OSHAWA COURT FILE NO.: CV-12-77145

DATE: 20130410

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE ATTORNEY GENERAL OF ONTARIO

Applicant

– and –

20 STRIKE AVENUE, BOWMANVILLE, ONTARIO (PIN # 26932-0115(LT)) and a 2005 DODGE MAGNUM (VIN# 2D4GV58255H680471) (IN REM)

Respondent

Sandra Nishikawa, for the Applicant

Bernard F. O’Brien, for the Respondents

HEARD: March 6, 2013

McCARTHY J.

[1] This is an application by the Attorney General of Ontario (the “AG”) under s. 8 (1) of the Civil Remedies Act, 2001, S.O. 2001, c. 28 (the “Act”), for an order for forfeiture of the real property municipally known as 20 Strike Avenue, Bowmanville, Ontario (the “property”) and an order for forfeiture of a 2005 Dodge Magnum motor vehicle bearing VIN # 1N4BL11E63C205315 (the “vehicle”). Both the property and the vehicle were the subject matter of a preservation order made on March 23, 2102, pursuant to s. 9(1) of the Act pending the hearing of this application.

The Legislation

[2] The relevant portions of the Act are set out below:

…Forfeiture Order

8 (1) In a proceeding commenced by the Attorney General, the Superior Court of Justice, shall, subject to subsection (3) and except where it would be clearly not be in the interests of justice, make an order forfeiting property that is in Ontario to the Crown in right of Ontario if the court finds that the property is an instrument of unlawful activity. [Emphasis added].

…Responsible Owners

8 (3) If the court finds that the 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.

…No limitation period

8 (5) There is no limitation period for a proceeding under the section.

[3] The parties agree that the application is in rem against the subject property and vehicle and that the civil standard of proof applies. I note as well that there is no prescribed de minimus threshold for the subsection to apply. There is no requirement for a conviction to have been entered in respect of any particular charge. No infractions are specifically incorporated in the scope of the subsection; nor are any specifically excluded. The term “unlawful activity” is conspicuously employed in the singular. The court is obligated to make a forfeiture order in the absence of a clear finding that such an order would not be in the interests of justice.

The Purpose of the Act

[4] The purpose of the Act is clearly enunciated in s. 1:

The purpose of the Act is to provide civil remedies that will assist in,

(a) Compensating persons who suffer pecuniary or non-pecuniary losses as a result of unlawful activities;

(b) Preventing persons who engage in unlawful activities and others from keeping property that was acquired as a result of unlawful activities;

(c) Preventing property, including vehicles as defined in Part III.1 , from being used to engage in certain unlawful activities; and

(d) Preventing injury to the public that may result from conspiracies to engage in unlawful activities.

[5] The Supreme Court of Canada has stated that the “pith and substance” of the Act is “….to require the disgorgement of financial gains from unlawful activity, to compensate victims, and to suppress conditions leading to unlawful activity by removing financial incentives:” Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] 1 S.C.R. 624, at para. 12.

The Positions of the Parties

[6] The AG argues that the registered owners of the property (Roger Parker) and the vehicle (Deborah Parker) have failed to prevent the property and the vehicle, respectively, from being used repeatedly by Fred Parker to engage in unlawful activity. Thus, they cannot demonstrate that they are “responsible owners” within the definition of the Act; nor can they demonstrate that forfeiture would clearly not be in the interests of justice. Moreover, an order for forfeiture would further the purposes of the Act.

[7] The Respondents concede that the property and the vehicle could be considered instruments of unlawful activity. They argue, however, that the court should consider the limited degree of involvement of the property, the vehicle, and the Respondents in the unlawful activity in considering the interests of justice. They also argue that both the Respondents should be found to be responsible owners for the purposes of s. 8(3). Moreover, the combination of all relevant facts should lead the court to conclude that forfeiture in this case is clearly not in the interests of justice.

