Court File and Parties

Newmarket Court File No.: CR-14-00000861-00 Date: 20160610 Ontario Superior Court of Justice

Between: Her Majesty the Queen, Respondent – and – Marquis Black, Applicant

Counsel: Carol Shirtliff-Hinds, Stephen Dawson and Michael McEachren, for the Respondent Steven M. Fishbayn, for the Applicant

Heard: April 13, 14, 27, 2016

Reasons for Ruling

Edwards J.:

Overview

[1] On October 22, 2015, Chaffe J. advised Mr. Black that:

…Gentlemen, it is imperative that you retain counsel for charges of this nature. I have been the judicial pre-trial judge from the onset and I think it goes without saying the legal applications that are anticipated, the cross-examinations that are necessary aren’t going to come from you guys, you’re going to need a lawyer to do it for you…

[2] Mr. Black now seeks an order pursuant to s. 462.34(4)(c)(ii) of the Criminal Code (hereinafter the section), the essence of which is to give effect to the aforesaid admonition of Chaffe J. by releasing money seized from Mr. Black’s residence to pay for his legal fees. The Crown resists the application on a number of grounds, the most significant of which is jurisdictional in nature.

[3] Granting the order does not end the matter as Mr. Fishbayn, counsel for Mr. Black, also seeks a declaration that s. 462.37(3) of the Criminal Code violates s. 7 and s. 11(d) of the Charter if it is applied to reasonable fees released by the Court. The essence of the application in this regard, is that the potential application of s. 462.37 to any legal funds released by the Court puts counsel in an unresolvable conflict of interest with his client. Simply put, counsel argues he can only be remunerated for his or her services at the expense of his client’s liberty.

The Facts

[4] Mr. Black was arrested on April 9, 2015, and charged with a number of offences contrary to the Criminal Code and the Controlled Drugs and Substances Act (CDSA). The charges against Mr. Black include: possession of cocaine for the purposes of trafficking; conspiracy to commit an indictable offence; trafficking cocaine (two counts); five counts of trafficking in cocaine; possession of cannabis and psilocybin; and four counts of possession of proceeds of crime contrary to s. 354(1) of the Criminal Code.

[5] Prior to his arrest on April 9, 2015, Mr. Black does not dispute (according to his affidavit evidence filed as part of this application), that Apartment 409 at 260 Davis Drive, Newmarket, Ontario (the apartment), was his apartment.

[6] On April 9 and 10, 2015, a search warrant was executed at the apartment. During the course of the execution of the search warrant police located and seized numerous items, which included cash totalling $39,850 in Canadian currency. It is alleged by the Crown, and not disputed for the purpose of this application, that of the aforesaid cash seized from the apartment, $l,180, was “police buy money”. It is the remaining funds, i.e. $37,970, that are the subject matter of this application.

[7] On April 15, 2015, Detective Constable Kevin Selwood filed a report to a justice, attached to which as Appendix A, was a list of items seized which included the aforesaid $37,970 in Canadian currency.

[8] On April 15, 2015, DeBartolo J.P. granted a detention order of all items seized until the completion of the proceedings against Mr. Black. Amongst the items ordered to be detained was the aforesaid cash. It is noteworthy that the order of DeBartolo J.P. does not differentiate whether the cash is “offence-related property” or “proceeds of crime”.

[9] Filed in support of this application was the affidavit of Mr. Black which deals with, amongst other things, access to funding to pay for his counsel of choice; his applications for Legal Aid; and his ability to realize upon any other assets of which he is the owner.

[10] Prior to his arrest, Mr. Black had been employed with various companies doing landscaping and snow removal. He had been able to save approximately $11,000, which he had given to his sister for safekeeping. These funds were ultimately used to retain Mr. Fishbayn. Those funds have presently run out.

