COURT FILE NO.: CrimJ (F) 1681/12
DATE: 2013/11/26
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: R. v. Tan Tien Nguyen
BEFORE: Ricchetti, J.
COUNSEL: R. McGuirl and M. Rahman, for the Crown
R. Barrs, for Mr. Nguyen
K. Scoffield for Ha Thu Tran
M. Mancini for the Bank of Nova Scotia
HEARD: September 26, 2013
FORFEITURE APPLICATION AND SENTENCING
Contents
FINDINGS OF GUILT. 3
THE FORFEITURE APPLICATION.. 3
FORFEITURE APPLICATION INQUIRY.. 3
HA THU TRAN.. 3
THE SUBJECT PROPERTY.. 6
SUMMARY OF THE CROWN AND DEFENCE POSITIONS. 7
OFFENCE RELATED PROPERTY.. 9
Schedule A Property. 11
Schedule B Property. 11
Schedule C Property. 14
PROCEEDS OF CRIME.. 15
Property is Proceeds of Crime - s. 462.37(1) 18
Pattern of Criminal Activity - s. 462.37(2.01)(a) 19
Other Income cannot reasonably account for the value of Mr. Nguyen's property- s. 462.37(2.01)(b) 24
FINE IN LIEU OF FORFEITURE.. 28
Should the court exercise its discretion to make an order that Mr. Nguyen pay a fine in lieu of forfeiture? 32
Having determined that a fine in lieu of forfeiture should be ordered, what is the amount of the fine? 32
Conclusion. 32
SENTENCING.. 33
Crown's Position. 33
Defence Position. 34
Mr. Nguyen's Personal Circumstances. 34
Mitigating Factors. 35
Aggravating Factors. 35
Principles of Sentencing. 36
Conditional Sentences. 37
What is an appropriate sentence in these circumstances?. 38
The Authorities. 38
The Sentence. 40
Should the sentence be served by way of a conditional sentence?. 42
Keinapple Principle. 43
Pre-Sentence Custody. 43
CONCLUSION.. 43
FINDINGS OF GUILT
[1] As set out in the Reasons dated February 1, 2013, Mr. Nguyen was found guilty of:
i. Count #1: during the 120 days preceding October 6, 2009, conspiring with Son Van Nguyen and other persons to commit the offence of possession of a Controlled Substance (marihuana) for the purpose of trafficking (s. 465(1)(c) of the Code);
ii. Count #2: during the 120 days preceding October 6, 2009, conspiring with Son Van Nguyen and other persons to commit the offence of production of a Controlled Substance (marihuana) (s. 465(1) (c) of the Code);
iii. Count #3: during the 120 days preceding October 6, 2009, committed the offence of possession for the purpose of trafficking a Controlled Substance (marihuana) (s. 5(3) (a) of the Controlled Drugs and Substances Act); and
iv. Count #4: during the 120 days preceding October 6, 2009, committed the offence of production of a Controlled Substance (marihuana) (s. 7(1) of the Controlled Drugs and Substances Act).
THE FORFEITURE APPLICATION
[2] Ha Thu Tran is the common law spouse of Mr. Nguyen.
[3] The Bank of Nova Scotia is the mortgagee of 244 Isabella Avenue, Mississauga ("Isabella Property").
FORFEITURE APPLICATION INQUIRY
[4] The forfeiture application is a discrete and distinct inquiry from sentencing. R. v. Craig, 2009 SCC 23 at paras. 11 and 13.
HA THU TRAN
[5] Ms. Tran filed no materials on this application.
[6] It is undisputed that Ms. Tran:
i. has no registered interest in the either the Dundas Property (as defined below) or the Isabella Property;
ii. has been the common law wife of Mr. Nguyen since the late 90's or early 2000; and
iii. was involved in the All Season Garden Supply (ASGS) operations during the period of police surveillance.
[7] Ms. Tran submits she is a "part owner" of the Isabella Property on the basis of her common law relationship with Mr. Nguyen.
[8] For the purpose of Part I and Part II of the Family Law Act/Family Law Act, R.S.O. 1990, c.F.3 (FLA), Ms. Tran is not a "spouse". No proprietary interest is created for a common law spouse under these parts of the Family Law Act (FLA). As a result Ms. Tran has no proprietary interest in the matrimonial home or in the equalization of family property under the FLA (in any event the FLA does not create a proprietary interest in his or her spouse's real property).
[9] Ms. Tran's sole potential claim as a "spouse" under the FLA is for support under Part III. This potential claim, by itself, does not create a proprietary interest in Ms. Tran's favour in any property belonging to Mr. Nguyen.
[10] Ms. Tran has put forward no evidence of any equitable interest in either property.
[11] No argument for a possessory interest was advanced by Ms. Tran.
[12] There is no evidence before this court which would permit this court to conclude that Ms. Tran has an unregistered proprietary interest or a possessory interest in the Dundas Property or the Isabella Property.
[13] The onus is on Ms. Tran to show, on a balance of probabilities, that she has a proprietary interest in either or both of the properties and she has failed to do so. See: R. v. Old Navy Property Corp. [2012] O. J. No. 2660 (Sup. Ct.) and s. 19(3) of the Controlled Drugs and Substances Act, S.C. 1996, c. 19 (CDSA) and s. 462.41(3) of the Criminal Code, R.S.C. 1985, c. C-46 (Criminal Code).
[14] As a result, I find that Ms. Tran does not have any interest in the Dundas Property or the Isabella Property which would engage the "third party interest" provisions of the CDSA or the Criminal Code as it relates to the forfeiture of property.
[15] Further, even if Ms. Tran had established a proprietary interest in either of the properties, the onus would have been on her to show that she lacked any complicity or collusion in the offences before this court. See s. 19(3) of the CDSA, s. 462.41(3) of the Criminal Code and Old Navy Property Corp. at paras. 58-59. Ms. Tran would have failed to do so given her active involvement in the ASGS business during the period of time in question in these offences and her prior conviction relating to the sale of marihuana plants from the Dundas Property.
[16] I recognize that the Isabella Property is where Ms. Tran resides with the children. However, Ms. Tran:
i. worked at the ASGS business with Mr. Nguyen when the police conducted their surveillance. For example on August 26 and September 10, 2009, the police attended at ASGS and spoke to Ms. Tran. It was clear that on September 10, 2009 the undercover police officer was referring to marihuana plants when talking with Ms. Tran. She directed them to Mr. Son Van Nguyen, the ASGS employee to help the officers;
ii. had previously been involved in marihuana grow operations with Mr. Nguyen which resulted in her guilty plea in 2004. Her illegal activity was conducted out of the same Dundas Property; and
iii. had no significant reported income in the 10 years leading up to the arrest in 2009 except from ASGS. Ms. Tran’s reported income for the noted years was as follows: 2000 - $37,052; 2001 - $30,000; 2002 - $10,000; 2003 - $5,000; 2004 - $3,500; 2005 - $40,000; 2006 - $12,500; 2007 - $12,458; 2008 - $18,000; 2009 - $26,086. While there was some suggestion by Mr. Nguyen that the bags full of new clothes with their price tags still on at the Isabella Property, was a business that Ms. Tran was operating, given Mr. Nguyen's credibility issues, I do not accept this evidence. Equally, it makes no sense that Ms. Tran would buy expensive clothes at retail (as the price tags were still on them), leave them in bags and boxes around in her house with the intention and ability to sell them for a profit. There is no evidence consistent with any "clothing business" operated by Ms. Tran. She gave no evidence in this regard but could have.
[17] While sympathetic that a forfeiture order of the Isabella Property will result in her having to leave her home, I am not persuaded that Ms. Tran's objection to a forfeiture order is a relevant factor for consideration in this application.
THE SUBJECT PROPERTY
[18] The Crown seeks the forfeiture of the property listed in Schedules A, B, C, D, E, F and G attached to the Supplementary Application Record: Forfeiture.
[19] On October 5th, 2009, Justice J. McMahon of the Ontario Superior Court issued a Restraint and Management Order pursuant to ss. 462.33 and 462.331 of the Criminal Code and a Special Search Warrant pursuant to s. 462.32(1) of the Criminal Code for the following properties:
• 244 Isabella Street, City of Mississauga (the "Isabella Property");
• 1000 Dundas Street, City of Mississauga( the "Dundas Property");
• Scotiabank account number 91082 *******, in the name of Mr. Nguyen;
• Bank of Montreal account number 3954 *******, in the name of Mr. Nguyen;
• 2002 Dodge Caravan motor vehicle, bearing vehicle identification number (“VIN”) 2B4GP44R02R670101;
• 2003 Harley Davidson motorcycle, bearing VIN 5HD1BW113Y020553;
• 1992 GMC Safari, bearing VIN 1GKDM15Z7NB546734;
• 2003 Toyota Tundra, bearing VIN 5TBBT48103S349044;
• 2005 BMW X5, bearing VIN 5UXFA93515LE82147; and
• 2007 Dodge Ram, bearing VIN 3D7MX49C27G728495.
