SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 622/15

DATE: 2015-11-25

RE: Attorney General of Ontario, Applicant

AND:

$39,460 in Canadian Currency and $100 in U.S. Currency (In Rem), Respondents

BEFORE: Heeney R.S.J.

COUNSEL:
Rosalyn Train, for the Applicant

Enzo Battigaglia, for Vivian Lee Hamilton

HEARD: October 20, 2015 at London

ENDORSEMENT

[1] This is an application under the Civil Remedies Act, 2001 (“the CRA”) for forfeiture of CAD$39,460 and US$100 that was seized by police on August 17, 2012 during the execution of a search warrant under the Controlled Drugs and Substances Act at a property on Napier Road, in Adelaide Metcalfe Township, in the County of Middlesex.

[2] The only person responding to the application is Vivian Lee Hamilton, who resides at the property in question and claims that the money belongs to her. She is the sole proprietor of a corporation registered to this address, which is stated to be in the business of selling farm animals and breeding dogs. She has resided there since 2004 with Florian Daponte, whom she describes as a “friend”. Mr. Daponte rents the property from his mother-in-law, Mrs. Lagerwerf, even though her daughter no longer resides there.

[3] The property is a 50 acre farm, the bulk of which is farmland that is rented out to a third party. The portion occupied by Mr. Daponte includes a mobile home, two residences and about 30 outbuildings.

[4] The property has been the subject of many CDSA and Criminal Code search warrants over the years. Mr. Daponte has been charged and convicted of many drug trafficking and related offences, as reflected by his criminal record that is filed in these proceedings.

[5] The Applicant relies on the following evidence in support of its application: the affidavit of Detective Sergeant Spencer Salters, who has been with the Asset Forfeiture Unit of the OPP since 2001, but for a brief hiatus of two years from 2005 to 2007; the affidavit of Laurie Pietras, a law clerk employed by the Applicant, to which is attached a large volume of material relating to the history of the drug seizure in question as well as previous drug matters involving the property and Mr. Daponte; and the affidavit of Detective Constable David Waterfield, an officer with York Regional Police Service, who has extensive experience investigating offences under the CDSA. He offers opinion evidence regarding the use of cash in the drug world, and the manner in which such cash is bundled and handled. His curriculum vitae is attached as an exhibit to his affidavit, and I am satisfied that he has the expertise to offer the opinions expressed in his affidavit. No objection was raised by counsel for Ms. Hamilton regarding the admissibility of any of the evidence tendered by the Applicant.

[6] On August 17, 2012 police executed a search warrant on the property. Mr. Daponte was arrested at the scene, as were two other persons who apparently reside there, Mr. Dennis and Mr. Freitas. Other persons who do not reside there were also arrested. Ms. Hamilton was not present, having left for a seven-week vacation on August 14, 2012.

[7] During the search, the following was located and seized:

• 3.6 lbs of marijuana, found on the porch east of the smaller house, packaged in 4 vacuum sealed clear bags;

• Another small quantity of marijuana, found inside Mr. Dapont’s house on the dining room table;

• A large quantity of pills, located inside two plastic bottles found in proximity to where Mr. Daponte was arrested, as he was walking from the northeast corner of his house. These included 819 Oxycontin pills of various strengths; 68 OxyNEO pills; 18 MDMA (Ecstasy) pills; 46.5 Hydromorph Cantlin pills of various strengths; 39 Suboxone pills; 280 Dolaudid pills of various strengths; and 653 Morphine pills of various strengths;

• 20 Oxycocet pills (5 mg.), found in a pill bottle in the name of Vivian Hamilton inside Mr. Dapont’s house on a table;

• $16,980 and US$20, found in the kitchen and bedroom of Mr. Dapont’s residence;

• $22,480 and US$80 found in a white tobacco container in the pigeon coop located in a room inside the house;

• A bag of 73 used Fentanyl patches, found inside a green garbage can outside the pump house;

• Six scales, five of which were digital and one of which was a triple beam;

• Two boxes of sandwich bags (believed to be packaging material), one of which was found in the small empty house and the other in Mr. Daponte’s house;

• Cell phones with text messages consistent with trafficking in controlled substances;

• A crack pipe, found in the pump house;

• Weapons and ammunition, including a loaded .22 rifle with extra ammunition, found in a dog kennel; another loaded .22 rifle found in another dog house; a 12 gauge shotgun, located outside the rear of an outbuilding; and, quantities of bullets and shotgun shells located in various places and buildings around the property;

• A drug inventory list, found on the kitchen table.