[11] The only other asset that Mr. Black might have had access to, for the purposes of obtaining funding for his legal defence, was an ownership interest in a pickup truck. The pickup truck was the subject of a financing arrangement and it is apparent from the cross-examination of Mr. Black during the course of this application that as a result of non-payment of the loan, the pickup truck has been repossessed. I am satisfied from a review of Mr. Black’s affidavit and viva voce evidence that he has no access to any other funds or assets that could be utilized for the payment of counsel of his choice.

[12] As for Legal Aid, Mr. Black did initially apply for Legal Aid when he was arrested. He did not disclose to Legal Aid the monies that he had entrusted to the care of his sister. He also did not disclose to Legal Aid that the police had seized $39,000 from the apartment. A Legal Aid certificate was temporarily issued to another lawyer other than Mr. Fishbayn. Once Mr. Black was able to contact and retain Mr. Fishbayn, Mr. Black contacted Legal Aid and advised them that he did not require a Legal Aid certificate and it was cancelled.

[13] When the $11,000 retainer with Mr. Fishbayn was exhausted, Mr. Black again requested Legal Aid provide assistance. Mr. Black did this in case Mr. Fishbayn would accept Legal Aid. Legal Aid considered the change of solicitor application, and it was denied on grounds that he did not qualify financially given that his financial information was not credible and complete.

[14] Mr. Black appealed the denial of his Legal Aid certificate to the local area committee and it was refused by way of a Notice of Decision dated October 7, 2015.

[15] Mr. Black has been incarcerated since his arrest on April 10, 2015. A preliminary hearing was scheduled for early February 2016, and was adjourned pending the disposition of the application presently before this Court. The new date for the preliminary hearing is scheduled for November 7 through November 10, 2016, “with or without counsel”.

[16] Crown counsel requested the assistance of Detective Constable Waterfield to determine the financial status of Mr. Black and any real estate that might be owned by Mr. Black, as well as any vehicles that might be owned by Mr. Black. These enquiries determined that Mr. Black did not own any real estate, but that there were a number of vehicles registered in Mr. Black’s name. Mr. Black was cross-examined on the voir dire with respect to these vehicles. I am satisfied that while the information supplied in the Crown’s responding materials is accurate, Mr. Black sold the vehicles in question and the person to whom he had sold the vehicles did not transfer them into his or her name. Regardless of whether the vehicles were properly registered or not, given the age of the vehicles in question I am satisfied that they would have marginal, if any value, upon which Mr. Black could – if he still was the owner, realize upon the vehicles to pay any legal fees.

[17] On December 15, 2015, Mr. Fishbayn sent an email to Crown counsel, Ms. Shirtliff-Hinds, advising he would be bringing an application for the release of the seized funds on December 21, 2015.

[18] On December 17, 2015, Ms. Shirtliff-Hinds faxed a letter to Mr. Fishbayn, which amongst other things stated:

…despite the merits of the application still being under review, you should be aware that if the application is granted, the Crown’s position with respect of the money is as follows:

If any funds released for the payment of reasonable legal fees are proven to constitute the proceeds of crime, then such funds will be made subject to an application by the Crown for a fine in lieu of forfeiture (pursuant to s. 463.37(3) of the Criminal Code). If a fine in lieu of forfeiture is ordered, and if the fine in lieu of forfeiture is not paid within the time allotted by the sentencing judge, then the penalty for non-payment of the fine is a term of imprisonment of not less than 12 months and not exceeding 18 months (presuming the amount of the fine in lieu of forfeiture is between $20,000 and $50,000).

It may be advisable for your client to consider securing independent legal advice with respect to this application given the jeopardy he finds himself in.

[19] On December 31, 2015, Mr. Fishbayn advised Ms. Shirtliff-Hinds by email as follows:

Please be advised that as a result of your letter dated December 17 I’ve determined that I have a conflict of interest with my client in this matter and I will be seeking to adjourn the motion on Monday January 4th….

[20] Mr. Black deposes in his affidavit that he does not feel competent to represent himself at the upcoming preliminary inquiry.