Unlawful Activities

[8] I have no hesitation in finding that both the property and the vehicle have been instruments of unlawful activity within the meaning of s. 8 of the Act. The arrest and conviction of Fred Parker in 2011 stemmed from searches of his person while he was operating the vehicle, and searches of the property while he was its principal resident. The searches revealed the presence of controlled substances, a prohibited weapon, and drug paraphernalia. On May 18, 2011, Parker pleaded guilty to possession offences. A search warrant executed at the property on July 2, 2010, uncovered some drug paraphernalia, eight grams of cocaine, thirty-three oxycodone pills, and five grams of cannabis resin. On July 20, 2010, Fred Parker pled guilty to possession for the purposes of trafficking (cocaine) and possession of a controlled substance (oxycodine). In March of 2006, undercover police operations and the execution of a search warrant resulted in the discovery of an indoor grow operation featuring marihuana plants and packaged marihuana, together with cocaine and other items, carrying a street value of more than $100,000. At various times then, both the property and the vehicle served to house, harbour, shelter, conceal, and transport the controlled substances or the prohibited weapons. Accordingly, under s. 8 of the Act, the property and the vehicle were instruments of unlawful activity. They should be forfeited unless the owners of the property and the vehicle are able to bring themselves within either the “responsible owner” exception [s. 8(3)] or the “interests of justice exception” [s. 8 (1)].

The “Responsible Owner” Exception, s.8 (3)

The vehicle

[9] I find that the owner of the vehicle can avail herself of this protection such that the application for forfeiture of the vehicle must fail. Deborah Parker offered a reasonable explanation as to why she had loaned the Dodge Magnum to her brother. She is an employee of her father’s company. She purchased the vehicle with her own funds. The vehicle remained in her name. It was insured. The vehicle was used partly for business purposes: it had the capacity to house and transport five foot long rolls of fabric manufactured by the business. The vehicle was made available for deliveries to and from Toronto. These deliveries were carried out by Fred Parker, but also by Roger Parker and sales manager Mike Norman. By 2011 when the vehicle was used by Fred Parker as an instrument of unlawful activities, she had owned the vehicle for approximately nine years. Deborah Parker denied being aware that Fred Parker was involved in drug activity in January 2011. She remained responsible for all maintenance and repairs of the vehicle throughout. Fred Parker was never issued his own set of keys for the vehicle. Finally, the record establishes a very small window of time in January 2011 when the vehicle was clearly being used as an instrument of unlawful activities. There was no evidence of a pattern or a history of vehicle use for unlawful activities of which the owner knew or ought to have known.

[10] The evidence therefore satisfies me that the owner of the vehicle, Deborah Parker, was a responsible owner at all material times. She has satisfied the onus of demonstrating to the court that she has done all that could reasonably be done to prevent the vehicle from being used to engage in unlawful activity. I consider it necessary, therefore, to protect the interest of the owner of the vehicle by dismissing the application for forfeiture as against the Dodge Magnum.

The property

[11] The property owner, Roger Parker, cannot, in my view, benefit from the protection in s. 8(3). I am not satisfied that he took reasonable steps to ensure that the property was not used as an instrument for unlawful activities. The onus of proof was on him to do so. He knew of Fred’s problems with substance abuse and the law. I cannot accept his evidence that he made regular visits to the property to determine if Fred Parker was again engaged in drug activity. I cannot accept his evidence that during these visits, the house was clean and free of drug paraphernalia. A single search warrant executed in July 2010 allowed police to find the house in disarray; a bag containing drugs was found on the kitchen countertop. More importantly, on at least two occasions prior to 2011, Roger Parker did in fact find out about unlawful activity by Fred Parker at the property. He must have realized, having learned of the enormous covert grow operation that Fred Parker operated under his very nose at 405 Lake Road, that Fred’s penchant for mischief and deceit demanded a special kind of supervision. There was a pattern of behaviour and a history of unlawful activity which, when taken together, demanded of the owner a higher standard of diligence and supervision. Yet, Roger Parker took no steps to terminate Fred Parker’s use of the premises; nor did he take the type of extraordinary measures (such as unscheduled or surprise visits) that a reasonably diligent property owner, in the circumstances, would undertake.

