Court File and Parties

COURT FILE NO.: CR-14-90000102-00MO DATE: 20140923

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: HER MAJESTY THE QUEEN

• and - MICHAEL HOBEIKA

BEFORE: DUNNET J.

COUNSEL: V. Rondinelli, for the Applicant, Michael Hobeika A. Shachter, for the Respondent, Her Majesty The Queen

HEARD: September 15, 2014

ENDORSEMENT

[1] The applicant is a 36 year old Canadian citizen with a post-secondary education certificate in Marketing and Entrepreneurship. He has been charged with drug-related offences and possession of the proceeds of crime. Pursuant to ss. 462.34 and 462.341 of the Criminal Code, R.S.C., 1985, c. C-46 [Criminal Code] the applicant applies for an order of restoration of property in order to be able to pay his reasonable legal expenses.

[2] On September 15, 2013, the applicant was arrested. Pursuant to search warrants executed at 5 Hanna Avenue, Unit 334 and 511 The West Mall, Unit 1112 in Toronto, the police seized a large quantity of powder cocaine, cannabis marihuana, oxycontin pills, psilocybin and $15,260 in cash.

[3] During the execution of the search warrants, the police located a number of banking documents pertaining to accounts held by the applicant at the Toronto Dominion Bank [TD], Canadian Imperial Bank of Commerce [CIBC] and Royal Bank of Canada [RBC]. Police also located information that the applicant had a safety deposit box at a branch of the TD bank. On September 16, 2013, the police seized $169,800 in cash from the safety deposit box.

[4] On September 19, 2013, the applicant was released on bail. As a result of production orders obtained pursuant to s. 487.012 of the Criminal Code, the police learned that within hours of his release from custody, the applicant emptied his bank account at TD by way of the purchase of a bank draft in the amount of $20,311 and the withdrawal of $2,500 in cash.

[5] By September 20, 2013, the applicant had withdrawn almost all of the funds in his CIBC bank accounts. Out of $138,000 in those accounts, two bank drafts were drawn with a total value of $110,692.74 and made payable to the applicant.

[6] On September 24, 2013, the police obtained a Restraint Order and Related Management Order against 511 The West Mall, Unit 1112. The applicant is the registered owner on title to the property.

[7] On October 3, 2013, during the execution of search warrants at the residences of the applicant’s mother and sister, and of the applicant’s vehicle, the police seized $54,635 in cash and the three bank drafts drawn from the applicant’s TD and CIBC bank accounts with a total value of $131,003.74.

[8] On that day, the applicant was arrested on new charges of possession of the proceeds of crime and failure to comply with his recognizance.

[9] On December 30, 2013, the applicant retained Gregory Lafontaine to represent him. Following a bail hearing on March 13, 2014, he was released on house arrest, except when in the company of one of his sureties. His mother pledged $125,000 to secure her son’s release.

[10] The preliminary inquiry is scheduled for four days in January 2015. If the applicant is committed to stand trial, the trial is anticipated to take two weeks. The defence may bring an application to challenge the search warrants.

[11] The applicant submits that he has a lawful interest in the monies seized from the safety deposit box and the three bank drafts. He seeks an order releasing those funds in the total amount of $300,000 for the purpose of meeting the present and anticipated legal expenses of Mr. Lafontaine and an associate lawyer.

[12] The applicant submits that he has no other assets or means to meet his legal expenses. He asserts that he cannot work because his sureties are unable to accompany him to a workplace, as required by the conditions of his bail. He also asserts that he has borrowed $15,000 from friends to maintain his monthly condominium expenses and he has attempted to rent his condominium without success. He contends that he has no unrestrained assets other than his vehicle, which his mother needs to drive his grandfather to medical appointments.

[13] The applicant has not applied for Legal Aid funding. He claims that such an application would be a waste of time and resources because the assets seized exceed Legal Aid eligibility requirements.

[14] Sections 462.34 and 462.341 of the Criminal Code provide a means by which an individual with an interest in seized property can apply to a judge for an order granting the individual access to monies seized by the police for the purpose of paying reasonable legal expenses.

[15] The applicant must satisfy three requirements on a balance of probabilities: a) he must have a possessory interest in the property; b) he must have no other assets or means available to pay his legal expenses; and c) the legal expenses must be reasonable.

[16] These issues are canvassed in two separate hearings. The “entitlement” hearing focusses on the first two issues. A second hearing is held in camera without the Crown and involves a consideration of the issue of reasonable legal expenses. Prior to the second hearing, the Crown may make representations as to the amount of the proposed fees.

[17] I am satisfied that the applicant has met his onus on the issue of possessory interest in the bank drafts and cash in the safety deposit box.

[18] An analysis of the second requirement raises a number of issues.