[21] Both defence counsel and Crown counsel agree that the disclosure in this matter involves thousands of pages of documents. It is fair, therefore, to assume that this case will involve some degree of complexity and, as such, the admonition of Chaffe J. that Mr. Black and his co-accused would need a lawyer is entirely well-founded.

Position of the Crown Regarding Jurisdiction

[22] Counsel for the Crown asserts this Court does not have jurisdiction to release the money seized to pay legal fees, as the money was seized as “offence-related property” in relation to the alleged drug trafficking activities of Mr. Brown. The Crown intends to seek forfeiture of the cash as offence-related property pursuant to s. 16 of the CDSA, in the event Mr. Brown is convicted.

[23] It is argued by the Crown, that neither the Criminal Code nor the CDSA has any provision which allows for access to offence-related property for the payment of legal fees. In that regard offence-related property, it is suggested, is quite distinct from proceeds of crime. Offence-related property is defined in s. 2 of the CDSA as any property:

a. by means of which 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.

[24] Crown counsel argues that money which is used in connection with drug trafficking is offence-related property within the meaning of the s. 2 definition provided for in the CDSA. Cash implicitly is essential for drug trafficking; it both facilitates transactions and also maintains the supply of drugs.

[25] It is argued by the Crown that s. 16 of the CDSA provides for the forfeiture of offence-related property upon conviction of a designated substance offence, which includes trafficking and possession for the purposes of trafficking. As such, in this case, as previously noted, the Crown intends to seek forfeiture of the cash in the event Mr. Brown is convicted.

[26] Offence-related property, is property which the Crown argues may be legitimately owned or possessed, but which is used in connection with an offence. Conversely, the possession of proceeds of crime is an offence under s. 354 of the Criminal Code. Proceeds of crime include property such as stolen money and goods. In this case, the Crown notes that Mr. Black is asserting that the money which was seized from his apartment is proceeds of crime, and therefore has brought his application under part XII of the Criminal Code which includes s. 462.3 to 462.5 and deals with proceeds of crime. In this case, the Crown argues that the cash was not seized or restrained in accordance with s. 462.34(1) of the Criminal Code, which provides:

Any person who has an interest in property that was seized under a warrant pursuant to section 462.32 or in respect of which a restraint order was made under subsection 462.33(3) may, at any time, apply to a judge

(a) for an order under subsection (4)…

[27] Fundamentally, the Crown argues that the cash was neither seized under a warrant pursuant to s. 462.32, nor was it the subject of a restraint order made under s. 462.33(3). The search warrant pursuant to which the cash was seized from Mr. Black’s apartment was made pursuant to s. 487 of the Criminal Code, and not pursuant to s. 462.32.

[28] In this case, the Crown acknowledges that s. 462.34(1) of the Criminal Code allows for an application in relation to money which was seized under the CDSA, but only if that money is subject to forfeiture as “proceeds of crime”. Section 462.34(1) provides:

Subsection 462.34(2), paragraph 462.34(4)(c) and subsections 462.34(5), (5.1) and (5.2) apply, with any modifications that the circumstances require, to a person who has an interest in money or bank-notes that are seized under this Act, or the Controlled Drugs and Substances Act and in respect of which proceedings may be taken under subsection 462.37(1) or (2.01) or 462.38(2).

[29] The Crown takes the position that the cash seized from Mr. Black’s apartment was seized under the CDSA as “offence-related property” and, therefore, Mr. Black has not satisfied the requirement of s. 462.34(1) in establishing that the property seized was property seized as proceeds of crime.

[30] The interpretation argued by the Crown was accepted by Trotter J. in R. v. Jackson, 2011 ONSC 366, 2011 O.J. No. 179, where Trotter J. held that the Court does not have jurisdiction to release money that was seized as offence-related property in order to pay legal fees.

