa’s telephone messages indicate that on March 24, 2009, he asked someone to “come here by my complex” at 1064 Courtland and on March 28, 2009, he made reference to someone on his phone that “my parents sleeping so I don’t want to wake them up”.

[ 12 ] I find as a fact that Hewa Waledkhani lived at 1064 Courtland Avenue, Unit E in 2009 and that the evidence of the respondent family that Hewa had not lived there since 2007 is intentionally false, misleading and not, in any respect, credible.

[ 13 ] I also reject much of the other evidence given by Dara and Qamarnaz in their police witness statements given on April 15, 2009, six days after the seizure of the money from their bedroom (set out in paragraphs 44 and 45 of Crown counsel’s factum), including but not restricted to, Dara asserting that Arman sleeps in the front bedroom “most of the time”, while Qamarnaz gave a statement separately that “no one else sleeps in the front bedroom”. I also reject the mother’s assertion that she does not know how to deal with banks and that she had “disowned” her son. I reject Dara’s statements that he kept the family money in his bedroom, (some of which was kept in a suitcase freely accessible under their bed) because if he had kept the money in the joint bank account with his wife, that “the kids would spend the money if it was kept in the bank so they have their mother look after the money”.

[ 14 ] I also accept the uncontroverted evidence of Detective Currie that the Waledkhani family was living at the Statistics Canada poverty line and that the method that this family kept their cash in their home was typical of the security and storage issues faced by drug traffickers who cannot utilize banks to store their drug proceeds and that the refinement of cash to alter the typology of bills is commonly done by criminals to distance the association to profit-motivated crimes, as well as to reduce the bulk nature of the cash. The cash seized was mostly in $20, $50 and $100 bills stored in bundles (pictures of which are found at Tab 14 A to the affidavit of Lori Blaskavitch in the supplementary Application Record of the Attorney General of Ontario).

[ 15 ] Much was made by Mr. Van Buskirk that of the various bundles of cash discovered by the drug-dog during this seizure, some of them had names of family members on the paper used to wrap the various bundles. The bundles were divided into three groups. In the first group, the mother has her name on one bundle and the father has his name on three bundles. There are two other bundles with what appear to be the initials “R.O.” on one, the initial G. (which might possibly stand for Golzar) on the other. In the second group of bundles seized, one is marked “Golzar” (her full name), one is marked “Arman” and one is marked “Loqman”. In the third group of bundles, there are unusual markings which would appear to be: “E 5”, on the first bundle, “10” on the second bundle and “7” on the third bundle. I note that no bundles have the name Ezat, nor are Shahla’s or Hewa’s name on any of the bundles.

[ 16 ] The responding family assert that the bundles were marked with various family members names because those were the individuals who contributed the money. I am unpersuaded by that explanation as it is equally as probable (after taking into consideration all of the inconsistencies and obvious mis-directions offered the police from the date of the seizure until their last affidavits, filed by the family in October 2012) that the bundles were marked, not for who brought the money into the family, but who it was planned to use the money in future.

[ 17 ] I also find that it is entirely inconsistent with the assertion that the family was keeping the money for their children’s post-secondary education when three of the bundles are marked for a now 27 year old, a 23 year old and a 20 year old, each of whom would have graduated from high school by the time that the funds were seized in 2009.

[ 18 ] It is also telling that some of the members of the family had no bundles marked with their name, especially Ezat. Dara and Qamaranz gave evidence that the grandmother, Ezat, had contributed $110 per month for rent, plus between $150 and $200 a month for food and that the entire balance of her disability pension payments were given to Dara “to save”. If their story was believable, or at least consistent, there should have been a bundle of cash with Ezat’s name on it, (unless the “E 5” on the third set of bundles could possibly have related to her). However, the odd markings on the front of the other bundles referred to above, (namely the “10”, “7” and “R O”) were not explained.

[ 19 ] I therefore do not accept that the names on the front of the bundles seized represent money obtained from various members of the family. The storage method, size of the bundles and identification marks are just as likely to have another explanation which could more likely be attributed to the movement of money in and out of the family to either fund Hewa’s drug dealing or to represent the proceeds thereof.