[8] The “drug inventory list” bears further elaboration. On the kitchen table was found a set of scales, a small amount of marihuana, baggies, $555 in cash and an envelope. The number $120340 appears on the front of the envelope, as well as an address and a phone number. On the back of the envelope the following appears:

1513

• 90 80’s

1603

1080

• 90 40’s

1170

1603 x 55 80’s

$88165

1179 x 27.50 40’s

$32175

[9] The explanation offered by the Applicant, supported by its unchallenged affidavit evidence, is that this is referring to the sale of a total of 1,603 Oxycontin pills at 80 mg. strength at a price of $55 each, as well as 1,179 Oxycontin pills at 40 mg. strength, at a price of $27.50 each, for a total price of $120,340. I accept that evidence.

[10] Photographs of where the money was found were filed in evidence. One depicts the kitchen table just described. Another depicts the coffee table in the front room of Mr. Daponte’s house, where $2,725 was sitting on the table while an additional $13,700 and US$20 was sitting on the floor near the coffee table with a set of kilogram scales. A third photograph shows the white can found in the pigeon coop in the house, showing $22,480 and US$80 in tight bundles inside.

[11] Under s. 3(1) of the CRA, the court shall, subject to subsection (3) and except where it would clearly not be in the interests of justice, make an order forfeiting property if the court finds that the property is proceeds of unlawful activity. Under s. 8(1), the court shall make an order forfeiting property if the court finds that the property is an instrument of unlawful activity, subject to subsection (3) and except where it would clearly not be in the interests of justice.

[12] It is the position of the Applicant that the money seized is either proceeds of unlawful activity, namely proceeds of the trafficking of controlled substances, or an instrument of unlawful activity, namely cash to be used to purchase controlled substances for the purpose of trafficking, or both. Pursuant to s. 16, findings of fact shall be made on a balance of probabilities.

[13] Under s. 17(2), an offence may be found to have been committed even if no person has been charged with the offence, or a person was charged with the offence but the charge was withdrawn or stayed or the person was acquitted of the charges.

[14] That latter section has particular significance here. Mr. Daponte was charged with six counts under the CDSA. On February 3, 2015, his trial took place before Hockin J. Justice Hockin granted a defence motion for a directed verdict at the close of the Crown’s case and acquitted Mr. Daponte on all counts. He found that the presence of the scales, envelope and cash in the house did not give rise to a reasonable and logical inference of knowledge and control by Mr. Daponte of the cocaine, marihuana and pills found in the various locations outside Mr. Daponte’s house. Given the fact that a total of nine people were arrested on the farm that day, it is not surprising that the Crown had difficulty pointing specifically to Mr. Daponte as being the person with knowledge and control of the drugs that were found.

[15] For purposes of this case, though, it is not necessary for the Applicant to prove beyond a reasonable doubt that Mr. Daponte was trafficking in drugs. It is only necessary to prove, on a balance of probabilities, that somebody was doing so on the property, such that the money found was either proceeds of unlawful activity or was the instrument of unlawful activity.

[16] The circumstantial evidence in support of the Applicant’s case can be summarized as follows:

• The large quantity of controlled substances found on the property;

• The presence of six sets of scales, which are commonly used to weigh controlled substances;

• Packaging material;

• The envelope with drug transaction calculations described above;

• Cell phones with text messages consistent with trafficking in controlled substances;

• Weapons and ammunition in various locations around the property;

• Large quantities of cash.

