COURT FILE AND PARTIES

COURT FILE NO.: CV-12-453536
DATE: 20130326

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ATTORNEY-GENERAL OF ONTARIO, Applicant

AND:

$51,000.00 IN CANADIAN CURRENCY (IN REM), Respondent

BEFORE: STEWART, J.

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

Eric M. Wolfman, for the Respondent,Ved Dhingra

HEARD: September 25, 2012

ENDORSEMENT

Nature of the Application

[1] In 2008, Ved Dhingra (“Dhingra”) was convicted of killing his wife, Kamlesh Dhingra (“Kamlesh”). Pursuant to the relevant provisions of the Criminal Code, Dhingra was found to be not criminally responsible for Kamlesh’s death due to his mental disorder. As a result, Dhingra was ordered to be detained in a psychiatric hospital until he was able to be released into the community.

[2] Dhingra claims entitlement to the proceeds of an insurance policy purchased in 1998 which provides for a payment to him as named beneficiary in the event of Kamlesh’s death. He also claims that the law firm of Osler, Wolfman is the legitimate owner of 25% of the insurance proceeds as a result of legal fees incurred in connection with his representation in prior civil proceedings, detailed below.

[3] The amount of $49,500.00 has been paid into court on application by the Scotia Life Insurance Company (“Scotia Life”) which issued the insurance policy. This present application by the Attorney General of Ontario is a request for an order of forfeiture of those funds under the Civil Remedies Act, 2001 (the “CRA”) to the Crown in Right of Ontario.

Background Facts

[4] The basic background facts of this matter are not in any serious dispute nor is the reliability and accuracy of the materials filed on this application which includes several comprehensive psychiatric reports and Ontario Review Board decisions.

[5] Dhingra emigrated to Canada from India with his wife and son Paul (“Paul”) in 1973. Their daughter Lina (“Lina”) was born following arrival in Canada.

[6] Dhingra worked variously as a real estate and insurance agent in Fort Erie. He later owned two hotels in the Belleville/Trenton area.

[7] In 1988, Dhingra began to show signs of escalating mental illness which ultimately resulted in the loss of his business and property. In 1993, Dhingra moved to Toronto on his own. Kamlesh stayed in Belleville, although it appears that the family remained in contact with Dhingra.

[8] In June 2005, Dhingra was found naked in the middle of Keele Street, speaking incoherently and trying to stop traffic. He was arrested by police and detained at the Centre for Addiction and Mental Health (“CAMH”) for observation and treatment. It was determined by Dhingra’s physicians that he had been schizophrenic for many years.

[9] On November 5, 2005, Dhingra was admitted to the York Central Hospital for treatment of a self-administered drug overdose.

[10] On May 6, 2006, Dhingra was found in Paul’s house with a severe, self-inflicted wound to his abdomen. He was admitted to the psychiatric ward at the York Central Hospital where he remained until June 9, 2006. Upon his release from hospital, Dhingra stayed with Kamlesh.

[11] In mid-June, 2006, Dhingra killed Kamlesh by striking her numerous times in the head with a white marble religious statue, rendering her unconscious, and stabbing her with a large knife approximately nine times on the left side of her neck and fifteen times in her left torso. Dhingra then took an overdose of several medications, lay down on the floor with his head on a religious statue, and lost consciousness. Dhingra was revived when Paul discovered both his parents.

[12] On June 16, 2006, Dhingra was arrested and eventually charged with second degree murder. On February 5, 2008, he was convicted of second degree murder but found not criminally responsible for Kamlesh’s death due to his mental disorder. Dhingra was ordered to be detained at the Whitby Mental Health Centre.

[13] Dhingra appeared several times before the Ontario Review Board for consideration for release before finally being released into the community on June 14, 2011, with treatment and supervision conditions.

[14] Dhingra is now 72 years old and resides in Toronto. His sole sources of income are from the Canada Pension Plan and Old Age Security, totaling approximately $1,600.00 per month. From this he must pay for the anti-psychotic drugs necessary for his treatment to prevent him from suffering any psychotic break from reality. Dhingra is subject to relapse if he is not compliant with his medication. He remains under the supervision of psychiatric personnel at CAMH.

