ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 53725

DATE: 2013/04/16

BETWEEN:

Attorney General of Ontario

Dan Phelan for the Applicant

Applicant

• and -

714 Railton Avenue, London, PIN #0813-0834 (LT) (in rem) and Russell Kenneth Dowdle

Respondent

Malcolm Scott, for the Respondent

HEARD: September 12, 2012, supplementary written submissions dated March 14, 26 and 28, 2013

Justice H.A. Rady

Introduction

[1] The Attorney General of Ontario applies for an Order of forfeiture pursuant to Part III of the Civil Remedies Act, 2001 (CRA) with respect to 714 Railton Avenue, a single family home in London, Ontario, owned by Russell Dowdle. The applicant alleges that the property was used by Mr. Dowdle as a commercial marijuana grow operation.

[2] Pursuant to a plea arrangement made with the federal prosecutor, Mr. Dowdle pleaded guilty to production of marijuana contrary to the Controlled Drugs and Substances Act (CDSA) on December 20, 2006. He was ordered to pay a fine of $10,000 payable within 90 days.

The Evidence

[3] On February 24, 2006, members of the London Police Service Drug Unit executed a CDSA search warrant at 714 Railton Avenue, a home located in a residential subdivision of London.

[4] The applicant says that the house had security bars on some of the windows and one of its doors was an industrial-type heavy door with an industrial lock. A video camera had been installed on one side of the house and motion detectors were installed on the back of the house and inside the living room.

[5] After the police gained entry to the house, Mr. Dowdle was arrested for marijuana production. A charge of possession for the purpose of trafficking was later laid.

[6] Inside the home, officers discovered a reasonably substantial grow operation with 342 marijuana plants at different stages of growth, including 157 clones and about five and one-half pounds of marijuana bud.

[7] Grow equipment, including lights and ballasts, fans and filters were discovered. Two digital scales and what the police considered to be a debt list were also located. Marijuana seeds and zip lock bags of varying sizes containing various amounts of marijuana were found.

[8] Extensive modifications to the home’s electrical wiring had been undertaken as well as alterations to the duct work and venting system to permit the venting of marijuana odours. There was no hydro bypass, however. Modifications to the home’s water supply had also been made.

[9] As part of the criminal proceeding, an expert report dated September 27, 2006 was prepared by a detective in the drug unit. He considered that the grow operation was a large, two stage commercial operation and the quantum of marijuana seized was not consistent with personal use. He calculated the minimum value of the crops to be $42,750 to a maximum of $95,760. I pause here to note that the calculation of the value of marijuana is often a source of some controversy between the Crown and the criminal defence bar, but what seems clear is that police considered the marijuana to have a significant value.

[10] Mr. Dowdle was charged with offences under s. 7(1) (production) and s. 5(2) (possession for the purpose) of the CDSA, as well as possession of psilocybin. The Attorney General obtained restraint and management orders pursuant to ss. 4(1) and 14.1 of the CDSA against the property.

[11] As already noted, Mr. Dowdle pleaded guilty to production of a controlled substance and he received a substantial fine. The other two charges were withdrawn and the restraint and management orders were vacated. The equipment seized was also forfeited.

[12] This application was issued on September 23, 2009. Prior to that, preservation orders were made on April 3, 2007 and April 10, 2007. Filed in support of the application are affidavits of the investigating officers; an affidavit respecting electricity consumption at the property; and an opinion from Detective Barry Smith of York Regional Police who concluded that the property was used as a commercial grow operation possibly yielding 60 pounds of marijuana and profits of $120,000 yearly (assuming a two stage grow with six crops annually). The value of the projected yield from the plants and harvest seized (12,181 grams) ranged from $54,360 to $121,810.

[13] Detective Smith deposed that the plants and harvest seized could not be for personal use. He considered that this represented an eleven year supply, assuming heavy daily consumption of five to ten cigarettes (or three grams) per day. He said that a typical user would not be expected to have a supply of more than several days to two weeks.