Defence Position Regarding Jurisdiction

[31] Counsel for Mr. Black argues that the remedy sought by the defence should not be dependent upon how the prosecution characterizes the funds seized. In that regard, the defence emphasizes the fact that Mr. Black - in addition to the various drug related offences, is also charged in count 11 of the Information as follows:

Reull Andrew Russell and Marquis BLACK on or about the 9th day of April in the year 2015 at the Town of Newmarket in the Regional Municipality of York and elsewhere in the Province of Ontario did possess proceeds of property, namely money of a value exceeding five thousand dollars, knowing that all or parts of the said proceeds have been obtained by an offence punishable by indictment, contrary to Section 354(1) of the Criminal Code.

[32] This count specifically relates to the execution of the search warrant on April 9, 2015.

[33] In relation to the reliance by the Crown on the decision of Trotter J. in Jackson, supra, the defence distinguishes the facts before Trotter J. and those before this Court on the basis that Trotter J. had before him two orders made by Conway J. in the form of a restraint order as it related to offence-related property. No such restraint order is before this Court. The only order before this Court is a detention order made by DeBartolo J.P. made on April 15, 2015.

[34] Of greater significance, however, as it relates to the decision of Trotter J., is the absence of any apparent argument being made to Trotter J. as it relates to decisions made by the British Columbia Supreme Court in R. v. Li, 1997 115 C.C.C. (3d) 336, and another decision of the British Columbia Supreme Court in John Terezakis and John Hinchcliffe v. Department of Justice, 2000 BCSC 80, [2000] BCJ No. 68.

[35] As it relates to the distinction between offence-related property and proceeds of crime, Boyd J. in Terezakis, supra, at para. 3 stated:

While I seriously question the Crown’s ability to raise this jurisdictional issue at this late juncture, I will not address that issue here. However, addressing the merits of the jurisdictional challenge, I reject the notion that in the circumstances at bar, the Crown can successfully circumvent the application of s. 462.34 of the Criminal Code by characterizing the subject funds as ‘offence-related property’ rather than as ‘proceeds of crime’.

[36] The characterization of offence-related property versus proceeds of crime was further addressed by Boyd J. in Terezakis in the following terms:

Secondly, based on a legal analysis, I reject the Crown’s submission that the Court’s jurisdiction to make an order under s. 362.34 (and therefore notionally the applicants’ access to s. 362.34) is dictated by the Crown’s post-seizure characterization of the funds seized as either ‘offence-related property’ or the proceeds of crime.

In my view, the situation at bar is almost completely analogous to that in R. v. Li and Pong (1997), 115 C.C.C. (3d) 336 (B.C.S.C.). There, the Crown challenged the applicants’ access to s. 363.34 on the grounds that the warrant under which the goods had been seized was a general warrant issued under s. 487 rather than a special warrant issued under s. 462.32. Romilly J. rejected the Crown challenge, holding that such a result would be patently unjust, would fail to recognize the ‘superordinate importance’ of the applicants’ right to counsel, and would be contrary to the rules of statutory interpretation calling for a fair, large and liberal interpretation of the Code. Further, he noted that as a matter of policy, allowing an accused a release of funds for reasonable legal expenses could not be said to be allowing an accused to profit from a crime.

[37] As for the application of s. 462.34(1), this was also addressed by Boyd J. in Terezakis at para. 12 as follows:

I reject this interpretation of s. 462.34(1). Applying the fair, large and liberal interpretation referred to in Li and keeping in mind the ultimate purpose of Part XII.2 of the Code referred to by Doherty J.A. in Wilson v. Canada (1993), 25 C.R. (4th) 239 (Ont. C.A.), I conclude that the applicant’s access to s. 462.34 is confirmed by the provisions of s. 462.34(1).

[38] In my view, the decision of Trotter J. in Jackson can be distinguished in two ways. First of all, unlike the facts before this Court, Trotter J. was dealing with a situation where a restraint order had previously been made by Conway J., determining that there were reasonable grounds to believe that the property was offence-related property and proceeds of crime and, therefore, granted the restraint order pursuant to s. 490.8 and 462.33 of the Criminal Code and s. 14 of the CDSA. No such order was before this Court. Secondly, and perhaps more importantly, it does not appear that Trotter J. was referred to the earlier decisions emanating out of British Columbia and, in particular, the parts of the Terezakis decision that I have emphasized above.