[17] The relevance of the first five items of evidence is obvious. As to the weapons and ammunition, neither Mr. Daponte nor the other persons residing on the property were licensed to have weapons. Weapons and drug dealing go hand in hand. If a seller of drugs gets “ripped off” by a person who takes their drugs without paying for them, he can hardly go to the police and complain. The drug trafficker is left to his own devices, and must provide for his own protection.

[18] And as to the cash itself, the mere presence of a large quantity of cash in proximity to weigh scales and controlled substances leads to a strong inference of drug dealing. However, the evidence relied on by the Applicant goes further than that. The evidence of Det. Const. Waterfield is that the $20 bill is the most common form of currency used by street level dealers. In this case, of the 1,489 bills seized, 1,136 (over 75%) were $20 bills.

[19] The bills were gathered in bundles of $2,000 (with a few exceptions), often with mixed denominations, and were secured with elastic bands. Banks do not use elastic bands because they damage the edges of the bills, and they do not mix denominations.

[20] Drug dealers do not use banks to deposit their proceeds of sale or to pay for the purchase of drugs, because they do not want to leave a paper trail of their transactions. Furthermore, banks are under a legal obligation to report suspicious transaction activity. As a consequence, drug dealers can be expected to have quantities of cash around, both representing the proceeds of drugs that have been sold, and the cash needed to purchase more drugs for later resale.

[21] By contrast, legitimate business owners and regular citizens use banks routinely. Keeping large quantities of cash around is unsecure and risks loss from theft, whereas money deposited into a bank is safe and secure, while still being readily accessible. Using bank accounts facilitates the tracing of receipts and disbursements and thereby makes record keeping easier. Furthermore, keeping money in the bank enables the cash to be used in a way that generates income.

[22] As against this powerful array of circumstantial evidence stands the evidence of Ms. Hamilton. In her affidavit of September 15, 2015, she states the following:

• She has owned a dog breeding and farm animal business since August, 2004;

• On August 14, 2012 she left for vacation and was not present when the search warrant was executed;

• Before she left she gave Mr. Daponte $25,000 of her cash for the purchase of dog food, hay, straw, corn and other animal feed, as well as for any veterinarian and household bills that may occur while she was away for seven weeks;

• Also before she left she sold a green 2008 Polaris four-wheeler for $8,000 cash. That money was given to her the day she was leaving for vacation;

• She also sold three mastiff dogs for $1,500 each, plus sheep, three goats for $1,200 cash and ten chickens, ten ducks and three geese for $300 cash;

• Her cash, totalling $39,000, is the same cash that was seized by police during the execution of the search warrant;

• She is the rightful owner of the $39,000 that is the subject of this application. This cash, apart from the $8,000 received for the Polaris, was generated from her dog breeding and farm business. It did not come from criminal activity. It was not used, or going to be used, to engage in any criminal activity whatsoever.

[23] She was cross-examined on her affidavit on September 30, 2015. She was represented by her counsel, Mr. Battigaglia, who made repeated objections and instructed her not to answer. Refusals included:

• To produce her records with the Strathroy Animal Clinic;

• To produce her business records showing how much she spent for feed, vet bills, bedding and other expenses for the animals in 2011 and 2012;

• To give an undertaking to obtain a copy of her account with Marshalls Country Depot regarding her purchase of dog food, or to provide an authorization so counsel for the Applicant could obtain it;

• To undertake to produce independent documentation from the Strathroy Animal Clinic/Hospital with respect to payments there, or to sign an authorization so counsel for the Applicant could obtain that information,

[24] In each case, Mr. Battigaglia objected that such questions were irrelevant. That is a spurious objection. This information goes to the very heart of this case. The Crown has produced circumstantial evidence that the money seized came from drug trafficking. Ms. Hamilton asserts that this money belongs to her and was generated from her animal and farming business. It is entirely relevant to examine what her income and expenses for the business were at the time the seizure took place, and for a reasonable period of time beforehand, to determine what expenses she was incurring and whether her business is capable of generating profits of this nature.