The “Interests of Justice” Exception, s. 8 (1)

[12] The question of forfeiture is not to be decided on a mere balancing of the pros and cons of making a forfeiture order. An order will not be made where it is clearly not in the interests of justice: s. 8(1). Courts have interpreted this provision of the Act as meaning that an order for forfeiture will not be made where it would be “manifestly harsh and inequitable.” As stated by Doherty J.A. in Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (in rem), 2011 ONCA 363, [2011] O.J. No. 2122 (C.A.), at para. 85,

…the word ‘‘clearly’’ modifies the phrase ‘interests of justice’ and must be given some meaning. I think the word “clearly” speaks to the cogency of the claim advanced for relief from forfeiture. The party seeking relief must demonstrate that, in the circumstances, the forfeiture order would be a manifestly harsh and inequitable result.

[13] The court in this case was reviewing the wording in s. 3(1), which deals with forfeiture of proceeds of crime. However, the phrase “clearly not in the interests of justice” is similarly employed in the subsection dealing with instruments of unlawful activity. Indeed, as noted by Thomas J. in Ontario (Attorney General) v. 51 Taylor Avenue, 2012 ONSC 6355, [2012] O.J. No. 5804, at para. 86, most of the considerations addressed by Doherty J.A. in respect of the “interests of justice” analysis under s. 3(1), continue to apply to “instrument” forfeiture under s. 8(1).

[14] One of the factors to consider in the “interests of justice” analysis is the property owner’s conduct as it relates to the unlawful activity. In 1140 Aubin Road, the Court of Appeal stated the following at para. 100:

Surely, a property owner who had no involvement in the criminal activity, was unaware of the activity, had acted reasonably throughout and did not profit from the activity, should as a matter of elementary justice, be treated differently on a forfeiture application from the property owner who was involved in and directly profited from the unlawful activity.

[15] In the case at bar, there was no suggestion that Roger Parker was complicit in, or profited from, the unlawful activities of his son, Fred Parker. I am not prepared to find that Roger Parker purchased the property for anything other than for his own purpose, using his own funds for a down payment and assuming the mortgage obligations. Although the AG made some suggestion to the contrary, I have no hesitation in concluding that Roger Parker was the sole and exclusive beneficiary of the property and that he purchased it because he operated a large factory and storage facility in the Bowmanville area. I also accept that Roger Parker legitimately rented the property to his son Fred, the perpetrator of the unlawful activity. I find that Fred Parker, prior to the events of 2010, was a legitimate employee of his father’s enterprise, Parker Brothers Textile Mills, and that this employment required him to attend at the Bowmanville site from time to time. For the reasons set out in the analysis under the “responsible owner” exception above, however, I am unable to conclude that Roger Parker acted as a responsible property owner throughout the history of the unlawful activities. Roger Parker’s conduct alone, therefore, is not sufficient to warrant him the protection of the “interests of justice” exception.

[16] The interests of justice exercise should also embody a review of all the relevant circumstances of a case. While the Act makes clear that there is no limitation period for the launching of an application, it is clear that the AG had grounds, as early as March 2006, to bring an application under the Act. Indeed, part of the grounds for the Application, as set out in paragraphs “y” through “dd,” were the unlawful activities that took place at the property in March 2006. These activities led to charges, which led to convictions in January 2008. The property became an instrument for unlawful activities again in 2010. Yet, the present Application was not launched until February 24, 2012, nearly six years after the unlawful activities were first discovered and more than four years after the conviction which followed. In my view, it is clearly not in the interests of justice to allow the Attorney General to bide its time in launching an application, while an unsuspecting owner of property continues to maintain his property and to use his own funds to pay down a mortgage obligation. In this case, Roger Parker’s own efforts served to enhance the equity in the property; yet, at the same time, he was unwittingly increasing the notional impact of the forfeiture on himself. He legitimately acquired the property back in 2001, partially financing its purchase by giving a $147,000 mortgage to the Canadian Imperial Bank of Commerce (CIBC). The court received evidence that the principal balance owing on the mortgage stood at $91,919.43 as at March 6, 2013. The property was listed for sale by the owner in February 2012 for $229,000. While no evidence was led of the increase in equity experienced by the property owner between 2006 and 2012, I take judicial notice of the fact that regular payments on a mortgage apply increasingly to principal as opposed to interest during any amortization period, thereby reducing the mortgage debt at an increased rate with every payment. Assuming average market value increases, the equity in the property would have grown considerably in the six years between 2006, when the AG first had grounds upon which it could apply for forfeiture under the Act, and 2012 when the present Application was issued.