[39] To allow the Crown to exercise its discretion in determining whether the cash seized from Mr. Black’s apartment was offence-related property, would allow the Crown to thwart the otherwise legitimate application by an accused to access money that may ultimately be found to be not tainted by any criminal wrongdoing and which should, therefore, be available to an accused to fund his legal defence. This Court cannot lose sight of the fact that at this stage of the proceedings Mr. Black is presumed innocent of the charges which he is presently facing, and attached to that presumption of innocence there must be some acknowledgment by the Court that the money seized may in fact not be tainted by criminal wrongdoing. For these reasons I am, therefore, rejecting the Crown’s position that this Court is without jurisdiction to entertain Mr. Black’s application.

[40] In coming to the conclusion that this Court should follow Terezakis, I note as well that Belch J. in R. v. Lalchan, 2014 OJ No. 5760, dealt with a similar application and chose to follow Terezakis and not Jackson. The decision of Trotter J. in Jackson was specifically referred to in Lalchan, supra, and at para. 16, after a brief analysis Belch J. came to the conclusion:

Faced with conflicting authorities and with a view to avoid further delay, I apply the Terezakis decision, reject the Crown’s position and allow recourse to the seized money to retain counsel.

The Crown’s Alternative Position Regarding Release of Funds

[41] The Crown takes the alternative position that if this Court determines there is jurisdiction to entertain Mr. Black’s application, that Mr. Black has failed to establish that he has the sole entitlement to the cash seized; that he has failed to provide a complete and truthful disclosure of his income and assets; that he failed to demonstrate that no other person appears to be the lawful owner of the cash; and that he has failed to provide a reasonable request for funds for legal expenses.

[42] With respect to the assertion that Mr. Black has failed to establish he has the sole entitlement to the cash seized, the Crown correctly notes that the onus is on Mr. Black to demonstrate he has the sole entitlement to the cash, and that he is required to demonstrate that he has an interest in the cash in the first place. Relying on a decision of Dambrot J. in R. v. Kalenuik, 2004 O.J. No. 2112, the Crown argues that sole entitlement and simple possession are not the same thing. Fundamentally, the Crown argues that just because the cash was found in Mr. Black’s apartment does not lead to the inexorable inference the cash belongs to Mr. Black.

[43] As to the question of whether Mr. Black has met his onus of establishing that he has no other means to fund his defence, the Crown argues that Mr. Black’s own evidence determines that at one point in time he had the ability to retain counsel, when he utilized the cash that he had provided to his sister to provide a retainer of approximately $11,000 to his counsel of choice, Mr. Fishbayn. The Crown also points to the interest that Mr. Black had in a 2010 pickup truck.

[44] It is also argued that in determining whether or not Mr. Black has any other means, the Court can look to whether or not Mr. Black has applied for Legal Aid. On the facts of this particular case, the evidence establishes that Mr. Black did at one point apply for Legal Aid and was successful in that application. Mr. Black chose to cancel the certificate when he chose to retain Mr. Fishbayn privately, utilizing the $11,000 that he had provided to his sister.

[45] The Crown argues that s. 462.34(4) requires an applicant like Mr. Black to satisfy the judge “that the applicant has no other assets or means available for the purposes set out in this paragraph (meaning reasonable living, business or legal expenses)…” [Emphasis added].

[46] The Crown acknowledges the Courts in Ontario have been divided on the issue of whether a Legal Aid application is a necessary precondition to the application for the release of seized funds under the section. Nonetheless it is argued that Legal Aid is a “means” available to the applicant to pay his or her legal expenses and in this case - at one point in time, Mr. Black in fact did have access to that means and chose to terminate his Legal Aid certificate.