[14] The London Hydro records show the average monthly electricity consumption per calendar year from 1993 to 2010. There is a marked increase in consumption in 2002 through 2005. Detective Smith, who is also a licensed electrician, noted the various electrical hazards in the home, which created shock and fire risks.

[15] Mr. Dowdle delivered responding material in which he has deposed that he had been growing marijuana for one year, he had harvested only one crop, and it was grown for his personal use only. He disputed the police tally and description of the plants seized and suggested that at least 190 of the plants were less than two inches tall and had virtually no value.

[16] He deposed that the video camera at his home, described by the police, was a fake camera purchased at Radio Shack, but with an authentic appearance in order to deter break-ins. Similarly, he says that the security bars and motion sensor lights were “unordinary [sic] steps taken by any property owner to prevent potential problems”. He denied altering the electrical or water systems in the house.

[17] He also filed an affidavit from Eric Nash, a co-owner of two Canadian medical marijuana businesses, who concluded that the operation was small and unsophisticated. He considered that the amounts grown are consistent with Mr. Dowdle’s consumption and to secure a long-term personal supply. He considered that if properly stored, the marijuana would have a “shelf life” (my term) of two years. Mr. Dowdle deposed that he smoked three to five grams daily and prior to beginning his grow experiment, he purchased and smoked about three pounds yearly.

[18] He says that he did not sell the marijuana or receive money for it. He denied the paper seized was a debt list but rather it was for a football pool he organized for friends and involved “a couple of dollars here and there”, from .50 cents to $18.

[19] Mr. Dowdle purchased the property for $121,400 in 1989 with a down-payment of $34,000 and mortgage of $87,400. The mortgage was discharged in 2000. He says that he received financial assistance from his mother from 1998 to 2000 which allowed him to reduce his mortgage debt to $35,000. An inheritance following his mother’s death in 2000 permitted him to retire his mortgage. Mr. Dowdle has produced an opinion of a real estate agent from 2010 suggesting that the home has a value of between $190,000 and $210,000 and “depending on the interior condition and mould reports, the stigma alone of a property being deemed “FORMER GROW-OP” can decrease the value of a property by between 15 to 20%”.

[20] Mr. Dowdle has also deposed that when he pleaded guilty, the federal prosecutor advised that there would be no forfeiture proceedings and that his criminal defence lawyer would not have recommended a guilty plea had it been understood that this civil remedy would be pursued. I quote from Mr. Dowdle’s affidavit:

At the time of the guilty plea, I was advised by my lawyer that there would be no further forfeiture proceedings against me. I am advised by Michael Barry and verily believe that when he negotiated my guilty plea with the Attorney General of Canada that he was advised that there would be no further forfeiture proceedings against me or the subject property. I am advised by Mr. Barry and verily believe that he would not have recommended to me to plead guilty to the charges if a further forfeiture application was a possibility.

[21] There is no affidavit from his criminal defence lawyer nor from the federal prosecutor.

[22] However, Detective Rafiq Bhabha (formerly of the London Police Service) who swore an affidavit in support of this application deposes as follows:

...Following the conclusion of the criminal proceedings, I spoke with Crown Counsel O’Malley who advised that no agreement was reached with Mr. Dowdle regarding the residence located at 714 Railton Avenue, London, Ontario. Further that no agreement was made concerning the forwarding of information to other government agencies. I advised O’Malley that I would be forwarding this file to CRIA and O’Malley did not object to the submission.

[23] Mr. Dowdle was cross-examined on his affidavits. He was questioned about his evidence respecting the plea. I reproduce the following passages from the transcript as follows:

BY MR. PHELAN:

Q. I’m going to come back to that topic for some more questions. I just want to save them for a little later on. Paragraph 29 of your affidavit, you talk about Michael Barry who’s a defence lawyer in London

A. Yes.

Q. He was your lawyer?

A. Yes.

Q. Throughout the proceedings?

A. Yes.

Q. And he negotiated the guilty plea?

A. Yes.

Q. When you say, “I am advised by Michael Barry and verily believe that when he negotiated my guilty plea with the Attorney General of Canada, “when did Mr. Barry advise you? What do you mean, “I am advised by Michael Barry”, when were you advised by Michael Barry, at the time of the guilty plea?