[25] Furthermore, Ms. Hamilton put her expenses directly in issue when she attested in her affidavit that before she left for a 7 week vacation on August 14, 2012, she gave Mr. Daponte $25,000 in cash for the purchase of dog food, hay, straw, corn and other animal feed, as well as for veterinarian and household bills. The Applicant is entitled to explore her records relating to such expenses, as well as any third party records, to determine whether or not they reflect average expenditures that support her story.

[26] I note that expenses of $25,000 for 7 weeks amounts to $3,571 per week, or $185,714 per year. Her 2011 Notice of Assessment shows gross business income of $87,696 and net business income of $5,819. Her 2012 Notice of Assessment shows gross business income of $43,750 and net business income of $7,821. Her 2013 Notice of Assessment shows gross business income of $44,420 and net business income of $10,995. Her 2014 Notice of Assessment shows gross business income of $33,150 and a net business loss of $8,521. By definition, the difference between her gross income and her net income would be the expenses she incurs in doing business, which would include feed, veterinarian bills and so on. In none of those years do her expenses amount to any more than a fraction of $185,714 per year.

[27] She was asked at pg. 55 for receipts for the three Mastiff dogs she allegedly sold for $1,500 each, and at first she said she had no receipts because they “were destroyed during the raid”. Then she said she doesn’t give receipts unless a buyer asks for them. When asked whether she provides receipts to H & R Block who does her income tax, she said “I don’t provide any receipts. I provide my documents and that, that they need.”

[28] Later, at pg. 61 of the transcript, she did agree to try to find and produce her invoices, receipts and business records with respect to her expenses, but nothing was forthcoming. At pg. 62, she gave an undertaking to advise as to total amount she borrowed to pay for feed and from whom, but again no further information was produced in compliance with that undertaking.

[29] She has provided no explanation as to why she would keep large quantities of cash around with which to run her business, rather than deposit her receipts in a bank where her money would be secure, and pay her bills through a bank, all of which would facilitate record-keeping for her business. She has provided no supporting evidence whatsoever to corroborate her bald assertion that this is her money and that it came from her animal business.

[30] She also alleged that of the cash seized, $8,000 came from the sale of a green 2008 Polaris four-wheeler. She says that she sold the vehicle before she left and received payment in cash. On her cross-examination, she was asked to provide proof that the vehicle had been registered in her name, and her answer was that it was never registered in her name because shortly after she bought it another person offered to buy it and she sold it. When asked who she had purchased it from, she said “a friend”. When asked the friend’s name, she couldn’t remember, nor could she remember the name of the person she sold it to.

[31] I find that very difficult to believe. Even though the alleged transaction had taken place 3 years earlier, purchasing an $8,000 vehicle is a relatively significant event in a person’s life. If it had been a stranger she purchased the vehicle from, she might well forget the person’s name, but she says bought it from a friend. She did remember that she bought it a week before she left on her trip to the Azores, but is somehow unable to remember from whom she bought it.

[32] Furthermore, her statement that she sold the vehicle and received $8,000 for it just before she left on holidays is inconsistent with the fact that the vehicle was found on the property at the time the search warrant was executed.

[33] Mr. Battigaglia made much of the fact that Detective Sergeant Salters sought and obtained a Return Order pursuant to s. 490(9) of the Criminal Code ordering the $39,460 and US$100 to be returned to Mr. Daponte following his acquittal. However, Detective Sergeant Salters explains that he did so because the prosecution was over, and the money seized was not required further. Significantly, the order specifically provided as follows:

THIS COURT FURTHER ORDERS that nothing in this Order shall detract from the rights of third party secured creditors in relation to the property, any right or claim by the Canada Revenue Agency, or any proceeding under the Civil Remedies Act for the civil forfeiture of the above property.

[34] The Applicant moved quickly, as expected, and secured a preservation order, pending final disposition of this application. The fact that Detective Sergeant Salters obtained a Return Order has no legal relevance to this application.