[47] As to the reasonableness of the amount claimed for his legal expenses, while this was initially an issue argued by the Crown in its factum, by the completion of argument it was agreed that in the event this Court was to release monies to fund Mr. Black’s legal defence, the hourly rate attributable to Mr. Fishbayn is no longer in dispute and that an agreed upon amount should be allocated to fund the cost of this application. There would, however, be no retroactive application of the funds released by this Court for any services provided by Mr. Fishbayn prior to the application itself.

Defence Position

[48] As to the entitlement of Mr. Black to access the cash seized from his apartment, defence counsel acknowledges that Mr. Black must establish that he has no assets or means to pay his legal fees, and that he must establish an interest in the cash.

[49] As to the first part of the test it is asserted that the fact Mr. Black has been incarcerated since the time of his arrest, with no income during that time, should speak volumes with respect to his financial status. He has sworn an affidavit and been cross-examined with respect to his income and assets, which it is argued on his behalf determines that he has no other means to pay his legal expenses.

[50] As to whether or not there is any other person who has any lawful interest in the cash, it is argued by Mr. Fishbayn that given the nature of this case, i.e. a drug bust, the circumstances are quite different from other criminal cases, such as fraud cases with known victims where there is a plausible proprietary claim by others to the restrained funds or assets. It is also argued that the Kalenuik, supra, decision of Dambrot J. is distinguishable because the Canada Revenue Agency (CRA) had obtained a previous order from the Superior Court in bankruptcy against the accused, that the money sought to fund the legal costs ($60,000) had already been charged in favour of the CRA by virtue of their superior prior claim of $64,000.

[51] As to the issue concerning Legal Aid, it is argued that a Legal Aid application is not a prerequisite before making an application under s. 462.34. In that regard, defence counsel relies on the competing body of case law that rejects the position of the Crown, that an accused must first exhaust his entitlement to Legal Aid before making an application under 462.34.

Analysis

[52] In my view, Mr. Black has satisfied this Court that he does not have any assets or means to pay for his legal costs. He has been in jail since the time of his arrest; there is no evidence he has had access to any income during his incarceration. He was cross-examined with respect to the $11,000 that he accessed through his sister to pay for the retainer of Mr. Fishbayn, and I am satisfied that this is the only “nest egg” that Mr. Black had access to. As for his pickup truck, I accept Mr. Black’s evidence that the pickup truck, in all likelihood, was repossessed by the holder of the loan that was advanced to Mr. Black to purchase the pickup truck in the first place. He has not made any payments on that loan and it is not unrealistic to infer that the pickup truck has, therefore, been repossessed for non-payment of the loan.

[53] As for the question of Legal Aid and what transpired after Mr. Black’s arrest and his initial application for Legal Aid, I find that at this stage of the proceedings Mr. Black did apply for Legal Aid and was denied - for reasons that are of no relevance to this Court, and that the appeal of that unsuccessful application was also turned down.

[54] There is, as acknowledged by the Crown, an ongoing debate concerning the requirement to exhaust Legal Aid eligibility prior to a consideration of the release of any seized funds. The most recent decision from this Court would appear to be R. v. Kidd, 2015 ONSC 6422, where it was determined that a Legal Aid application must be made prior to applying for a release of funds. In that regard, see also R. v. Breton, 2014 ONSC 4419, R. v. Cheng, 2011 ONSC 4479 and R. v. Price, 2011 NBBR 102.

[55] The contrary decisions, taking an alternative approach to that reflected in Kidd, supra, can be found in the following decisions: R. v. Devries, 2012 NUCJ 1, R. v. Alves, 2015 ONSC 4489, Battista v. Ontario, R. v. Comrie and R. v. Gader, 2001 SKQB 95.