[15] Dhingra continues to suffer from a major mental illness diagnosed as Schizo-Affective Disorder. There is no suggestion in the psychiatric assessments that this condition is curable, but it is controllable with appropriate medication.

The Insurance Policy

[16] On June 1, 1998, Dhingra purchased a life insurance policy from Scotia Life Insurance Company on his own life with Kamlesh named as beneficiary in the event of his death. For a modest extra premium, Dhingra extended coverage to the life of Kamlesh as an insured spouse. Dhingra is the sole beneficiary named under the policy in the event of Kamlesh’s death. Premiums were paid regularly in accordance with the terms of the policy.

[17] In May 2007, acting under power of attorney, for Dhingra, Paul submitted a claim on behalf of Dhingra to Scotia Life with respect to the policy’s proceeds.

[18] Although Scotia Life approved payment of the policy proceeds of $51,000.00, it did not pay out the funds. After Dhingra’s trial, Paul, as administrator of Kamlesh’s estate, requested that the proceeds be paid to her estate.

[19] Because of these competing claims to entitlement, Scotia Life brought an application to pay the insurance proceeds, less costs of $1,500.00, into court pending their determination.

[20] Dhingra then commenced an application to have the proceeds paid out of court to his benefit. Paul opposed this application on behalf of Kamlesh’s estate.

[21] The judge hearing Dhingra’s application concluded that payment of the insurance proceeds to Dhingra would be contrary to public policy and thus denied Dhingra’s application. She found that the public policy prohibition against benefitting from one’s own wrong doing was not limited to only those cases in which there was an actual intent to commit the activity. Consequently, she was of the view that the “not criminally responsible” finding attaching to Dhingra did not operate to soften the public policy consideration so as to permit him to Benefit by receiving the insurance proceeds.

[22] Dhingra appealed this decision to the Ontario Court of Appeal. On April 24, 2012, the decision of the application judge was reversed. In its reasons, the Court of Appeal concluded that the public policy rule prohibiting persons from benefitting from their own wrongdoing does not prevent a person found not criminally responsible on account of mental disorder from taking under an insurance policy. The Court of Appeal ordered that the proceeds deposited with the court be paid to Dhingra’s counsel in trust for his benefit.

[23] However, the Court of Appeal further stated that its determination did not preclude the Attorney-General from proceeding under the Civil Remedies Act for the relief now sought. Accordingly, the Court of Appeal stayed the implementation of its order to permit the Attorney-General to consider whether or not to commence proceedings and seek to preserve the money under the Civil Remedies Act.

[24] This application has now been brought by the Attorney-General. Although not a party, Paul supports the position of the applicant. The insurance proceeds in question are subject to a preservation order, and remain in place and undistributed pending the determination of the issue raised herein.

Issue

Should the proceeds of the Scotia Life insurance policy on the life of Kamlesh Dhingra be forfeited to the Crown under the Civil Remedies Act?

Law and Discussion

[25] The Civil Remedies Act (“the Act”) provides a statutory regime under which the Attorney-General may bring in rem proceedings in Superior Court against property. The statutory framework is independent of the common law and public policy rules that were at issue before the Court of Appeal. As noted by the Court of Appeal, each regime operates in its own separate sphere.

[26] Proceedings under the Act can be brought by the Attorney-General to preserve and ultimately forfeit property that is the proceeds of unlawful activity. Although the proceedings are against property and not individuals, individuals with an interest in the property at issue are permitted to respond and participate as Dhingra has done in this case. The question of whether any property is the proceeds of unlawful activity is to be decided on a balance of probabilities.

[27] If property is forfeited, funds are to be paid into a special purpose account in the consolidated revenue fund. Those funds can be used for designated purposes which include compensating direct victims of the unlawful activity.

[28] The Act provides that, except where it would clearly not be in the interests of justice, the court shall grant an order for forfeiture of property where a court finds that the Attorney- General has established that the property in question in Ontario is the proceeds of unlawful activity.