A. Yes.

Q. Have you spoken to him since then?

MR. SCOTT: I’ve spoken with him since then.

THE DEPONENT: I haven’t.

BY MR. PHELAN:

Q. You haven’t?

A. No.

MR. PHELAN: This might be a case of where the lawyer’s typing up the affidavit and that’s fine.

MR. SCOTT: No, but it says I was advised by my lawyer, sorry, yes, you’re right. This is probably me typing up the affidavit, yes.

BY MR. PHELAN:

Q. Okay. So, you haven’t spoken to Michael Barry since...

A. No, I haven’t.

Q. ...the criminal charges were settled?

A. No, I haven’t. That’s correct.

[24] There was undoubtedly some sloppy drafting of Mr. Dowdle’s affidavit but the essence of his position is that had he appreciated that his home might be subject to forfeiture in future, he would not have pleaded as he did. In the circumstances, I do not draw an adverse inference from the failure to provide evidence from Mr. Barry.

[25] The circumstances surrounding the guilty plea were of concern to me and as a result, a transcript of the proceedings before Justice A.R. Webster on December 20, 2006 was ordered. It reveals the following submissions made by the federal prosecutor to the court in support of the joint submission on sentence:

MR. O’MALLEY: I – this is a case where the residence was restrained. It was restrained based on the different valuation and restrained based on some income information that was available at the time. My friend has provided me today with a number of documents that explain on the – previously unexplained sources of wealth which if not explained would have led us to proceed with the forfeiture application for the house.

THE COURT: Is there a formal application in front of the court?

MR. O’MALLEY: There’s no formal application.

THE COURT: No.

MR. O’MALLEY: There won’t be but I’m going to have to get an order from you to unrestrain the house.

THE COURT: All right.

MR. O’MALLEY: Which I’ll have to draft and give to the clerk.

THE COURT: Well, an order will go unrestraining that to – cease any restraining on the house.

[26] Justice Webster in accepting the joint submission noted as follows:

I will accept the joint submission and I will fine you $10,000. I will give you 90 days to pay it. And your grow equipment is to be forfeited to the Crown and we have the Crown’s undertaking with respect to registering a cessation of the request for – what is it?

MR. O’MALLEY: It’s basically to unrestrain...

THE COURT: The residence.

MR. O’MALLEY: To vacate the restraint order.

[27] I arranged for a copy of the transcript of the plea and sentencing hearing to be sent to Mr. Phelan and Mr. Scott and I asked for their submissions in writing as to whether the sentencing hearing altered their positions.

[28] I received Mr. Phelan’s submissions on March 14, 2013, Mr. Scott’s submissions on March 26, 2013 and Mr. Phelan’s reply on March 28, 2013, all of which I have reviewed.

[29] The applicant’s position remains that it is legally entitled under the CRA to seek forfeiture of the property. It makes the following points:

• proceedings under the CRA are not barred where property is not the subject of a criminal forfeiture proceeding and where there is no judicial finding with respect to the status of the property in the criminal proceedings, an approach that finds support in Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] S.C.J. No. 19. In that case, the court made this observation: “[W]here no forfeiture is sought in the sentencing process, I see no reason why the Attorney General cannot make an application under the CRA. Where forfeiture is sought and refused in the criminal process, a different issue arises.”

• the forfeiture was not sought in the criminal proceedings and the Crown advised the court that no formal application to forfeit the home was before the court;

• the lifting of the restraint was incidental to the plea agreement and not the result of a judicial determination on the merits of a forfeiture application in the criminal proceeding;

• the applicant reiterates that no agreement was reached between the federal Crown and the defence respecting forfeiture and no assurances were made by the federal Crown regarding the submission of the case to the applicant for a CRA proceeding.