[56] While the Court, on an application such as the one advanced by Mr. Black, is required by s. 462.34(5) to take into account the Legal Aid tariff of the Province in considering the reasonableness of legal expenses, in my view to require an accused like Mr. Black to in fact apply for and be bound by a Legal Aid certificate would, in essence, have the Court interfering with an accused’s constitutional right to counsel of choice. In this case, Mr. Fishbayn does not accept a Legal Aid certificate. Mr. Black has chosen Mr. Fishbayn to represent him. Mr. Black has a constitutional right to counsel of his choice. This Court should not, within reason, interfere with Mr. Black’s right to choose his counsel (See R. v. Peterman at paras. 26 to 27).

[57] While there are competing cases dealing with the question of whether or not an accused is required to apply for Legal Aid prior to commencing an application under the section, I note there is no statutory requirement for the release of funds to only those cases where Legal Aid is not available to take on the defence of someone like Mr. Black. In my view, the language of s. 462.34(5) is, in fact, contrary to this conclusion. What the Court is required to do is make reference to the Legal Aid tariff in its determination of what could be considered reasonable in the circumstances. If there had been an intention to require a Legal Aid application prior to an application to access seized funds, it would have been a simple matter to include the appropriate wording in the section to this effect. No such wording is found.

[58] As to the Crown’s assertion that Mr. Black has not established an interest in the monies seized, Mr. Fishbayn points to Mr. Black’s affidavit where he asserts at para. 12 “that I have an interest in the monies seized”. This assertion is unchallenged. In any case, for obvious reasons Mr. Black could not be questioned about the origins of the monies. As well I note there is no evidence before the Court that anyone else asserts an interest in the cash. I am satisfied on this limited evidence that Mr. Black has met his onus of establishing an interest in the cash; that there is no one else who has asserted an interest in the money seized; and, therefore, it is appropriate to allow for the release of the cash for the purposes of funding Mr. Black’s reasonable legal expenses.

[59] The Crown and defence have agreed on an hourly rate for Mr. Fishbayn, and have further agreed that of the monies that are being released, approximately $17,000, shall be released immediately for the time spent by Mr. Fishbayn with respect to this application. The balance of the funds shall be accessed by Mr. Fishbayn for the purposes of funding the defence of Mr. Black’s preliminary hearing and, thereafter, any potential trial. The Crown has the right to assess Mr. Fishbayn’s legal accounts rendered in connection with those services.

Application of Section 462.37(3) to Funds Released for Legal Fees

[60] With the release of the funds to pay for Mr. Black’s legal defence, Mr. Fishbayn now asserts “the applicant is stuck in a legal limbo”. The legal limbo, it is suggested, arises out of the Crown’s intention to apply for a fine in lieu of forfeiture in the event Mr. Black is convicted, and if the fine is not paid within the time provided by the sentencing judge to then seek as a penalty for non-payment, a term of imprisonment not exceeding 18 months.

[61] The intention of the Crown in this regard, as previously noted, was set forth in correspondence to Mr. Fishbayn quoted in para. 18 above. In addition to advising Mr. Fishbayn of the intention of the Crown to seek a period of imprisonment in the event a fine was not paid within a reasonable period of time, the Crown also advised Mr. Fishbayn that Mr. Black might want to consider obtaining independent legal advice with respect to the application that has now been decided by this Court.

[62] Mr. Fishbayn asserts that he is in an unresolvable conflict of interest, and therefore Mr. Black seeks a declaration that s. 462.37(3) violates s. 7 and 11(d) of the Charter if it is applied to reasonable legal fees released by the Court and, as such, unconstitutional in such circumstances. As an alternative, Mr. Black seeks a judicial stay of the proceedings and an order releasing him from custody as an equitable remedy pursuant to s. 24(1), until such time as the prosecution abandons its s. 462.37(3) application.