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

[30] The language of the Act is fairly comprehensive and sweeping in its definition of unlawful activity. Unlawful activity includes conduct that is found to be an offence under the Criminal Code, but may also include conduct that was not the subject of criminal prosecution.

[31] Section 17(1) of the Act provides that proof that a person was convicted, found guilty or found not criminally responsible on account of a mental disorder in respect of an offence is proof that the person committed the offence. It is evident that the Act contemplates the possibility that forfeiture of any proceeds of unlawful activity may result following a finding of not criminally responsible for the death of another person.

[32] To find that the killing of Kamlesh was not an offence under the Act because of the provisions of the Criminal Code which provide that non-culpable homicide is not an offence under the Code, as counsel for Dhingra submits, conflates the two statutes. As already noted, it is not strictly necessary for charges under the Criminal Code to have been laid at all for the provisions of the Act to be invoked. Indeed, a person so charged may have been acquitted in a criminal court and nevertheless face civil proceedings under the Act for forfeiture of property obtained as a result of the conduct.

[33] I must therefore conclude that the circumstances of this case are such that the Attorney-General has established on a balance of probabilities that the killing of Kamlesh by Dhingra, albeit while he was suffering from a serious and profound mental disorder, constitutes unlawful activity under the Act. Similarly, it follows that the insurance benefit payable as a result of her death constitutes proceeds of that unlawful activity. But for the killing of Kamlesh by Dhingra, the insurance proceeds would not have become payable to him.

[34] It is argued on Dhingra’s behalf that his case falls within the “interests of justice” exception provided for in s. 3(1) of the Act. Would the granting of the forfeiture order sought be clearly not in the interests of justice?

[35] It is common ground that the purpose of the Act is to assist in compensating individuals, municipal corporations and prescribed public bodies who suffer losses as a result of unlawful activities, preventing people who engage in unlawful activities and others from keeping property that was acquired as a result of those activities, preventing property from being used to engage in unlawful activities, and preventing injury to the public that may result from conspiracies to engage in unlawful activities.

[36] In essence, the Act creates a property-based authority to seize money and other things shown, on a balance of probabilities to be tainted by crime and thereafter to allocate the proceeds to compensating victims of and remedying the societal effects of criminality. The practical and intended effect is also to take the profit out of crime and to deter its present and would-be perpetrators (see Chatterjee v. Ontario (A.-G.), 2009 SCC 19, [2009] S.C.J. No. 19).

[37] Indeed, these principal objectives of the Act are set out in a document entitled “An Update on the Cost Remedies Act 2001” published by the Ministry of the Attorney-General. In that same document, an outline of case profiles is provided to illustrate the kinds of cases for which forfeiture had been sought and the results achieved as of July 31, 2007. It is therein asserted that “seventy-three per cent of (applications under the Act) have been drug-related”. Examples are given of forfeiture of real estate used as “grow-op houses” or “crack houses”. Other examples of property that was the subject of seizures and forfeiture orders include money from illicit drugs, securities and internet fraud and automobiles used in “street racing” incidents.

[38] In a follow-up “Backgrounder” document dated July 14, 2011, the Ministry of the Attorney-General provided a further list of examples of how the Act has been used. That list of property ordered to be forfeited includes biker clubhouses, crack houses, marijuana grow operations, street racing vehicles, guns (including a Uzi sub-machine gun) and a cross-bow.

[39] None of this is to say that the Act is restricted to application only in the instances described above. However, the material does provide some illustration of the focus of the efforts of the Attorney-General of Ontario since the Act came into force, the types of court orders made as a result and helps to illuminate the proper application of the “interests of justice” exception under the Act.