[19] On the record before me, Police Officer Nicolas Talesnik made inquiries of various bank employees on September 20, 2013 and was advised that the applicant had more than one active bank account with TD. At Branch 1806, he had an account with the balance of $22,811.20 referred to above. At Branch 31, he had a line of credit on which he owed nothing and for which he had an available credit of $5,000. He also had a Visa credit card on which he had an available credit of $20,000.

[20] Officer Talesnik was also advised that on September 20, 2013, the applicant had three active bank accounts at CIBC with balances of $51,319.86, $86,587.82 and a line of credit on which he owed nothing. He also had credit available to him in the amount of $10,000.

[21] The applicant has produced one bank statement from RBC to demonstrate his lack of means. He does not account for the balances remaining in his accounts at TD or CIBC. The record seems to suggest that there is a balance of $27,000 in his CIBC accounts. He has also failed to account for any lines of credit.

[22] There is no evidence of an attempt to seek permission from the Crown to sell his condominium pre-forfeiture in order to eliminate the property maintenance costs.

[23] There is no evidence that he has attempted to alleviate his funding issues by obtaining employment in his field of marketing, or any other work. There is no expressed desire to vary his bail conditions to allow him to work.

[24] Further, there is no satisfactory evidence to suggest that the applicant’s family cannot assist in funding his defence. In his affidavit, the applicant asserts that his mother has no assets other than her home, “which she has already pledged as my security.” Yet, the record demonstrates that there continues to be equity in her home in the amount of $175,000.

[25] The applicant has taken no steps to apply for Legal Aid funding, asserting that it is a waste of time and a foregone conclusion that no funding will be available to him.

[26] The courts in Ontario are divided on the issue of whether a Legal Aid application is a necessary precondition to an application for the release of seized funds. Having reviewed those cases, I prefer and adopt the reasoning expressed by Then J. in R. v. Cheng, 2011 ONSC 4479, 284 C.C.C. (3d) 240. After agreeing with the analysis of Dambrot J. in R. v. Kaleniuk (2004), 2004 CanLII 19299 (ON SC), 186 C.C.C. (3d) 408 (Ont. S.C.) at paras. 29-31, that the word “means” in s. 462.34(4) is intended to encompass legal aid funding, Then J. states at paras. 20-23 in Cheng:

First, it is not, in my view, a foregone conclusion that Legal Aid would reject this application on the basis of the applicant’s potential access to seized monies. It would be available for Legal Aid to take the position that the applicant was without present income to fund his defence and accordingly was eligible for Legal Aid. Moreover, Legal Aid could be granted on condition that the monies be repaid from the seized monies by way of an assignment of funds or a contribution agreement even in the event of an acquittal on the proceeds of crime charge. In the event of a conviction, the seized monies would revert to the state in any case. In view of the availability of such an order, it seems to me that the distinctions drawn in Bedi, supra, [R. v. Bedi, [2003] O.J. No. 5825 (S.C.) at paras. 8-13] between the use of public and presumptively private funds are of little moment.

Secondly, while I appreciate in Bedi, supra, the concern for the public interest that presumptively “private” money be expended for the purpose of legal defence before spending “public” money in the event of an acquittal on the proceeds of crime charge, that concern must be balanced against the prospect that potentially “public” money, i.e. money which will revert to the Crown in the event of a conviction will be expended as if it were “private” money.

For example, if the applicant is convicted of the proceeds of crime offence he will nevertheless have received the benefit of counsel of choice funded at approximately twice the Legal Aid rate from “public” monies which otherwise would have reverted to the Crown if his application is successful. In the result, “public” monies will have been expended at twice the Legal Aid rate to obtain legal representation by counsel of choice which is not available to other impecunious litigants who are state funded except in very rare circumstances [see R. v. Fisher, [1997] S.J. No. 530 (Sask. Q.B.); R. v. Peterman (2004), 2004 CanLII 39041 (ON CA), 185 C.C.C. (3d) 352 (Ont. C.A.)]. In my view, such a result is not in the public interest.

In my view, from a public interest perspective the approach in Bedi, supra, unlike that taken in Kaleniuk, supra, does not strike the appropriate balance between the applicant’s need for legal assistance against the possibility that property which will turn out to be the proceeds of crime will be used to benefit a person who may be shown to have acquired the property through the commission of a criminal offence as identified by Doherty J.A. in Wilson, supra [Wilson et al v. The Queen (1993), 1993 CanLII 8665 (ON CA), 86 C.C.C. (3d) 464 (Ont. C.A.)].

[27] For the reasons stated above, I am of the view that the applicant has failed to discharge his onus of demonstrating that there are no other means available to meet reasonable legal expenses in the conduct of his case. The application is dismissed, without prejudice to the applicant to apply to Legal Aid for funding and to address the issues raised above on a more fulsome record.

DUNNET J.

Date: September 23, 2014