[20] The real properties which the Crown seeks forfeiture are:
i. 1000 Dundas Street East in Mississauga, Ontario, the location at which ASGS carried on business. Mr. Nguyen purchased this property in 2001; and
ii. 244 Isabella Avenue, Mississauga, the home of Mr. Nguyen. Mr. Nguyen purchased this property in 2006.
[21] Mr. Nguyen is the sole registered owner of the Dundas Property and Isabella Property.
[22] Mr. Nguyen opposes forfeiture of any properties set out in the Crown's application.
[23] Ms. Tran opposes any forfeiture regarding the real properties, but as I found, she has no standing.
[24] The Bank of Nova Scotia is the mortgagee of the Isabella Property, which mortgage is in substantial arrears. The Bank of Nova Scotia takes no position on the Crown forfeiture applications.
[25] I am satisfied that the third party notice requirements for the forfeiture applications have been complied with. Copies of the Affidavits of Service were attached at Tab 3 of the Application Record.
SUMMARY OF THE CROWN AND DEFENCE POSITIONS
[26] The Crown relies on the forfeiture provisions in the CDSA and the forfeiture provisions of the Criminal Code.
[27] The Crown submits that the property in Schedules A, B and C should be forfeited as offence related property under the CDSA.
[28] The Crown submits that the property in Schedules D, E, F, and G should be forfeited as proceeds of crime under the Criminal Code.
[29] The Crown no longer seeks forfeiture of the property identified in Schedules H and I.
[30] The Crown also seeks a fine in lieu of forfeiture with respect to monies that, at one time were in Mr. Nguyen's bank accounts, but were since transferred or withdrawn.
[31] Mr. Nguyen opposes any forfeiture of any property. Much of the argument was a repeat of the submissions as to why Mr. Nguyen should not have been found guilty - a matter which has already been decided. The balance of the submissions relate to the lack of or reduced blameworthiness of Mr. Nguyen, which the Defence suggests would make any forfeiture out of proportion to the seriousness of the offences.
[32] The Defence points to the Crown's position throughout these proceedings as "determined actions" against Mr. Nguyen, suggesting some impropriety on the part of the Crown. The Defence also points to an alleged implicit authorization of Mr. Nguyen's ASGS business given that the charges in 2002 were for selling marihuana plants and subsequently, Mr. Nguyen decided not to sell marihuana plants, but continued to sell equipment and products, and the failure by the police to take any action against him for selling the equipment and products for years. The Defence points to the liberalization of marihuana laws and the possibility that Mr. Nguyen may have been selling to licensed marihuana growers. I put no weight into any of these submissions. There is no evidence of any impropriety by the Crown. There was no explicit or implicit approval of Mr. Nguyen's actions or ASGS's business to knowingly assist marihuana growers in the manner described in the Reasons. Finally, the law is the law and Mr. Nguyen knew what he was doing was illegal and went to great extent to hide what he was doing from the public. The submission that he may have thought his business was a legitimate one essentially disregards the evidence as to how the business was conducted and the rejected evidence of Mr. Nguyen who denied he knew he was selling equipment knowingly to marihuana grow operators.
OFFENCE RELATED PROPERTY
[33] The CDSA provides that "offence related property" is subject to forfeiture under s. 16 of the CDSA. The relevant provisions relied on by the Crown include:
s. 2. .....
“offence-related property” means, with the exception of a controlled substance, any property, within or outside Canada,
(a) by means of or in respect of which a designated substance offence is committed,
(b) that is used in any manner in connection with the commission of a designated substance offence, or
(c) that is intended for use for the purpose of committing a designated substance offence;
“designated substance offence” means
(a) an offence under Part I, except subsection 4(1), or
(b) a conspiracy or an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a);
s. 16. (1) Subject to sections 18 to 19.1, where a person is convicted of a designated substance offence and, on application of the Attorney General, the court is satisfied, on a balance of probabilities, that any property is offence-related property and that the offence was committed in relation to that property, the court shall
(b) in the case of any other offence-related property,
(i) where the prosecution of the offence was commenced at the instance of the government of a province and conducted by or on behalf of that government, order that the property be forfeited to Her Majesty in right of that province and disposed of by the Attorney General or Solicitor General of that province in accordance with the law, and
s. 19.1 (3) Subject to an order made under subsection 19(3), if a court is satisfied that the impact of an order of forfeiture made under subsection 16(1) or 17(2) in respect of real property would be disproportionate to the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the criminal record, if any, of the person charged with or convicted of the offence, as the case may be, it may decide not to order the forfeiture of the property or part of the property and may revoke any restraint order made in respect of that property or part.
(emphasis added)
[34] Forfeiture with respect to offence related property was described in R. v. Trac, 2013 ONCA 246, albeit with respect to similar provisions in the Criminal Code:
[79]“Offence-related property” reaches property used in any manner in connection with the commission of an indictable offence. The section is aimed at the means, devices or instrumentalities used to commit offences. Thus, the house used to grow marihuana or the truck used to carry the marihuana to the point of sale are “offence-related property”. They are clearly not “proceeds of crime” unless perhaps the drug operation funded the purchase of the house and/or vehicle: see R. v. Craig, 2009 SCC 23, [2009] 1 S.C.R. 762, at para. 81; R. v. Paziuk, 2007 SKCA 63, 221 C.C.C. (3d) 518, at para. 10; R. v. Manning, 2011 QCCA 900, 2011 CarswellQue 15720.
[92]The phrase “in relation to” commonly appears in statutes and other legal writing. It describes in broad terms a connection between two things: Nowegijick v. The Queen, 1983 18 (SCC), [1983] 1 S.C.R. 29, at p. 39. In s. 490.1(1), it describes a connection between the property sought forfeited and the offence.
[93] The parties did not make submissions as to the meaning of the phrase “in relation to that property” in s. 490.1(1). I will not attempt an exhaustive definition. I think it is fair to say, however, that the requirement that the offence be committed “in relation to that property” demands a more direct connection between the property and the offence than would be necessary to find that property was “used in any manner in connection with the commission” of the offence. For example, although property, such as a bank account used to conceal or disguise money laundering, would be considered “offence-related property”, it is arguable that the crime of money laundering could not be said to have been committed “in relation to that property”.
[95] Where the Crown establishes a right of forfeiture under s. 490.1(1) or a judge chooses to exercise his discretion in favour of forfeiture under s. 490.1(2), the judge may still grant relief from forfeiture under ss. 490.3 to 490.41. These provisions deal with various persons and types of property, including innocent third party owners and dwelling homes. I need only refer specifically to s. 490.41(3), which creates a broad power to relieve in whole or in part from a forfeiture order made under either s. 490.1(1) or s. 490.1(2). The section reads in part:
[I]f a court is satisfied that the impact of an order of forfeiture … would be disproportionate to the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the criminal record, if any, of the person charged with or convicted of the offence, as the case may be, it may decide not to order the forfeiture of the property or part of the property …
[96] The provision giving the judge a broad power to relieve from forfeiture in respect of “offence-related property” has no comparable provision in the forfeiture scheme applicable to the proceeds of crime. In my view, the discretion to relieve from forfeiture, in whole or in part, found in s. 490.41(3) is a reflection of the very wide definition of “offence-related property” and the consequentially broad forfeiture powers in s. 490.1. Parliament recognized that there would inevitably be cases where the forfeiture of “offence-related property” would be unjust in the circumstances. Rather than attempting a narrower definition of “offence-related property” and potentially missing property that should be forfeited to effectively deter criminal conduct, Parliament chose instead to protect against the injustice of excessive forfeiture by giving trial judges the discretion to relieve from forfeiture: see Craig, paras. 22-23 and 50-51.[6]
[35] Forfeiture of property deprives offenders of the offence related property, thereby raising the stakes by imposing a very real cost on those who permit their properties to be used in the commission of drug offences and further ensures that the offence related property will no longer be used in the criminal activity. See: R. v. Craig, 2009 SCC 23, 2009 S.C.C. 23: at paras. 16-17.
Schedule A Property
[36] Schedule A consists of the equipment found at the Dundas Property upon Mr. Nguyen's arrest. In my Reasons, I concluded that the equipment at ASGS was equipment which had been used in marihuana grow operations and/or was knowingly available for sale and being sold by Mr. Nguyen to marihuana grow operators to facilitate their operations. This finding was at the heart of the finding of guilt on the various offences.
[37] Legitimate customers were neither sought nor wanted at ASGS. ASGS was not operated as a legitimate commercial business. There was only one purpose for the equipment described in Schedule A to be at ASGS - sale to marihuana growers. This was clear from the evidence of the Crown's marihuana grow operations expert.
[38] I am satisfied, on a balance of probabilities, that the equipment in Schedule A is "offence-related property" and was used in relation to the offences for which Mr. Nguyen has been found guilty.
[39] The property in Schedule A is forfeited to the Crown.
Schedule B Property
[40] Schedule B consists of the Dundas Property.