[ 20 ] In that respect I find it relevant that it was a drug-sniffing dog that “indicated on the safe” where the funds were held, even though, when tested, there were no actual drugs found inside the safe.

[ 21 ] I also reject the assertion by the respondent family that they “saved all their money” and lived well below the poverty line in order to amass almost $140,000 between 2002 and early 2009. The father’s enterprise in buying and selling used vehicles during that period, as well as the fact that he and two of his adult sons flew to Europe for an extended vacation in 2008 persuades me that the family was living well above its declared means of government and support, disability benefits and some of the children’s part-time work wages.

[ 22 ] Lastly, the evidence persuades that the respondent family has entirely misrepresented its financial circumstances. That finding is consistent with the family misrepresenting to their subsidized housing, as well as to the Ontario Disability Support Program, what were their actual accumulated assets and sources of income.

[ 23 ] The Ontario Disability Support Program Act , 1997, S.O. 1997, c.25, s.5(1)(c) imposes strict asset limits on recipients. A single person may only possess accumulated assets worth $5,000. A person with a spouse may possess accumulated assets of $7,500. Each additional child may possess assets of $500. Recipients are required to declare all of their assets to the Program. Under this Program the Waledkhanis would have been allowed to have accumulated assets totalling only $14,500 in order that they be able to continue to receive the disability benefits that they had been receiving since 2005.

[ 24 ] It is obvious that in 2009 they had not disclosed to the subsidized housing or government disability assistance program that they had accumulated almost $140,000.00 which they kept, in cash, hidden in their residence. This non-compliance with the legislation and non-disclosure was fraudulent. The cash assets that they had accumulated and its non-disclosure evidences a fraud on those programs. In my view those funds could equally be found to be “property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity” (i.e: fraud), thus subject to forfeiture under the Civil Remedies Act .

[ 25 ] The family has not produced documentation as to its monthly expenses, its income or its banking practices, although the family members admitted (only under cross-examination), that they have all held (and continue to hold) actual bank accounts at their local bank, despite assertions by the parents at and after the time of the April 2009 seizure that they either don’t use, don’t trust or know how to use bank accounts.

[ 26 ] I also reject Mr. Van Buskirk’s argument that the fact there was only one fingerprint of Hewa’s inside the safe that it could have been placed there before 2007, (when Hewa was allegedly disowned and asked to leave the family home) or that it indicated that Hewa did not have regular access to the safe.

[ 27 ] It is entirely improbable that the single thumbprint inside the safe was over two years old. I find as a fact that that thumbprint establishes beyond doubt that Hewa was able to and did access the safe to either place money inside or to remove money from the family stash of cash to facilitate his drug enterprise.

[ 28 ] I also find that it is a reasonable inference and an inherent probability that at least Dara, the father, was complicit in (or at least wilfully blind to) Hewa’s ongoing criminal activities between 2005 and 2009.

[ 29 ] The fact that there was only one thumbprint of Hewa in the safe could equally lead one to infer that he had regular access to the money stashed under the bed in the suitcase more frequently than that which was kept in the safe.

The Law

Civil Remedies Act , 2001, S.O. 2001, c.28 (3) (i) and (viii) (i) set

[ 30 ] Ss. 3(1) and 8(1) of the Civil Remedies Act , 2001, S.O. 2001, c.28, set out that at the forfeiture stage of a proceeding there is only one threshold question to be decided. That question is whether the Attorney General has established, on a balance of probabilities, that the property in question is a proceed or instrument of unlawful activity.

[ 31 ] In this case the Attorney General argued that the currency seized qualifies as “an instrument of unlawful activity” because drug money can also be used to purchase more drugs for eventual resale and profit (see s.7(1) of the Civil Remedies Act and Ontario (Attorney General) v. Chow , [2003] O.J. No. 5387 (S.C.J.) ).

[ 32 ] If the court finds that the property seized is a “proceed” or an “instrument of unlawful activity” then the court shall make an order forfeiting the property, subject to the “legitimate/responsible owner” and “clearly not in the interests of justice” exceptions.