[40] In considering whether forfeiture would be clearly not in the interests of justice, the Court of Appeal for Ontario has held that forfeiture should not be granted where the party seeking relief from forfeiture has established that forfeiture would be “manifestly harsh” or “draconian”. The onus in that regard rests on the respondent. In order to determine whether the forfeiture would meet this test, among the factors to be considered are the role of the respondent in the unlawful activity, the disparity between the amount of the proceeds and the amount sought to be forfeited, and whether forfeiture would be consistent with the purposes of the Act (see: Ontario (Attorney-General) v. 8477 Darlington Crescent et al, 2011 ONCA 363, [2011] O.J. No. 2122 (C.A.)).

[41] It is important to note that this list of factors is not exhaustive. The appropriate factors to be considered in each case must be determined and weighed on a case-by-case basis. However, the relief available under s. 3(1) will be the exception, not the rule, and granted sparingly (see: Ontario (Attorney-General) v. 1140 Dubin Road, Windsor and 3142 Halpin Road, Windsor (in rem), 2011 ONCA 363, 2011 O.N.C.A. 363).

[42] The British Columbia courts have cited several helpful additional factors that may be taken into account in determining whether, under the counterpart statute of that province, forfeiture would be “clearly not in the interests of justice”. Among the factors considered appropriate to the determination of that issue are proportionality, fairness, the degree of culpability and/or complicity, knowledge, acquiescence, or negligence of the individual involved, the extent of the problem in the community of the sort of unlawful activity in question, the need to remove profit motive, the need for disgorgement of wrongfully obtained profits as well as, the need for compensation, prevention of future harm and general deterrence (see: British Columbia (Director of Civil Forfeiture) v. Rai, 2011 B.S.C.S. 186).

[43] All of the authorities agree that punishment is not a factor in the determination.

[44] Would forfeiture in this case be consistent with the purposes of the Act? Would the granting of the order sought here take the profit out of crime and deter its present and would-be perpetrators?

[45] There is no doubt but that Dhingra killed Kamlesh and that he was the sole instrument of her death. The forfeiture of the entire amount of the policy proceeds paid into court by Scotia Life is being sought by the Crown. Although the Crown did not move immediately to seek forfeiture, its delay is explained by the civil proceedings which ensued upon payment of the policy proceeds into court.

[46] This is not a case in which the insurance proceeds were the instrument of the crime, or payment directly received for committing the unlawful act, or the motive for the condct.

[47] Dhingra purchased the insurance policy on his own life some 8 years before Kamlesh’s death. Presumably this was to provide her with some financial assistance in the event of his death. It was only at the suggestion of an insurance broker that Kamlesh was added to the policy as an insured. This policy of insurance was kept in force by Dhingra over the years through payment of premiums. Payment to Dhingra of the policy proceeds upon Kamlesh’s death is a matter of contractual entitlement which, as the Court of Appeal has determined, is not prohibited by any rule of public policy.

[48] Dhingra was found not criminally responsible for Kamlesh’s death on the basis of extensive psychiatric evidence. There is no suggestion whatsoever that he was capable at the time of forming an intent to kill his wife, and certainly no evidence that the possible availability of the life insurance proceeds played any role in these events or his conduct. I fail to see how the granting of the order would serve to deter others in any general sense from doing what Dhingra did. The very essence of having been found not criminally responsible for the offence denotes an absence of awareness or understanding of its meaning or consequences. Any person who might replicate Dhingra’s actions would, by definition and by reason of mental disorder, be impervious to any caution a forfeiture order in this instance could provide.

[49] In its decision in the proceedings referred to in paragraph 22 above, the Court of Appeal relied upon earlier court authority which determined that the public policy rule against profiting from wrong-doing did not apply in cases of insanity (see: Nordstrum v. Baumann, 1961 51 (SCC), [1962] S.C.R. 147; Re Dreger (1986), 1976 713 (ON SC), 12 O.R. (2d) 371). The Court of Appeal further stated that not only was there no reason not to apply this earlier authority to Dhingra’s case, developments since 1976 have only strengthened the policy basis for making an exception to the rule for persons found not criminally responsible for unlawful conduct. Reforms to our Criminal Code relating to the disposition of mentally ill offenders (see: Winko v. British Columbia (Forensic Psychiatric Institute), 1999 694 (SCC), [1999] 2 S.C.R. 625), as well as approaches taken by other common law jurisdictions to this issue demonstrate a general trend to exempt persons with a mental disorder that would give rise to an insanity defence from the effect of the public policy rule.