[41] In this case, the Dundas Property was used exclusively by Mr. Nguyen to operate his business - "one stop shopping" for marihuana grow operators' equipment and products. He also used the Dundas Property to assist his customers, the marihuana grow operators, to dispose of their marihuana grow operations garbage in a safe and clandestine manner.
[42] The ASGS operations at the Dundas Property were not incidental to any legitimate business operations at that location.
[43] The Defence submits that only 4 customers, over the course of four months, were found to be marihuana grow operators. The Defence suggest this is evidence that only a small portion of the ASGS customers were marihuana grow operators. Further, the Defence suggests that it is not known if any marihuana grow operators were legal marihuana grow operators.
[44] Both submissions have no merit. The first submission fails to recognize that the surveillance was limited and sporadic over the four months and given the limited surveillance, the customers which were followed by the police after their purchases at ASGS were marihuana grow operators. There was also no evidence that there was any legitimate business transacted at ASGS during these four months. Rather the evidence is that the only business sought and conducted at the Dundas property was to and for marihuana growers. As to the second submission, the four marihuana grow operators which were followed, were charged with producing marihuana (and other charges). There is no evidence these purchasers were legal marihuana grow operators. Such a conclusion would be entirely speculative.
[45] Where the property sought to be forfeited is real property, s. 19.1 (3) of the CDSA provides that the court, if satisfied the impact of the order of the forfeiture of real property would be disproportionate to the nature and gravity of the offence, the circumstances of the offence and criminal record of the accused, the court may decide not to order forfeiture of the real property.
[46] Section 19.1(3) applies to the Dundas Property.
[47] Some of the factors which go into the exercise of the court's discretion under this provision are set out in R. v. Craig, 2009 SCC 23, 2009 S.C.C. 23 at the following paragraphs:
[56] What, then, should a judge consider under s. 19.1(3)? The nature and gravity of the offence could include the character and quantity of the substance involved, the level of sophistication of the crime and the extent to which the commercial production or distribution of drugs was involved.
[57] The second factor, the circumstances surrounding the commission of the offence, might include consideration of the offender’s role in the commission of the offence, the nature of the property and the manner in which it was used in the offence, risks to the security or safety of the community, whether the property was used in a manner that detrimentally affected its legitimate use and enjoyment, whether the property was fortified or otherwise adapted to accommodate the grow operation, the extent of the offender’s involvement in organized crime and whether the property itself was held by a criminal organization.
[48] In this case, the sole purpose and use of the Dundas Property was to sell equipment to marihuana grow operators, accept their marihuana plant waste and to assist the marihuana growers to avoid detection by the police. It is clear that Mr. Nguyen was successful in this business. He sold the equipment, in a clandestine manner, to very substantial marihuana grow operations. Just the four sales that were discovered during the surveillance uncovered marihuana grow operations with almost $12 million dollars’ worth of marihuana being seized from these ASGS’ customers. The Dundas property housed a garbage bin used by ASGS customers to dispose of their marihuana grow operation waste in a clandestine and safe manner. This is the second time the property has been used in connection with the sale of products for marihuana grow operations.
[49] Millions of dollars of sales from the Dundas Property went through Mr. Nguyen's bank accounts.
[50] The actions of Mr. Nguyen through ASGS and the Dundas Property assisted very large commercial marihuana grow operations, not just in this province but inter-provincially as well.
[51] This was a sophisticated operation at the Dundas Property. Cash business. No receipts. No employee records. Concealed carry out of products. Use of a delivery vehicle at no charge with no identification required. Disposal of customer's marihuana grow operation waste. Specific marihuana grow operation equipment pre-made and ready to be sold and used. One source for all necessary marihuana grow operations, from soil to fertilizer, to growing lights, to electrical equipment, to equipment to get rid of the smell of marihuana and so on. The Defence's analogy to Home Depot having such equipment does not even come close to being accurate.
[52] Mr. Nguyen was the operating mind and in control of the ASGS business. He structured how the business was conducted - with little signage, unkept premises, no business records and so on.
[53] In my view, the impact of forfeiture would not be disproportionate to the nature and gravity of the offences or the circumstances surrounding the commission of the offences as this was a very serious offence on a very large scale and that the Dundas Property's primary or sole purpose was to carry on Mr. Nguyen's illegal business of supplying and assisting large marihuana grow operations locally and from a considerable distance from the location.
[54] This is not a situation where the court should only forfeit a portion of the real property as the entire property was used essentially exclusively for selling and assisting marihuana grow operations.
[55] The Dundas Property is forfeited to the Crown.
Schedule C Property
[56] The Schedule C property consists of a boat and various vehicles.
[57] It is important to note in the definition that property used or intended to be used in "any" manner in connection with the commission of the offence, is offence related property. To use the words in Trac, it includes any "property used in any manner in connection with the commission of an indictable offence".
[58] I am satisfied that the 2005 BMW X5, 2003 Toyota Tundra, 2007 Dodge Ram were all seen transporting the "black garbage bags", the typical manner in which marihuana equipment was sold or in which garbage containing marihuana growers waste for disposal at ASGS, was transported. As a result, I am satisfied that the Crown has established, on a balance of probabilities, that these vehicles were used in the relation to the offences of which Mr. Nguyen has been found guilty. As a result, these vehicles are offence related property. These vehicles are forfeited to the Crown.
[59] Let me now turn to the boat, the 2002 Dodge Caravan and the Harley Davidson motorcycle.
[60] With respect to the boat, the Crown submits that Mr. Nguyen admitted he entertained "suppliers" on this boat. Given that Mr. Nguyen's only business was the sale of equipment to marihuana grow operators, the Crown submits this connection makes the boat is offence-related property. I am not satisfied that, on a balance of probabilities, the boat was used in any way in relation with Mr. Nguyen's business selling equipment to marihuana grow operators at ASGS. The Crown has failed to meet its onus with respect to the boat. The Crown has not sought to have the boat forfeited as proceeds of crime. As a result, the boat must be returned to Mr. Nguyen.
[61] With respect to the 2002 Dodge Caravan (not the one used for the clandestine or customer deliveries) and the 2003 Harley Davidson, the only evidence is that these vehicles were used by Mr. Nguyen or his employee, Son Van Nguyen, to drive back and forth from home to ASGS. There is no connection they were used in connection with the ASGS business. I do not find that these vehicles are offence related property. I also do not find that the Crown has established, on a balance of probabilities, that these vehicles were used in relation to the offences.
[62] The boat and the 2002 Dodge Caravan and the 2003 Harley Davidson shall be returned to Mr. Nguyen and the restraint order is revoked in connection with these items.
PROCEEDS OF CRIME
[63] The Crown submits that the balance of the property in Schedules D through G are proceeds of crime and should be forfeited to the Crown.
[64] The items in Schedules D, E, F, and G can be summarily described as follows:
i. Schedule D - the Isabella Property;
ii. Schedule E - personal property found at the Isabella Property;
iii. Schedule F - 2002 Honda motorcycle, 2008 Kawasaki Jet ski and a 2003 Polaris ATV; and
iv. Schedule G - 4 bank accounts in the name of Mr. Nguyen and 1 bank account in ASGS's corporate name.
[65] Forfeiture of property from the proceeds of crime for CDSA and Criminal Code offences is set out in Part XII.2 of the Criminal Code.
[66] The relevant provisions of the Criminal Code relied on by the Crown are:
s. 462.3 (1):
“proceeds of crime” means any property, benefit or advantage, within or outside Canada, obtained or derived directly or indirectly as a result of
(a) the commission in Canada of a designated offence, or
(b) an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence.
"designated offence” means
(a) any offence that may be prosecuted as an indictable offence under this or any other Act of Parliament, other than an indictable offence prescribed by regulation, or
(b) a conspiracy or an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a);
462.37 (1) Subject to this section and sections 462.39 to 462.41, where an offender is convicted, or discharged under section 730, of a designated offence and the court imposing sentence on the offender, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime and that the designated offence was committed in relation to that property, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law.
(2.01) A court imposing sentence on an offender convicted of an offence described in subsection (2.02) shall, on application of the Attorney General and subject to this section and sections 462.4 and 462.41, order that any property of the offender that is identified by the Attorney General in the application be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law if the court is satisfied, on a balance of probabilities, that
(a) within 10 years before the proceedings were commenced in respect of the offence for which the offender is being sentenced, the offender engaged in a pattern of criminal activity for the purpose of directly or indirectly receiving a material benefit, including a financial benefit; or
(b) the income of the offender from sources unrelated to designated offences cannot reasonably account for the value of all the property of the offender.
(2.02) The offences are the following:
(b) an offence under section 5, 6 or 7 of the Controlled Drugs and Substances Act — or a conspiracy or an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to an offence under those sections — prosecuted by indictment.
(2.03) A court shall not make an order of forfeiture under subsection (2.01) in respect of any property that the offender establishes, on a balance of probabilities, is not proceeds of crime.