[ 33 ] The Attorney General can satisfy the test for a finding that the currency seized is a proceed of unlawful activity by establishing, on direct or circumstantial evidence, that the money was acquired from crime in general . The onus of proof is on the applicant.

Even 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 .

Ontario (Attorney General) v. Chatterjee , 2009 SCC 19 () , [2009] S.C.J. No. 19 (S.C.C.) (my emphasis)

[ 34 ] Convictions on criminal charges are not required in order for the court to find that property is “a proceed of unlawful activity”. Proceedings under the Civil Remedies Act do not need to establish the fault of a person; only that the property is proceeds or an instrument of unlawful activity. For the purpose of a proceeding under the Civil Remedies Act , an offence may be found to have been committed even if no person has been charged with that offence; if a person was charged with the offence but the charge was withdrawn or stayed; or if the person was acquitted of the charge (see Ontario (Attorney General) v. Chatterjee , 2007 ONCA 406 () , [2009] S.C.J. No. 19 (S.C.C.), 2007 O.J. No. 2102 (C.A.)).

[ 35 ] “Unlawful activity” is defined as “any act or omission that is an offence under an Act of Canada, Ontario or another province or territory of Canada”. (see Civil Remedies Act , 2001, S.O. c. 28, s. 2 and 7)

[ 36 ] It is based on ss. (2) and (7) of the CRA that I find that even if the funds seized on April 9, 2009 could not be found on a balance of probabilities to be directly or circumstantially the result of Hewa’s drug dealing (a finding which I do , indeed make), the family’s fraudulently withholding disclosure of the existence of such a large asset (except for $14,500 to which they were, by law, entitled) to the Ontario Disability Support Program is “property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity” since it represents an “omission” under “an Act of Canada, Ontario, ...”.

[ 37 ] The standard of proof in proceedings under the Civil Remedies Act is the civil standard of proof on the balance of probabilities (see Civil Remedies Act , 2001, S.O. 2001, c.28, ss. 16 and 17 , Chatterjee at para. 23 and Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor , 2011 ONCA 363 () , [2011] O.J. No. 2122 (Ont. C.A.) (8477 Darlington Crescent) at para. 54.

[ 38 ] The Chatterjee case also recognized that drug dealings are a cash business:

It is a well known fact that persons involved in illegal drug activity frequently are found carrying large sums of cash for the purpose of purchasing drugs or as proceeds from the sale of drugs. The suspicion that arises, therefore, calls for a credible and reasonable answer (para. 46).

[ 39 ] I am satisfied that on the facts of this case, the respondents have not offered an answer that is either credible or reasonable and that their explanation why they had such a large amount of cash, stashed secretly in their bedroom, is highly and inherently improbable.

[ 40 ] In the case of F.H. v. McDougall et al , 2008 SCC 53 () , [2008] 3 S.C.R. 41 at para. 33 “inherent probability or improbability of an event” was discussed by Lord Nicholls in In re H (Minors) (Sexual Abuse: Standard of Proof), [1966] A.C. 563 (H.L.), at p. 586 :

… the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established.

[ 41 ] Rothstein J. then observes at para. 40 that:

Like the House of Lords, I think it is time to say, once and for all in Canada, that there is only one civil standard of proof at common law and that is proof on a balance of probabilities. Of course, context is all important and a judge should not be unmindful, where appropriate, of inherent probabilities or improbabilities or the seriousness of the allegations or consequences. However, these considerations do not change the standard of proof.

and at paras 45-48:

45 To suggest that depending upon the seriousness, the evidence in the civil case must be scrutinized with greater care implies that in less serious cases the evidence need not be scrutinized with such care. I think it is inappropriate to say that there are legally recognized different levels of scrutiny of the evidence depending upon the seriousness of the case. There is only one legal rule and that is that in all cases, evidence must be scrutinized with care by the trial judge.

46 Similarly, evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of probabilities test. But again, there is no objective standard to measure sufficiency. … If a responsible judge finds for the plaintiff, it must be accepted that the evidence was sufficiently clear, convincing and cogent to that judge that the plaintiff satisfied the balance of probabilities test.