[30] Mr. Scott, on behalf of the respondent, submits as follows:

• a federal forfeiture application was contemplated by the federal prosecutor at the time of the plea bargain, and based on information it had obtained and because of the plea deal, it decided not to pursue one;

• the Attorney General of Ontario should be bound by the plea bargain – in essence, there is an issue estoppel, an argument referred to by the court in Chatterjee (supra) in which Justice Binnie observed “that the various doctrines of res judicata, issue estoppel and abuse of process are adequate to prevent the prosecution from re-litigating the sentencing issue”.

• a plea bargain entered into by the Crown is binding on both provincial and federal Crowns, as contemplated by the concept of the “indivisibility of the Crown” and several cases said to stand for this proposition are cited;

• it is not in the interests of justice to permit the Crown to “renege on a plea bargain” and re-litigate “a matter that was resolved by way of plea bargain”;

[31] Mr. Phelan makes these submissions in reply:

• the doctrine of issue estoppel does not apply because the issues are not the same, there is no prior final judicial decision and the parties are not the same. It relies on the decision of the Court of Appeal in Ontario (Attorney General) v. 1140 Aubin Road, Windsor, 2011 ONCA 363 (to which I will return below and which I will refer to as the Darlington Crescent decision);

• the provincial attorney general in a CRA proceeding and the federal Crown in a criminal prosecution are not “indivisible” and the cases relied upon by the respondent are distinguishable.

The Law

[32] The Crown in this proceeding does not argue that the house was obtained from the proceeds of sale of marijuana (see s. 3 of the CRA). It relies instead, on s. 8(1) of the Act which provides as follows:

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

[33] Instrument of unlawful activity defined in s. 7 to mean:

...property that is likely to be used to engage in unlawful activity that, in turn, would be likely to or is intended to result in the acquisition of other property or in serious bodily harm to any person, and includes any property that is realized from the sale or other disposition of such property;

[34] Unlawful activity is defined as:

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

(b) ...an offence under an Act of a jurisdiction outside Canada, if a similar act or omission would be an offence under an Act of Canada or Ontario if it were committed in Ontario whether the act or omission occurred before or after this Part came into force.

[35] S. 7(2) further provides:

For the purpose of the definition of “instrument of unlawful activity” in subsection (1), proof that property was used to engage in unlawful activity that, in turn, resulted in the acquisition of other property or in serious bodily harm to any person is proof, in the absence of evidence to the contrary, that the property is likely to be used to engage in unlawful activity that, in turn, would be likely to result in the acquisition of other property or in serious bodily harm to any person.

[36] S. 8(3) provides as follows:

If the court finds that property is an instrument of unlawful activity and a party to the proceeding proves that he, she or it is a responsible owner of the property, the court, except where it would clearly not be in the interests of justice, shall make such order as it considers necessary to protect the responsible owner’s interest in the property.

[37] Finally, responsible owner is defined as:

“responsible owner” means, with respect to property that is an instrument of unlawful activity, a person with an interest in the property who has done all that can reasonably be done to prevent the property from being used to engage in unlawful activity, including,

(a) promptly notifying appropriate law enforcement agencies whenever the person knows or ought to know that the property has been or is likely to be used to engage in unlawful activity, and

(b) refusing or withdrawing any permission that the person has authority to give and that the person knows or ought to know has facilitated or is likely to facilitate the property being used to engage in unlawful activity;

[38] The applicant bears the onus of proof on a balance of probabilities. If the court is satisfied that the property is an instrument of unlawful activity that resulted in the acquisition of other property, then the property is forfeited, subject to the “responsible owner” and “clearly not in the interests of justice” exceptions.

[39] With respect to the interplay between the federal Crown in a criminal proceeding and the provincial Crown in a CRA proceeding, the court in Chatterjee (supra) recognized the potential for problems; hence, the court’s comments about res judicata, issue estoppel and abuse of process.