(2.04) In determining whether the offender has engaged in a pattern of criminal activity described in paragraph (2.01)(a), the court shall consider
(a) the circumstances of the offence for which the offender is being sentenced;
(b) any act or omission — other than an act or omission that constitutes the offence for which the offender is being sentenced — that the court is satisfied, on a balance of probabilities, was committed by the offender and constitutes an offence punishable by indictment under any Act of Parliament;
(c) any act or omission that the court is satisfied, on a balance of probabilities, was committed by the offender and is an offence in the place where it was committed and, if committed in Canada, would constitute an offence punishable by indictment under any Act of Parliament; and
(d) any other factor that the court considers relevant.
(2.05) A court shall not determine that an offender has engaged in a pattern of criminal activity unless the court is satisfied, on a balance of probabilities, that the offender committed, within the period referred to in paragraph (2.01)(a),
(a) acts or omissions — other than an act or omission that constitutes the offence for which the offender is being sentenced — that constitute at least two serious offences or one criminal organization offence;
(2.06) Nothing in subsection (2.01) shall be interpreted as preventing the Attorney General from making an application under subsection (1) in respect of any property.
(2.07) A court may, if it considers it in the interests of justice, decline to make an order of forfeiture against any property that would otherwise be subject to forfeiture under subsection (2.01). The court shall give reasons for its decision.
[67] Section 462.41 of the Criminal Code deals with third party rights in the property sought to be forfeited. It provides:
462.41 (3) Where a court is satisfied that any person, other than
(a) a person who is charged with, or was convicted of, a designated offence, or
(b) a person who acquired title to or a right of possession of that property from a person referred to in paragraph (a) under circumstances that give rise to a reasonable inference that the title or right was transferred for the purpose of avoiding the forfeiture of the property,
is the lawful owner or is lawfully entitled to possession of any property or any part thereof that would otherwise be forfeited pursuant to subsection 462.37(1) or (2.01) or 462.38(2) and that the person appears innocent of any complicity in an offence referred to in paragraph (a) or of any collusion in relation to such an offence, the court may order that the property or part thereof be returned to that person.
(emphasis added)
[68] The Crown relies on forfeiture under s. 462.37(1) (the proceeds of crime section) and s.462.37 (2.01) (a pattern of criminal activity or assets not reasonably accounted for section).
Property is Proceeds of Crime - s. 462.37(1)
[69] Upon conviction of a designated offence, if the Court is satisfied, on a balance of probabilities, that:
i. the property, sought to be forfeited, is proceeds of crime; AND
ii. that the designated offence was committed in relation to the property sought to be forfeited
THEN the court SHALL order forfeiture subject to third party interests under s. 462.41 of the Criminal Code.
[70] Even if the Crown had been able to satisfy this court that the above property was purchased from the proceeds of Mr. Nguyen's illegal conduct involving these offences, the Crown has not established that there is any connection between these properties and the offences for which Mr. Nguyen has been convicted. Simply proving that the property is from proceeds of the offences is not enough. The property must also have been used in relation to that offence.
[71] Forfeiture under this section is dismissed.
Pattern of Criminal Activity - s. 462.37(2.01)(a)
[72] Let me now turn to the Crown's primary argument on the property in Schedules D through G.
[73] Under s. 462.37(2.01) (a), as applied to this case,
IF the Crown can satisfy this court, on the balance of probabilities, that:
a) Mr. Nguyen was convicted of an offence under s. 5, 6 or 7 of the CDSA; AND
b) there is an application for forfeiture by the Crown of specified property; AND
c) Mr. Nguyen has :
i. engaged in a pattern of criminal activity having considered the factors in ss. 2.04 (a) through(d); AND
ii. within the past 10 years committed at least 2 serious offences (other than the offences before the court); AND
iii. done so for the purpose of a material benefit;
THEN the forfeiture order SHALL be made UNLESS
d) Mr. Nguyen can establish, on a balance of probabilities, that the property is not the proceeds of crime - s. 462.37(2.03); OR
e) a third party interest is engaged where the court exercises its discretion to order that the property be returned to that person - s. 462.41 (3); OR
f) the court determines it is in the interests of justice to decline to make a forfeiture order - s. 462(2.07).
a) - Convicted of a Designated Offence
[74] There is no issue that Mr. Nguyen was convicted of offences under sections 5 and 7 of the CDSA.
b) - Crown Application for Forfeiture
[75] There is no issue that the Crown has brought this forfeiture application with respect to the properties set out in schedules D through H.
c) - Was Mr. Nguyen engaged in a Pattern of Criminal Activity involving 2 serious offences in the past 10 years for material benefit?
[76] The onus is on the Crown to establish this on the balance of probabilities.
[77] I am satisfied, on a balance of probabilities, that Mr. Nguyen bought a number of homes, used them as marihuana grow operations and sold the homes. Within the 10 year period, he did this with the following properties:
• 1466 Bancroft Drive, Mississauga, Ontario;
• 39 Red Maple Drive, Brampton, Ontario;
• 7 Giza Crescent, Brampton, Ontario;
• 22 Deerglen Drive, Brampton, Ontario;
• 33 Sheepberry Terrace, Brampton, Ontario; and
• 2 Carrie Crescent, Brampton, Ontario.
(the "ghost properties")
[78] These marihuana grow operations at the ghost properties over the number of years constituted "at least two serious offences" under ss. (2.05).
[79] The circumstances of this case include:
i. Selling the equipment to marihuana grow operators was a cash business. No business records were kept. Mr. Nguyen and his wife reported little income from their sole source of income. ASGS had little reported income. This conduct goes back to 2000 when the ASGS business was started and continued after 2002 when Mr. Nguyen and Ms. Tran were charged with marihuana related offences from the Dundas Property;
ii. There were vast amounts of money going through ASGS' and Mr. Nguyen's bank accounts. Mr. Nguyen's net worth was increasing beyond his reported income. The only source of income was from the profits generated from the ghost properties and the sale of products at ASGS to marihuana grow operators;
iii. Mr. Nguyen had access to substantial amounts of money to buy the ghost properties and used many different banks at different locations to buy the properties, utilizing, in many cases, bank drafts or other such instruments where the source of funds could not be identified;
iv. Mr. Nguyen bought substantial assets with cash (i.e. the $208,000 boat);
v. Mr. Nguyen went to great lengths to hide the fact he was the real owner behind the ghost properties; and
vi. Ms. Tran pleaded guilty, to operating a business, with Mr. Nguyen, where she sold marihuana seedlings and assisted in setting up a marihuana grow operation in 2001-2002 through a hydroponics garden store which subsequently relocated to the Dundas Property. Ms. Tran's activities with marihuana grow operations continued at the Dundas Property - a property owned by Mr. Nguyen and of which Mr. Nguyen was the principal person running the business. When Ms. Tran was arrested in 2002, $860,517.34 in cash and other assets were seized. A forfeiture order was made at Ms. Tran’s guilty plea, which forfeiture order was consented to by Mr. Nguyen (see page 20 of the transcript of the guilty plea). Mr. Nguyen simply continued with his business at the Dundas Property by knowingly selling equipment and products to marihuana grow operators everything marihuana grow operators would need in a clandestine manner and assisted them to get rid of their marihuana grow operation waste.
[80] This constitutes a pattern of criminal activity.
[81] There is no doubt that Mr. Nguyen engaged in these activities for financial gain and he was successful given the assets he accumulated over the years and the vast amounts of money going through his bank accounts. The evidence clearly showed, and I found, that Mr. Nguyen received the proceeds of sale of the ghost properties. There are no records showing where any sale proceeds of ASGS went to but a reasonable inference is that this money went to Mr. Nguyen and permitted him to accumulate the assets he did and enjoy the lifestyle he lived.
[82] The activities all took place within 10 years of his arrest for the offences before this court.
[83] The evidence is overwhelming that Mr. Nguyen was involved in a pattern of criminal activity for the period of 10 years prior to these offences and had committed more than two serious offences.
[84] I am satisfied that the Crown has established on a balance of probabilities that Mr. Nguyen engaged in a pattern the prior 10 years of criminal conduct committing more than two serious offences for the purpose of receiving a material benefit.
d) - Has Mr. Nguyen established that the property is not proceeds of crime?
[85] Mr. Nguyen has not put forth any evidence, except his evidence at trial which was rejected, to establish, that any of the property listed in Schedules D through G was not proceeds of crime.
[86] To a large extent, the only position put forward was that Mr. Nguyen did not know that he was selling to marihuana grow operators. This explanation was rejected at trial.
e) - Are there any third party interests?
[87] There is no evidence that any third party has an interest in the properties set out in Schedules D through G.
f) - Is it in the interests of justice that this court decline to order the property be forfeited?
[88] The mandatory nature of the order, where the Crown has met its onus and the accused has not established that the property is not proceeds of crime or a third party interest, is subject only to s. 462.37 (2.07) where the court can decline to make such an order where the interests of justice are engaged.