[17] The Applicant could offer no explanation of the reason for the delay other than that prospective Applications were back-logged. I recognize that, in order to succeed on a forfeiture Application where the responsible owner of property exception in s. 8(3) might be invoked by a Respondent, a certain passage of time between the commission of the unlawful activity and the Application might be necessary in order to gauge the reasonableness of the property owner’s actions in the aftermath of identified unlawful activities. Yet, the Applicant did not present any evidence of this being a reason for the delay, nor was it even suggested as a reason in submissions. Moreover, the Applicant’s contention was that Roger Parker was already failing to act as a responsible owner as early as 2006. This was a time when Roger Parker was well aware of Fred Parker’s unlawful activities both at the property and at 405 Lake Road as a result of the police investigation, the arrest and charges, and Roger Parker’s own role as a surety for his son. The Applicant further contended that Roger Parker purchased the property for the benefit of his son, that he was at all times a nominal owner only and that he was aware of, and indeed facilitated, drug trafficking and criminal activity by allowing Fred Parker to use the property for those purposes. To the extent that any of that is true, it is obvious that the AG believed it to be true by March 2006, or a short time thereafter. In my view, in the absence of some adequate explanation, and notwithstanding the absence of a limitation period in the Act, it is clearly not in the interests of justice to permit the AG to delay the launching of an application beyond a reasonable period from the date when prima facie grounds for forfeiture existed especially where, as here, that period of delay coincides with a significant growth in the equity in the property, to the ultimate detriment of the legitimate property owner.

[18] In arriving at my conclusion in this case, I have borne in mind the words of Doherty J.A. in 1140 Aubin Road, at para. 96:

I do not, however, agree that the ‘interests of justice’ in s. 3(1) are limited to the purpose of the CRA identified in s. 1. Those purposes are part of, but cannot be equated with, the ‘interests of justice’. That phrase is a broad one and includes maintaining public confidence in the civil justice process. That confidence is promoted by orders that are, broadly speaking, in accord with the community’s sense of fairness. A forfeiture order made in circumstances where any reasonable person would regard the order as excessive, while perhaps serving the purposes of the CRA in the narrow sense, would do a real disservice to the administration of justice and thereby undermine rather than promote the ‘interests of justice’.

[19] I cannot imagine that reasonable members of the community would not find it troubling, perhaps even shocking, for a court to order forfeiture in these circumstances. Fairness requires a balancing of the competing interests of the Applicant and the property owner. An unexplained six year delay in bringing a forfeiture application under s. 8(1) of the Act, while an unsuspecting owner of property builds up his equity in a property for the benefit of the Attorney General, is unfair to the point of offensive. To grant forfeiture in these circumstances would, in my view, be a manifestly harsh and inequitable result.

Disposition

[20] For the reasons set out above, (i) the owner of the vehicle has satisfied me that she was a responsible owner, and (ii) it is clearly not in the interests of justice that forfeiture of the property should be ordered. The Application is therefore dismissed. If the parties are unable to agree on the issue of costs, they may contact the Trial Coordinator at Oshawa to arrange for an appointment to address that issue either by personal attendance or via teleconference on a date to be assigned.

McCARTHY J.

Released: April 10, 2013