[40] The Court of Appeal decision in the Darlington Crescent case (supra) is also instructive. It involved the forfeiture of four properties under the CRA following criminal proceedings. Charges of cultivating and trafficking in marijuana had been laid against two individuals, Mr. Do and Ms. Tran, after police discovered a marijuana grow operation at a home owned by Ms. Tran (the Atwater property). Mr. Do pleaded guilty to both charges, and the charges were withdrawn against Ms. Tran. Mr. Do told the sentencing judge that Ms. Tran had no involvement in the grow operation, and that he never told her that he had moved marijuana plants and equipment into her home. After the criminal proceedings, the Attorney General commenced a civil forfeiture application against the Atwater property. The judge hearing the application concluded that the forfeiture application against Tran’s home, following the guilty plea and the withdrawal of criminal charges against Tran, created an appearance of unfairness. This was one factor that she considered in exercising her discretion to relieve from forfeiture in the interests of justice. The Court of Appeal upheld the application judge’s decision to relieve against forfeiture of the Atwater property but did not agree with her with respect to the appearance of unfairness as a relevant factor in the exercise of discretion.

[41] It observed:

I see no unfairness in the bringing of the application. The federal Crown, responsible for the drug prosecution, chose not to prosecute Ms. Tran. The provincial AG, responsible for the operation of the CRA, chose to pursue a forfeiture order. The AG’s claims did not depend on demonstrating, to any standard of proof, that Tran was complicit in any criminal activity. The AG’s decision to pursue a forfeiture claim can hardly be described as arbitrary or unfair when, under the terms of the legislation, the AG established a prima facie entitlement to the forfeiture order, subject to the “interest of justice” exception in s. 3.

[42] The Court of Appeal also held that the Attorney General was not estopped from bringing the forfeiture application noting:

Counsel submits that the federal Crown in the criminal prosecution and the provincial AG in these proceedings are “indivisible” and that the decision made by the federal prosecutors not to pursue a forfeiture order in the criminal proceedings is binding on the provincial AG in this proceeding. Counsel cites no authority for this proposition.

The submission cannot survive the analysis in Chatterjee. In the course of discussing the potential intersection of proceedings under the CRA and forfeiture applications in the course of sentencing proceedings, Binnie J., after recognizing the possibility of abusive re-litigation of factual issues, said, at para. 39:

...but where no forfeiture is sought in the sentencing process, I see no reason why the Attorney General cannot make an application under the CRA. Where forfeiture is sought and refused in the criminal process, a different issue arises.

[43] The Court’s decision contains an extensive discussion of the relief from forfeiture aspect of a proceeding under the CRA. I will return to it under the analysis in this case of whether Mr. Dowdle has established his entitlement to such relief.

Analysis

[44] The fact that the property was used in the past to engage in unlawful activity that resulted in the acquisition of other property, is proof that it is likely to be used again for that purpose, except if there is evidence to the contrary, to paraphrase s. 7 (2). Put another way, s. 7(2) creates a rebuttable presumption.

[45] It is necessary therefore to determine whether the property was used for unlawful activity resulting in the acquisition of other property.

[46] In my view, the fact that Mr. Dowdle pleaded guilty to production of marijuana contrary to the CDSA, is proof that the property was used for unlawful activity. To hold otherwise would be to permit a collateral attack on the plea.

[47] Did it result in the acquisition of other property?

[48] This requires a consideration of Mr. Dowdle’s assertion that he had only grown marijuana for one year and it was grown for his personal consumption. Simply put, this evidence is not credible and should be rejected. First, the hydro records, which show an increase in the consumption of electricity, support the inference that this operation had been carried on for at least four years. In cross-examination, Mr. Dowdle conceded the accuracy of the hydro records.

[49] Second, there is too great a volume of marijuana to support such a conclusion. Detective Bhabha deposed that the sheer amount of processed bud, the packaging in individual bags, the presence of scales and the debt list are common to a trafficking operation. Detective Smith spoke of the value of the seized marijua