[89] The Defence suggests that there is a change in attitude with respect to marihuana related offences. I am not persuaded that this is a relevant factor given the present state of the law and the fact that this illegal activity has gone on for quite a number of years, well before there may have been any shift in other jurisdictions regarding the seriousness of marihuana related offences.
[90] The only conclusion that this court can come to is that Mr. Nguyen amassed his assets and financed his lifestyle over the years through his illegal activities. He paid little or no income taxes. He lived a lavish lifestyle. He owned a valuable piece of property on Dundas St. He owned a very nice home in Mississauga. He had many luxuries (such as jewelleries, expensive alcohol and so on), had many vehicles and had many "toys" (such as motorcycles, jet skis, boats, ATV and so on).
[91] The Crown has established that the monies from Mr. Nguyen's illegal criminal activity over the past 10 years has essentially been the means by which Mr. Nguyen bought and maintained the assets set out in the Schedules.
[92] There is no evidence of any other legitimate source of income for Mr. Nguyen.
[93] There simply is no good reason why the fruits of this illegal criminal activity over the past 10 years should not be forfeited to the Crown.
Conclusion
[94] The Crown has satisfied the onus set out in s. 462.37 (2.01) (a).
[95] Section 462.37(2.01) of the Criminal Code is a mandatory provision where the Crown has met its burden and there is no reason not to make the order. The provision provides that the court shall make an order with respect to "any property of the offender that is indentified by the Attorney General in the application".
[96] The property listed in Schedules D through G of the Crown forfeiture application are forfeited to the Crown.
[97] Notwithstanding that this court has concluded that the property listed in Schedules D through G of the Crown forfeiture application are forfeited to the Crown, let me nevertheless proceed to deal with the second basis the Crown submits that there should be forfeiture of this property.
Other Income cannot reasonably account for the value of Mr. Nguyen's property- s. 462.37(2.01)(b)
[98] Even if the Crown had not established that Mr. Nguyen had engaged in the past 10 years in a pattern of criminal activity for material benefit, I would have concluded that the Crown has established, on a balance of probabilities, that Mr. Nguyen's income from other sources, unrelated to designated offences, could not reasonably account for the value of Mr. Nguyen's property.
[99] Under s. 462.37(2.01) (b), as applied to this case,
IF the Crown can satisfy this court, on the balance of probabilities, that:
a) Mr. Nguyen was convicted of an offence under s. 5, 6 or 7 of the CDSA; AND
b) there is an application for forfeiture by the Crown of specified property; AND
c) Mr. Nguyen's income from sources unrelated to designated offences cannot reasonably account for the value of his property;
THEN the forfeiture order SHALL be made UNLESS
d) Mr. Nguyen can establish, on a balance of probabilities, that the property is not the proceeds of crime - s. 462.37(2.03); OR
e) a third party interest is engaged where the court exercises its discretion to order that the property be returned to that person - s. 462.41 (3); OR
f) the court determines it is in the interests of justice to decline to make a forfeiture order - s. 462(2.07).
[100] a) and b) are satisfied.
c) - Can the income of Mr. Nguyen, from sources unrelated to the designated offences, reasonably account for the value of all of his property?
[101] Mr. Nguyen had no source of income other than ASGS since 2000.
[102] Mr. Nguyen’s reported income for the noted years was as follows:
2000 - $31, 593
2001 - $44, 814
2002 - $21, 794
2003 - $13, 239
2004 - $76, 275
2005 - $51, 604
2006 - $73, 625
2007 - $28, 211
2008 - $28,000
2009 - $29,500
[103] ASGS had only limited income for a few years:
July 1, 2004 to June 30, 2005 Net income $48,649 (before taxes)
July 1, 2005 to June 30, 2006 Net Income $48,649 (before taxes)
July 1, 2006 to June 30, 2007 Net income -$9,540 (before taxes)
[104] Mr. Malamed, the financial expert, opined that the financial records of Mr. Nguyen, Ms. Tran and ASGS, showed:
i. The reported income of Mr. Nguyen and Tran between 2006 and 2009 was approximately $228,000;
ii. During the same period, their net worth increased by at least approximately $982,000;
iii. During the period October 2005 to October 2009, approximately $2,904,124 was deposited into the bank accounts of Mr. Nguyen, Tran and ASGS and approximately $3,100,000 was withdrawn; and
iv. During the period October 2005 to October 2009, approximately $969,524 was deposited into the bank account of ASGS and approximately $$976,251 was withdrawn.
[105] Just a few of Mr. Nguyen’s fixed monthly expenses greatly exceeded his reported income:
-monthly mortgage payment for 244 Isabella with Scotia Bank for $3,387.87;
monthly car loan payment with BMW Canada for $678.00;
monthly car loan payment with Chrysler Financial for $933.00; and
Estimated monthly private school tuition of $1,325.
[106] This list does not include other living expenses and does not include other significant expenses such as property taxes, insurance, utilities and maintenance.
[107] The evidence is very clear that the value of Mr. Nguyen's property could not be accounted for by Mr. Nguyen's income even if you were to add Ms. Tran's income and ASGS' net income.
[108] Mr. Nguyen suggested two other sources of income: Ms. Tran's alleged clothing business and ASGS' overseas business. Neither of these alleged sources of income are accepted by this court.
[109] I will not repeat why this court did not accept Mr. Nguyen's evidence that Ms. Tran also had a clothing business.
[110] Mr. Nguyen attempted to refer to other legitimate overseas business by ASGS but his evidence at trial was not accepted for the reasons set out in my Reasons. There was no evidence that Mr. Nguyen had any significant sales overseas and, besides, the sales were highly questionable given that he was shipping soil, fertilizer and other such items to England. It is hard to imagine how such sales would be as lucrative as suggested by Mr. Nguyen or provide any substantial unreported profits to Mr. Nguyen or ASGS. Further, while Mr. Nguyen sold some products to a UK company, the principals of that company (and a related company) were arrested for marihuana production. Lastly, there are no records which demonstrate the significant sales suggested by Mr. Nguyen or that significant profits were generated from such sales.
[111] The financial evidence at trial was credible and reliable. It painted a picture of substantial expenses and the accumulation of assets by Mr. Nguyen, with no corresponding source of income.
[112] The Defence suggested this is not an Income Tax case, in other words, the failure to disclose all income to Revenue Canada. I agree. What is significant is that the expenses were substantial over many years, assets were being accumulated, some were substantial and paid in cash (such as the $208,000 boat) and it came from knowingly selling equipment to marihuana grow operators or in relation to the ghost properties.
[113] The amount which went through Mr. Nguyen's bank account was in the millions of dollars. Properties were bought and sold. There were substantial lifestyle expenses incurred annually. None are explained by any income from legitimate sources.
[114] The fact ASGS sold essentially exclusively to marihuana grow operators, the financial investigation coupled with this court's findings that Mr. Nguyen was the beneficial owner of the ghost properties where marihuana grow operations were carried on, leads to the inescapable conclusion that Mr. Nguyen's income from sources unrelated to designated offences cannot reasonably account for the value of his property. The Crown has established this on a balance of probabilities.
d) - Has Mr. Nguyen established that the property is not proceeds of crime?
[115] Mr. Nguyen did not lead any evidence on this application that the subject properties were not from the proceeds of crime, including that any property was bought in part or whole by income from Ms. Tran, as Mr. Nguyen was entitled to do under s. 462.37 (2.03).
e) - Are there any third party interests?
[116] There is no evidence that the property set out in the schedules to the Crown's application belong to anyone but Mr. Nguyen.
f) - Is it in the interests of justice that this court decline to order the property be forfeited?
[117] For the same reasons set out above, I see no basis to exercise my discretion not to order the property in Schedules D through G of the Crown's application to be forfeited.
Conclusion
[118] If it had been necessary, I would have determined that the Crown met the onus on it under s. 462.37(2.01)(b) and concluded that the properties in Schedule D through G of the Crown's application be forfeited to the Crown.
FINE IN LIEU OF FORFEITURE
[119] The Crown submits that Mr. Nguyen's bank accounts, which have substantially reduced balances when Mr. Nguyen was arrested, are proceeds of crime and, because this court cannot trace these monies, the court should impose a fine in lieu of forfeiture.
[120] Cash in bank accounts is property which can be forfeited. In Trac, the Court of Appeal stated:
78 Real property and cash are undoubtedly property as defined in the Criminal Code. A credit in a bank account represents a debt owed to the account holder by the deposit-taking institution. Subject to the terms of any agreement between that institution and the account holder, the account holder has the right to payment on demand of the debt represented by the credit in the account: see B.M.P. Global Distribution Inc. v. Bank of Nova Scotia, 2009 SCC 15, [2009] 1 S.C.R. 504, at para. 63; Royal Bank of Canada v. Rastiogi, 2011 ONCA 47, 330 D.L.R. (4th) 98, at para. 17. The debt owed to the account holder is personal property within the definition of property in the Criminal Code.