47 Finally there may be cases in which there is an inherent improbability that an event occurred. Inherent improbability will always depend upon the circumstances. …

48 Some alleged events may be highly improbable. Others less so. There can be no rule as to when and to what extent inherent improbability must be taken into account by a trial judge. As Lord Hoffman observed at para. 15 of In re B :

… Common sense, not law, requires that in deciding this question, regard should be had, to whatever extent appropriate, to inherent probabilities.

It will be for the trial judge to decide to what extent, if any, the circumstances suggest that an allegation is inherently improbable and where appropriate, that may be taken into account in the assessment of whether the evidence establishes that it is more likely than not that the event occurred. However, there can be no rule of law imposing such a formula.

[ 42 ] I find that, on all of the evidence amassed by the Crown in this case when compared and contrasted against the respondent family’s assertions, their various attempts to explain away the Crown’s clear, convincing and cogent evidence are replete with glaring inconsistencies and inherent improbabilities.

[ 43 ] I accept the Attorney General’s submissions, evidence and inferences as set out at para 86 of Mr. Phelan’s Factum as follows:

“86. The Attorney General relies on the following evidence and inferences from the evidence:

• The currency was seized by police pursuant to a Controlled Drugs and Substances Act search warrant from a secret location in a residence in which police found a digital scale;

• The target of the warrant has a criminal record for dealing drugs dating to 2005;

• The majority of the currency was found in a locked safe which a drug detector indicated on;

• The drug dealer’s fingerprint was imprinted on the inside door of the safe;

• The storage, building and denominations of the currency are consistent with the money being the proceeds of drug trafficking

• None of the residents of the home advised the police executing the warrant that the money was their legitimate savings;

• Drug dealing is a cash business;

• Detective Constable Peter Currie’s expert opinion;

• Inconsistencies and gaps in the Respondents’ evidence, particularly in respect of:

(1) The claim that Hewa did not live at the residence – contradicted by police surveillance, text messages obtained from Hewa’s phone, and statements made by family members to the attending police officers executing the warrant;

(2) The claim that the family has made every sacrifice to save money – contradicted by the evidence of multiple car ownership and family vacation to Europe

(3) The origin of the cash – Dara and Qamarnaz add a new explanation in their affidavits (not made in their statement to police in 2009) that they saved $50,000 in cash from summer employment during 2002 and 2003 (no documentation provided)

(4) The claim that Dara and Qamarnaz disowned Hewa – contradicted in their own statements to police in 2009; contradicted by text messages obtained from Hewa’s phone; and contradicted by evidence at cross-examination that Dara gave two motor vehicles to Hewa in the year prior to his 2009 arrest

(5) The claim that they continue to save money since 2009 – no documentation produced to substantiate any actual savings

(6) That they don’t trust banks because of their experience in Iraq – contracted by their admissions at cross-examination that they have maintained bank accounts since coming to Canada

(7) No explanation given as to how or why they exceeded the ODSP asset accumulation limit”

(8) No disclosure of large cash assets to subsidized housing. (my addition)

[ 44 ] Accordingly, I find that it is indeed in the interests of justice that all of the funds seized on April 9, 2009 be forfeited to the Crown and that the legitimate/responsible owner exception does not apply in this case.

Order

[ 45 ] The application meets the requirements of the Act . Thus I am bound to order forfeiture as sought. I therefore grant an order of forfeiture of all of the money seized by the police on April 9, 2009 to the Crown pursuant to s. 3(1) and s. 8(1) of the Act .

[ 46 ] Counsel did not address the issue of costs during their submissions. Therefore, if counsel cannot agree that costs should follow success and the quantum of same, I will accept brief (less than four pages) written submissions and a costs outline from Mr. Phelan within 20 days of the release of these Reasons, followed by Mr. Van Buskirk’s brief (less than three pages) response within 10 days thereof. Mr. Phelan may briefly reply thereto within 5 days.

G.A. Campbell J.

Released: December 21, 2012

COURT FILE NO.: C-974-09
DATE: 2012-12-21

ONTARIO SUPERIOR COURT OF JUSTICE
Attorney General of Ontario – and – $138,650 In Canadian Curreny ( In REM )

REASONS FOR JUDGMENT

G.A. Campbell J.

Released: December 21, 2012

/lr