[35] Considering all of the evidence, I am satisfied on a balance of probabilities that the cash in question is either the proceeds of unlawful activity, or the instrument of unlawful activity, or both. I find that the unlawful activity in question is trafficking in controlled substances. The circumstantial evidence put forward by the Applicant is overwhelming, and points to the conclusion that this is drug money.

[36] I simply do not believe the evidence of Ms. Hamilton that this money belongs to her and was generated from her business and from the sale of the Polaris. Her evidence is internally contradictory and entirely unsupported by any documentary evidence – evidence that should be available to her if her story were true. It defies common sense to suggest that a legitimate business would forsake the use of banks, and would instead conduct business through large bundles of cash laying about the house.

[37] Having made that finding of fact, I must order that the money be forfeited to the Crown in right of Ontario, unless it “would clearly not be in the interests of justice” to do so, or unless either s. 3(3) or s. 8(3) applies.

[38] Subsection 3(3) provides as follows:

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

[39] A “legitimate owner” is defined in s. 2 as follows:

“legitimate owner” means, with respect to property that is proceeds of unlawful activity, a person who did not, directly or indirectly, acquire the property as a result of unlawful activity committed by the person, and who,

(a) was the rightful owner of the property before the unlawful activity occurred and was deprived of possession or control of the property by means of the unlawful activity,

(b) acquired the property for fair value after the unlawful activity occurred and did not know and could not reasonably have known at the time of the acquisition that the property was proceeds of unlawful activity, or

(c) acquired the property from a person mentioned in clause (a) or (b);

[40] None of this applies here. I have found, as a matter of fact, that the money was generated from drug dealing and rejected Ms. Hamilton’s assertions that it was generated from her business. It cannot therefore be said that Ms. Hamilton was the rightful owner of the money before the unlawful activity occurred and was deprived of possession by means of the unlawful activity, nor can it be said that she acquired the property for fair value after the unlawful activity occurred.

[41] Subsection 8(3) provides as follows:

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

[42] A “responsible owner” is defined in s. 7 as follows:

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

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

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

[43] Once again, none of that applies here. It has not been demonstrated that Ms. Hamilton has any interest in the property.

[44] The remaining issue is whether it would clearly not be in the interests of justice to order forfeiture. As interpreted by Doherty J.A., speaking for the court in Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (In Rem), 2011 ONCA 263, (C.A.), at para. 4, this refers to “cases that fall within the scope of the forfeiture order where, on any reasonable view, forfeiture would be a draconian and unjust result.”

[45] In that case, the court examined factors such as the conduct of the party whose property is the subject of the forfeiture application, and the value of that party’s interest in the property compared to the value of the property that is tainted by the unlawful activity. The court also recognized that in deciding whether or not to grant relief from forfeiture, the court must consider the effect of granting relief on the achievement of the purposes set out in s. 1 of the CRA.

[46] Subsection 1(b) of the CRA sets out the following purpose:

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

[47] Ms. Hamilton seeks to keep property that was acquired as a result of unlawful activities. She is one of the “others” referred to in this subsection. An order for forfeiture would be entirely in keeping with that purpose.

[48] I have made a finding that Ms. Hamilton did not earn this money from her business and has no interest in it. I have found that the money was generated from drug trafficking. It cannot be said that forfeiture would be a draconian and unjust result. Quite the contrary. Refusing to order forfeiture would allow Ms. Hamilton to profit from the illegal activities of others.

[49] The application is allowed. An order will go that the sum of $39,460 and US$100 seized by the police on August 17, 2012 be forfeited to the Crown in right of Ontario.

[50] If the Applicant wishes to pursue the issue of costs, I will accept brief written submissions within 15 days, with Ms. Hamilton’s response within 10 days thereafter and any reply within 5 days thereafter. Failing that, the parties will be deemed to have resolved the issue of costs between themselves.

“T. A. Heeney R.S.J.”

Regional Senior Justice T. A. Heeney

Date: November 25, 2015