103 Lastly, the trial judge seems to have proceeded on the basis that he could either order forfeiture of the entire asset, or refuse forfeiture entirely in respect of an asset. There is, however, authority for the proposition that property can be forfeitable to the extent that the property falls within the meaning of the “proceeds of crime”. On this approach, a pro rata forfeiture of credits in a bank account, or a pro rata forfeiture of the equity in real property attributable to the “proceeds of crime” would be possible: see R. v. Marriott, 2001 NSCA 84, 194 N.S.R. (2d) 64, at para. 28; R. v. 1431633 Ontario Inc., 2010 ONSC 266, 250 C.C.C. (3d) 354; R. v. Kelly, 2011 QCCQ 4080, 2011 CarswellQue 5045; contra R. v. Vincent, 2003 29776 (QC CA), [2003] J.Q. No. 12819 (C.A.), at para. 31.
[121] The evidence at trial showed that between October 2005 and October 2009, deposits into Mr. Nguyen's bank accounts were $2,904,124.08. During the same period there were withdrawals and transfers in the amount of $3,129,537.28. By October 2009, there was only $94,912.69 in the five bank accounts held by Mr. Nguyen.
[122] Of the amount withdrawn from the accounts:
• $1,436,703.11 - the recipient was unknown;
• $250,000 - investment (with no further detail);
• $68,056.68 - transfers to unknown recipient(s);
• $227,760 - transferred to Mr. Nguyen's other accounts;
• $70,868.41 - cash withdrawals;
• Bill and mortgage payments - $820,000
• Balance - other expenses
[123] Clearly, a substantial amount of money has passed through Mr. Nguyen's bank accounts with very little left in the bank accounts and very little known as to the destination of those funds.
[124] The Crown seeks an order that a fine of $2,809,211.40 be imposed on Mr. Nguyen ($2,904,124.08 less $94,912.69).
[125] Section 462.37 of the Criminal Code provides:
(3) If a court is satisfied that an order of forfeiture under subsection (1) or (2.01) should be made in respect of any property of an offender but that the property or any part of or interest in the property cannot be made subject to an order, the court may, instead of ordering the property or any part of or interest in the property to be forfeited, order the offender to pay a fine in an amount equal to the value of the property or the part of or interest in the property. In particular, a court may order the offender to pay a fine if the property or any part of or interest in the property
(a) cannot, on the exercise of due diligence, be located;
(b) has been transferred to a third party;
(c) is located outside Canada;
(d) has been substantially diminished in value or rendered worthless; or
(e) has been commingled with other property that cannot be divided without difficulty.
(4) Where a court orders an offender to pay a fine pursuant to subsection (3), the court shall
(a) impose, in default of payment of that fine, a term of imprisonment
(i) not exceeding six months, where the amount of the fine does not exceed ten thousand dollars,
(ii) of not less than six months and not exceeding twelve months, where the amount of the fine exceeds ten thousand dollars but does not exceed twenty thousand dollars,
(iii) of not less than twelve months and not exceeding eighteen months, where the amount of the fine exceeds twenty thousand dollars but does not exceed fifty thousand dollars,
(iv) of not less than eighteen months and not exceeding two years, where the amount of the fine exceeds fifty thousand dollars but does not exceed one hundred thousand dollars,
(v) of not less than two years and not exceeding three years, where the amount of the fine exceeds one hundred thousand dollars but does not exceed two hundred and fifty thousand dollars,
(vi) of not less than three years and not exceeding five years, where the amount of the fine exceeds two hundred and fifty thousand dollars but does not exceed one million dollars, or
(vii) of not less than five years and not exceeding ten years, where the amount of the fine exceeds one million dollars; and
(b) direct that the term of imprisonment imposed pursuant to paragraph (a) be served consecutively to any other term of imprisonment imposed on the offender or that the offender is then serving.
[126] The leading decision on the interpretation and application of s. 462.37(3) and (4) of the Criminal Code is the Supreme Court of Canada’s decision in R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392.
[127] In Lavigne, the Supreme Court decided the sentencing judge had the discretion as to determine whether it is appropriate to impose a fine instead of forfeiture. However, this discretion to impose a fine can be exercised only where the court cannot order forfeiture or where forfeiture is not practicable if the property or any part of or interest in the property:
i. cannot, on the exercise of due diligence, be located;
ii. has been transferred to a third party;
iii. is located outside Canada;
iv. has been substantially diminished in value or rendered worthless; or
v. has been commingled with other property that cannot be divided without difficulty.
See Lavigne at paras. 22-27.
[128] The Supreme Court determined that “the word ‘may’ allows for the exercise of discretion consistent with the spirit of the whole of the provisions in question”. See Lavigne at para. 28.
[129] In this case, the fact most of the money was withdrawn from Mr. Nguyen's bank accounts does not foreclose the possibility of a fine in lieu of forfeiture. At paras. 31 and 32 the Supreme Court in Lavigne stated:
Obviously, where a sum of money is concerned, a reduction in the value of such property is most often associated with the use thereof, which is itself often associated with an absence of other income. If one of the objectives is to ensure that crime does not pay, use of the proceeds of crime must be a basis for ordering a fine instead of forfeiture of the property and cannot be a basis for mitigating the impact of the measure.
The mere fact that the property has been used cannot therefore justify exercising the discretion to reduce the amount of the fine, especially where the property consists of cash. The fact that the offender no longer has enough money must not therefore serve as a way to avoid a fine. A fine can be ordered only if the property cannot be forfeited or if forfeiting it is impracticable. Moreover, s. 462.37(3)(d) is significant: a fine may be imposed where the property has been substantially diminished in value. The purpose of the order, to replace the property, would be thwarted if the offender could avoid the fine simply by spending the proceeds of the crime.
[130] In Lavigne the sentencing judge was convinced the accused had received $150,000 in proceeds of crime. However, there was a lack of evidence that the accused still possessed that amount. In lieu of forfeiture, the sentencing judge imposed a fine in lieu of forfeiture in the amount of $20,000. The Supreme Court allowed the appeal and ordered the accused to pay a fine in lieu of forfeiture in the amount of $150,000.
[131] The only conclusion available, on the evidentiary record before me, is that the entire amount of $2,809,211.40 was proceeds of crime which has not been recovered and cannot be recovered by the authorities. Therefore, having determined that the monies in the bank account should be forfeited but the monies in the bank accounts cannot be forfeited because the funds have been withdrawn, the court may make an order of forfeiture.
Should the court exercise its discretion to make an order that Mr. Nguyen pay a fine in lieu of forfeiture?
[132] As stated above, the monies deposited into the bank accounts were proceeds of crime. There was no other source of monies for Mr. Nguyen. The monies have been withdrawn (except for the approximately $94,000). The monies are no longer subject to forfeiture. The "transfers and recipients of withdrawals was not available" despite the forensic audit by Grant Thornton. The monies have been transferred to persons and places unknown or used in some unknown fashion. The lack of documentation and the manner, in which funds were used by Mr. Nguyen so as to conceal the source of the funds and to deal in cash, lead me to conclude that a fine in lieu of forfeiture should be ordered.
Having determined that a fine in lieu of forfeiture should be ordered, what is the amount of the fine?
[133] It is impossible to say where the monies from the account went or how they were used. This was done deliberately by Mr. Nguyen. In these circumstances, there is no good reason why the entire amounts which went through the bank accounts during the four year period, should not be paid by way of a fine.
Conclusion
[134] Mr. Nguyen shall pay a fine in lieu of forfeiture in the amount of $2,809,211.40.
[135] Neither the Crown nor Mr. Nguyen made any submissions with respect to how long Mr. Nguyen would have to pay any fine imposed and no submissions with respect to what period of imprisonment should be imposed if the fine is not paid.
[136] Given that the period of Grant Thornton's "Period of Review" of the bank accounts was over a 4 year period, Mr. Nguyen shall have 4 years from the time of the completion of any sentence imposed to pay the fine.
[137] Given that no submissions were made as to a length of imprisonment if the fine was not paid, I impose a term of imprisonment of 5 years, being the minimum period provided by law, and which imprisonment would be consecutive to the sentence set out below.
SENTENCING
[138] Before dealing with what is a fit sentence in the circumstances of the offences and the offender, it is important to note that the sentence is only for the offences before this court for which Mr. Nguyen has been found guilty.
[139] In R. v. Craig, 2009 SCC 23, 2009 SCC23, the Supreme Court held that forfeiture inquiry is a discrete and distinct inquiry as to what a fit sentence is for the offences of which the accused has been found guilty. See: Craig at para. 11 and para. 69.
[140] I will not repeat the facts as they are extensively set out in my Reasons. In summary, Mr. Nguyen knowingly supplied to marihuana grow operators all the equipment necessary for marihuana growops in a clandestine and safe manner and assisted the marihuana grow operators to dispose of their marihuana grow waste. He was the facilitator who made money by selling to marihuana growers and help them avoid detection by the police. Mr. Nguyen's culpability is not much different than that of marihuana growers, however, I do recognize that Mr. Nguyen is not the person who grew the marihuana.