[50] The development of the law alluded to by the Court of Appeal demonstrates a growing awareness of the nature of mental illness and the lack of moral blameworthiness that attaches to the conduct of mentally ill offenders. It is not, I believe, an overstatement to consider Dhingra to be a victim of the manifestation of his illness in violent action.

[51] In expressing the view that the Act did not affect the Court of Appeal’s determination of the issue, Rosenberg, J.A. stated:

I accept that the Civil Remedies Act is an indication that public policy in Ontario favours preventing persons from profiting from their crimes and that, given the provisions of s. 17, the policy extends to persons found not criminally responsible by reason of mental disorder. In my view, however, the Act does not supplant the common law rule of public policy that does not prevent an NCR accused from taking under an insurance policy or a will. At its highest, the Act indicates that the rule ought not to be applied automatically. The common law rule and the Act serve different functions. The common law rule simply prevents the wrongdoer, however defined, from receiving the proceeds of the insurance policy or the will. In many cases, that would mean that the funds would be available either to a secondary beneficiary in the case of an insurance policy, if one is named, or to other beneficiaries, in the case of a will.

A forfeiture order made under the Act, however, deprives everyone, including other beneficiaries, of the proceeds because the proceeds are forfeited to the Crown. A more compelling expression of public policy would be for the legislature to reverse the effect of the public policy that permits the NCR accused to take under a will or insurance policy by deeming the accused to have predeceased the victim. Such a provision would result in the proceeds usually ending up in the estate of the victim for the benefit of beneficiaries other than the accused.

Thus, there are competing public policies. On the one hand, the common law, reinforced by the policy as explained in Winko, is that an NCR accused is neither morally or legally responsible for the death and therefore should be entitled to take under an insurance policy in which he or she is a beneficiary. On the other hand, there is the reflection of the public policy in the Act favouring the view that proceeds of crime in the hands of an NCR accused may be forfeited to the Crown.

In my view, the way to reconcile these competing policies is to allow the common law and the Act to each operate in their own spheres. That the legislature has so recently turned its mind to the question of criminals profiting from their crimes and not sought to wholly abrogate the common law rule suggests to me that the legislature intended to leave the common law rule intact. The legislature has expressed public policy in the province but limited forfeiture to applications made by the Attorney General.

[52] Dhingra is now an elderly psychiatric patient living alone in inexpensive rental accommodation in Toronto on very modest income from pension and old age security payments. He has no exigible property of any appreciable value. Legal representation was provided to him for the criminal and ensuing proceedings by Legal Aid or by amicus curiae appointed for that purpose. He is not named as a beneficiary under Kamlesh’s will which leaves whatever is in her estate to their two children. Although need is not a consideration for the purposes of applying the exemption under the Act, I am of the view that Dhingra’s personal circumstances may be taken into account when determining the factors of proportionality and fairness which comprise part of the exercise of deciding what the interests of justice require in any individual instance.

[53] In interpreting and applying the exemption provided for in the Act, and with due regard to the exceptional nature of the relief sought, I am of the opinion that it would be manifestly harsh and therefore clearly not in the interests of justice to order the forfeiture to the Crown of the insurance proceeds which form the subject matter of this application.

[54] In view of this disposition, the alternative argument advanced on Dhingra’s behalf – that a portion of the proceeds of the insurance policy should be paid out to the law firm of Osler Wolfman LLP pursuant to s. 3(3) of the Act is rendered moot. Were I required to address the issue, I would not consider Osler Wolfman LLP to qualify as a “legitimate owner of the property” as provided for in the Act.

Conclusion

[55] For these reasons, the application is dismissed.

Costs

[56] If there is any request for costs arising out of this decision or any further order required, written submissions may be delivered to me within 30 days of the date of its release.

STEWART, J.

Date: March 26, 2013