Crown's Position
[141] The Crown seeks a sentence of 5 to 6 years incarceration. The Crown submits this was a sophisticated, extensive enterprise with a substantial value of marihuana being grown with Mr. Nguyen's knowledge and assistance.
Defence Position
[142] The Defence submits that Mr. Nguyen has been financially destroyed by the actions of the police, his assets have been seized for the past 4 years and his freedom has been curtailed as a result of bail conditions.
[143] The Defence seeks a 90 day intermittent sentence being the sentence Mr. Son Van Nguyen, the ASGS employee, received. In the alternative, the Defence submits a conditional sentence of "somewhat longer" than 90 days would be appropriate in these circumstances.
Mr. Nguyen's Personal Circumstances
[144] Mr. Nguyen has a prior criminal record of possession of property obtained by crime (2000) and an impaired driving (2001). There is no further information regarding the possession conviction. As a result, neither prior convictions are particularly significant as to what constitutes a fit sentence in the circumstances of this case.
[145] The Pre-Sentence Report sets out that Mr. Nguyen had a stable and supportive upbringing. There is no evidence of any drug or alcohol problems in Mr. Nguyen's life which might explain his involvement in the offences before this court.
[146] There was one troubling aspect regarding Mr. Nguyen's cooperation with the probation officer preparing the Pre-Sentence Report. Mr. Nguyen stated he had been working for a car dealership since his arrest but he did not want the dealership owner contacted. Mr. Nguyen said that he was a car cleaner and salesperson at this dealership. What is interesting is that this car dealership is operating on the Dundas Property - the same property for which Mr. Nguyen is the registered owner and which property is the subject of the forfeiture application. It is hard to imagine that Mr. Nguyen, the owner of this valuable piece of land in central Mississauga, would rent this property to the dealership and then be employed there as a car cleaner or salesperson. As the probation officer was not able to confirm this information, I am not persuaded that I can conclude Mr. Nguyen has been gainfully employed since his release on bail.
[147] Mr. Nguyen stated he continued to believe he did nothing wrong by selling the equipment and products as he did. The method by which Mr. Nguyen conducted his business makes it clear that he did know his actions were illegal and deliberately chose to pursue those illegal activities for profit.
Mitigating Factors
[148] The mitigating factors are:
i. Mr. Nguyen has no relevant criminal record;
ii. there is no evidence that Mr. Nguyen has breached any of his bail conditions since his arrest; and
iii. Mr. Nguyen's actions were perhaps one small step removed in seriousness from the actual marihuana grow operators. I say small step since Mr. Nguyen conspired and aided and abetted with the marihuana grow operators avoid detection by the police and assisted them to dispose of their marihuana grow operation waste. He simply wasn't the marihuana grower.
Aggravating Factors
[149] The aggravating factors are:
i. this was a sophisticated, large scale commercial operation which reduced the risk to marihuana growers of getting caught by the police through the methods by which the products were sold (cash, no records, black garbage bags, a safe marihuana growop waste disposal site and so on);
ii. Mr. Nguyen's actions assisted extremely large marihuana grow operations;
iii. Mr. Nguyen's actions assisted marihuana growers throughout the province and extra-provincially;
iv. Mr. Nguyen was the directing mind at and owner of ASGS, unlike Mr. Son Van Nguyen who was an employee. He structured the manner which the business was carried on and reaped the financial benefits of the activities; and
v. Mr. Nguyen's motivation was strictly for profit.
Principles of Sentencing
[150] Section 718 of the Criminal Code provides that:
…[t]he fundamental purpose of sentencing is to contribute ... to respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions having one or more of the following objectives:
(a) to denounce the unlawful conduct;
(b) to deter the offender, and others, from committing such an offence;
(c) to separate the offender from society, where necessary;
(d) to assist in rehabilitating the offender;
(e) to provide reparations for harm done to victims or to the community; and
(f) to promote a sense of responsibility in offenders, and acknowledgement of the harm done to the victims and the community.
[151] In R. v. Wust 2000 SCC 18, [2000] 1 S.C.R. 455 at para. 468 Arbour J. stated:
In deciding on the appropriate sentence, the court is directed by Part XXIII of the Code to consider various purposes and principles of sentencing, such as denunciation, general and specific deterrence, public safety, rehabilitation, restoration, proportionality, disparity, totality and restraint, and to take into account both aggravating and mitigating factors. The case law provides additional guidelines, often in illustrating what an appropriate range of sentence might be in the circumstances of a particular case.
[152] The fundamental purpose of sentencing as expressed in s. 718 is to contribute to respect for the law, the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the objectives of denunciation; deterring the offender and other persons from committing offences; separating offenders from society, where necessary; assisting in rehabilitating offenders; providing reparation for harm done to victims or to the community; and promoting a sense of responsibility in offenders, and acknowledgment of the harm done to victims and to the community. The determination of an appropriate sentence involves attempting to apply a blend of the above principles.
[153] The fundamental principle of sentencing is that the punishment should be proportionate to the gravity of the offence and the degree of responsibility of the offender. The punishment should fit the crime.
[154] Section 718.1 of the Code requires that the sentence be proportionate to the gravity of the offence and the degree of the offender's responsibility. An offender should not be deprived of his liberty if a less restrictive sanction would suffice in all the circumstances. Rather, all available sanctions, other than imprisonment that are reasonable in the circumstances, must be considered.
Conditional Sentences
[155] The conditional sentence came into being when s. 742.1 was proclaimed in 1996. As the Supreme Court of Canada stated at p. 464 in R. v. Proulx, (2000), 2000 SCC 5, 140 C.C.C. (3d) 449 (S.C.C.) “Parliament clearly mandated that certain offenders who used to go to prison should now serve their sentence in the community.”
[156] The applicable version of s. 742.1 is as follows:
742.1 If a person is convicted of an offence, ......., and the court imposes a sentence of imprisonment of less than two years and is satisfied that the service of the sentence in the community would not endanger the safety of the community and would be consistent with the fundamental purpose and principles of sentencing set out in sections 718 to 718.2, the court may, for the purpose of supervising the offender’s behaviour in the community, order that the offender serve the sentence in the community, subject to the offender’s compliance with the conditions imposed under section 742.3.
[157] The Supreme Court stated that an offender who meets the criteria of section 742.1 will serve a sentence under strict surveillance in the community instead of going to prison. His liberty will be constrained by conditions to be attached to the sentence. In case of breach of conditions, the offender will be brought back before a judge who may order him to serve the remainder of the sentence in jail, as it was intended by Parliament that there be a real threat of incarceration to increase compliance with the conditions of the sentence.
[158] If the court imposes a sentence of less than two years, section 742.1 lists five criteria that a court must consider before deciding to impose a conditional sentence. These are:
the offender must be convicted of an offence that is not specifically excluded under the legislation;
the offender must be convicted of an offence that is not punishable by a minimum term of imprisonment;
the court must impose a term of imprisonment of less than two years;
the safety of the community would not be endangered by the offender serving the sentence in the community; and
a conditional sentence, if imposed, must be consistent with the fundamental purpose and principles of sentencing set out in ss. 718 to 718.2.
[159] If the court imposes a sentence of less than two years, the first four criteria are prerequisites to any conditional sentence. These prerequisites answer the question of whether or not a conditional sentence is possible in the circumstances. Once they are met, as they are in this case, the only question is whether a conditional sentence is appropriate. That is whether a conditional sentence is appropriate in all of the circumstances of this case taking into account the fundamental purpose and principles of sentencing set out in ss. 718 to 718.2.
What is an appropriate sentence in these circumstances?
The Authorities
[160] In my view, the sentencing authorities where the accused was guilty of importing/exporting a controlled drug provide little assistance. Importation usually involves much more serious controlled substances and importation of a controlled substance is a more serious offence than production of marihuana or possession of marihuana for the purpose of trafficking. See R. v. Bajada, (2003) 2003 15687 (ON CA), 173 CCC (3d) 255; 169 OAC 226 at para 10.
[161] In R. v. Paryniuk, 2013 ONCJ 443 the court summarized the appropriate range of sentencing for a first offence of marihuana production at para 25:
It is apparent from the applicable case authorities that the appropriate range of sentence for a conviction for a first offence of marihuana production where there is a well-planned and carefully executed commercial venture with or without a hydro bypass tends to be between 10 and 15 months:
• R. v. Bick, 2012 ONCJ 233 – 2074 plants and $18,000.00 worth of grow equipment – 12 months imprisonment;
• R. v. Moffatt, 2012 ONSC 1720 – 451 marihuana plants, 54 bags of marihuana seeds and paraphernalia, prior conviction for marihuana production – 12 months imprisonment;
• R. v. Jewers-Dailley, 2011 ONCJ 586 – 478 marihuana plants – 12 months imprisonment;
• R. v. Doan, 2011 ONCA 626 – 369 plants, hydro bypass – 10 months imprisonment;
• R. v. Nguyen, (2007) 2007 ONCA 645, 227 C.C.C. (3d) 262 (Ont.C.A.) - 1,121 plants and 18 pounds of harvested marijuana; as well $10,000 of electricity was stolen during the operation - Held: Although fifteen months imprisonment might be said to be somewhat high, it is not, in my view, outside the range.”
• R. v. Ha, [2008] O.J. No. 4295 (Ont.C.A.) – 480 plants and extensive hydro bypass – 18 months imprisonment; Held: “In holding that the sentence is within the range we accept the significant aggravating factors identified by the trial judge in his careful reasons for sentence”.
[162] At the upper end of the range, the following authorities are instructive:
i. The Court of Appeal in R. v. Gobran, 2013 ONCA 407 upheld a 5 year sentence on the production of marihuana where there was a significant commercial enterprise involving three properties.
ii. In R. v. Jowett, [1990] O.J. No. 2911, the Court of Appeal accepted that a significant penitentiary term was appropriate for the possession of significant amounts of marihuana for the purpose of trafficking and determined a fit sentence was 6 1/2 years.
iii. Similarly, in R. v. Tran, [2006] O.J. No. 4161, the Court of Appeal upheld a four year sentence for possession of marihuana for the purpose of trafficking where the distribution, high level and sophisticated.
[163] At the lower end of the range, the Defence has produced some 90 authorities where much lower sentences have been given for production of marihuana and for possession for the purpose of trafficking, including numerous authorities where conditional sentences have been imposed. However, I note that few, if any, of the cases cited by the defence dealt with large sophisticated commercial operations for substantial financial gain as in this case. Many are from outside this jurisdiction. It is expected that there may be differences in sentences imposes within different regions of Canada. The Supreme Court in R. v. M. (C.A.), 1996 230 (SCC), [1996] 1 SCR 500 stated"
[91]... Perhaps most importantly, the sentencing judge will normally preside near or within the community which has suffered the consequences of the offender's crime. As such, the sentencing judge will have a strong sense of the particular blend of sentencing goals that will be "just and appropriate" for the protection of that community. The determination of a just and appropriate sentence is a delicate art which attempts to balance carefully the societal goals of sentencing against the moral blameworthiness of the offender and the circumstances of the offence, while at all times taking into account the needs and current conditions of and in the community. ....
[92].... As well, sentences for a particular offence should be expected to vary to some degree across various communities and regions in this country, as the "just and appropriate" mix of accepted sentencing goals will depend on the needs and current conditions of and in the particular community where the crime occurred.....
[164] Some of the Defence authorities involved guilty pleas, remorse by the accused, co-operation with the police or other significant mitigating factors such as those described in Song. No such factors are applicable to this case.
[165] It is clear that the appropriate sentencing range for the production of marihuana and possession for the purpose of trafficking appears to be very broad - from a few months of a conditional sentence to 6 1/2 years.
[166] In cases such as this, a fit sentence is a individualized process which is highly dependent on the circumstances of the offence and the offender before the court. See Gobran at para 27.
The Sentence
[167] The primary sentencing factors are denunciation and deterrence.
[168] Commercial marihuana production has been consistently viewed by the appellate courts as a very serious offence: See: R. v. Evans, 1996 248 (SCC), [1996] 1 S.C.R. 8 at para. 31 and R. v. Jacobson, 2006 12292 (ON CA), [2006] O.J. No. 1527 at para. 31. It is a serious offence. A sentence of imprisonment is appropriate.
[169] There is little evidence that rehabilitation would be effective in this case. Some 11 years ago, ASGS supplied marihuana plants and equipment. After the 2002 charges, the plea by Ms. Tran and the forfeiture of significant property, ASGS under the control of Mr. Nguyen, continued to do the essentially the same except for selling the marihuana plants. ASGS is Mr. Nguyen. Mr. Nguyen was not deterred by the events in 2002 regardless of the criminal conviction of his common law spouse and the forfeiture of property of a significant value. Specific deterrence is a significant factor in this case.
[170] While the production and possession of marihuana for the purpose of trafficking remain illegal, there are huge profits to be made by those involved in marihuana grow operations, not just the operators but also those who knowingly help them to start, maintain and conceal their illegal activities. General deterrence requires a penalty to deter those who might be tempted to engage in this activity for the lucrative profits that are available.
[171] Denunciation is also significant in the circumstances of this case where positive and active assistance was provided by Mr. Nguyen to numerous and very large marihuana growers to start, maintain their marihuana grow operations and to avoid detection by the police. Mr. Nguyen made a conscious choice to engage in this illegal activity to make substantial amounts of money and without regard to the harm to society and individuals when the drugs he helped to cultivate were distributed. These actions are deserving of condemnation by the public.
[172] Mr. Nguyen shares a high degree of responsibility for the production of marihuana grow operations, at least one of which was a very large commercial operation, and the consequent effect of the distribution of marihuana by those marihuana grow operators.
[173] The range of sentence suggested by the Crown may have been appropriate had the offences for which Mr. Nguyen been found guilty spanned the many years that he operated ASGS. The time period in this case covers 120 days.
[174] In order to achieve the fundamental purpose and principles of sentencing, a sentence of 20 months incarceration is appropriate on each count.
[175] I see no reason why the sentences should not be served concurrently.
Should the sentence be served by way of a conditional sentence?
[176] In R. v. Nguyen, 2007 ONCA 645 at paras. 46-48 the court stated:
Justice Rosenberg pointed out at para. 31 in R. v. Jacobson (2006), 2006 12292 (ON CA), 207 C.C.C. (3d) 270 (Ont. C.A.) that, “a conditional sentence for cultivation in a residential area would be rare, even for a first offender”. The appellant argues that, as a first time offender, this is one of the rare cases where a conditional sentence is appropriate. The trial judge disagreed.
This was a large scale marijuana grow operation. The warrant yielded 1,121 plants and 18 pounds of harvested marijuana. As well $10,000 of electricity was stolen during the operation. The trial judge determined that these circumstances required the need for denunciation and general deterrence that could not be achieved through a conditional sentence. She was entitled to do so. This is not one of the rare cases.
The trial judge, in my view, was also entitled to decline to impose a conditional sentence in light of the evidence of the increasing prevalence of this form of offence in the local community and the danger caused by the hydro by-pass: see R. v. Nguyen, Khuong Van, [2002] O.J. No. 2480 (C.J.); varied on other grounds, [2002] O.J. No. 5490 (C.A.). It is important to note that trial courts have observed that there is an increase in large-scale marijuana grow operations with accompanying violence and threats of violence that courts must respond to. For example, see R. v. Nguyen, Manh Hung, [2006] O.J. No. 1607 (C.J.).
[177] In R. v. Song, 2009 ONCA 896 at para 15 the court re-affirmed that a conditional sentence for marihuana grow operations is "rare":
Given the authorities referred to above, and applying conventional principles of sentencing, we find it very difficult to conclude that this is one of those rare cases where a conditional sentence is appropriate. Mr. Song was engaged in a large-scale commercial marijuana grow operation involving more than 1,400 plants worth a considerable amount of money, on any estimation, in the market. Even the trial judge acknowledged that the grow operation "might have yielded a fair amount of money eventually". The enterprise was carried on in a residential area and featured the theft of a considerable amount of electricity through a hydro bypass. While Mr. Song did plead guilty and had no prior criminal record, there was little else of a mitigating nature, and much of an aggravating nature, in the circumstances. Unlike in other cases, for example, there were no issues of ill-health, dire financial need or addiction to explain the operation. It was a purely commercial venture. Mr. Song was the person setting up and running the operation and held a significant degree of responsibility for it.
[178] The type of rare circumstances which may justify a conditional sentence described in Song at para. 15, such as motivations due to "ill-health, dire financial need or addiction" do not exist in the circumstances of this case. The motivation in this case was purely profit driven. This was a very large commercial operation which generated very substantial profits for Mr. Nguyen. Meaningful deterrence would not be achieved through a conditional sentence where the rewards are great, as they were in this case. I am not persuaded that a conditional sentence is appropriate in this case as not achieving the principles and purpose of sentencing. A period of incarceration is necessary.
Keinapple Principle
[179] As a result of the application of the Keinapple principle, count's #3 and #4 are stayed
Pre-Sentence Custody
[180] Neither party has suggested there was any pre-sentence custody.
[181] Mr. Nguyen has been on bail since his arrest. There was no submission by Defence that any pre-sentence credit should be given to Mr. Nguyen.
[182] In addition, there is no evidence before me that Mr. Nguyen's bail conditions have been onerous or that any credit should be given for the period Mr. Nguyen has had bail. For example, in the past 6 months, Mr. Nguyen has had his bail varied on two occasions to permit him to travel outside of Canada.
[183] There shall be no pre-sentence credit.
CONCLUSION
[184] Mr. Nguyen is sentenced to 20 months incarceration on each of Counts #1 and 2 to be served concurrently.
[185] No ancillary orders were sought. However, the mandatory order under s. 109 of the Criminal Code shall issue for a period of 10 years.
Ricchetti J.
Date: November 26, 2013