Position of the Crown

[63] Counsel for the Crown take a number of positions with respect to this aspect of the relief sought by Mr. Black. Heavy reliance is placed by the Crown on the comments of Doherty J.A. in R. v. Wilson, [1993] O.J. No. 2523, where at para. 48 Doherty J.A. stated:

Not only are the competing interests different on the two applications, the effect of granting the relief sought in each application on the overall goal of Part XII.2 of the Criminal Code is very different. If a person on whose behalf funds were released to pay reasonable legal expenses is found guilty of an enterprise crime, and if the other criteria for forfeiture are met, then the entirety of the seized property including that which has been released for payment of legal fees, will be subject to forfeiture under s. 462.37. The part of the property that has been transferred to the offender's lawyer for the payment of legal fees, would, however, no longer be available for forfeiture. The sentencing judge could then turn to s. 462.37(3), and if appropriate, impose a fine on the offender in an amount equal to the fees paid to his or her lawyers. In this way the ultimate purpose of Part XII.2 would be served, while at the same time allowing the accused access to the seized property for the purposes of paying reasonable legal expenses. As indicated above, the fine option is not available under s. 462.42 because the offender has already been sentenced. To the extent that the interests of the third party are favoured on an application under s. 462.42, the overall goal of Part XII.2 of the Criminal Code suffers.

Finally, had the Hibberts been able to apply for the release of part of the seized funds to pay reasonable legal expenses, they would not have been able to decide unilaterally that they would put their legitimate resources towards Mrs. Hibbert’s business instead of towards their legal expenses. The Hibberts would have been required to disclose their legitimate assets and convince a judge that their financial circumstances justified reaching into the seized funds for payment of legal expenses: R. v. Morra (1992), 17 C.R. (4th) 325, 11 C.R.R. (2d) 379 (Ont. Gen. Div.). No such inquiry is contemplated by s. 462.42.

[64] While there was considerable debate by counsel as to whether the aforesaid comments of Doherty J.A. were obiter I am of the view that regardless of whether they are obiter they are binding on this court.

[65] In addition to the reliance by the Crown on the aforesaid comments of Doherty J.A, it was argued that the application by Mr. Black is premature because for an offender to be subject to an order of a fine in lieu of forfeiture a number of events must occur, including:

a) the offender must be convicted or discharged under s. 730 of the Criminal Code of a designated offence;

b) the Crown must make an application for forfeiture of property as proceeds of crime;

c) the Court must find that the property is in fact proceeds of crime under s. 462.37(1) (2) or (2.10) of the Criminal Code; and

d) the Court must be satisfied that the property cannot be made subject to an order of forfeiture because it has been transferred to a third party, or substantially diminished in value.

[66] The Crown argues that the Court should not decide an issue of law, particularly a constitutional issue such as the one before this Court, which is not necessary for the resolution of the matter before the Court. (See Lalonde J. in Morin-LeBlanc, 2013 ONSC 6534 at para. 17)

[67] It is also argued on behalf of the Crown that even if Mr. Black was to be convicted of a designated offence and the Court found that the property constituted proceeds of crime, the sentencing Court “may” in the exercise of its discretion not order a fine in lieu of forfeiture, and even if a finding in lieu of forfeiture was considered it would be incumbent upon the Court to then deal with the question of whether or not Mr. Black had an ability to pay the fine. If it was determined that Mr. Black did not have the ability to pay a fine, the Crown asserts that Mr. Black would not be incarcerated if it was ultimately determined that he truly did not have an ability to pay. (See R. v. Wu, 2003 SCC 73, [2003] 3 SCR 530)

Position of the Defence

[68] The essence of the defence argument is set forth in a factum submitted by Alan Gold to the Newfoundland and Labrador Court of Appeal in R. v. Appleby, [2009] NJ No. 28 (NLCA).

[69] I am advised that leave to appeal to the Supreme Court of Canada was denied November 9, 2009.

[70] In Appleby, supra, the Newfoundland and Labrador Court of Appeal held that the application of s. 462.37(3) to legal fees would result in a fundamental unfairness. In that regard, Chief Justice Wells of the Newfoundland Court of Appeal, at para. 65, stated:

Notwithstanding that Parliament has not explicitly so stated, funds paid out for legal expenses pursuant to an order made under section 462.34(4), are not to be considered “property of an offender” under subsection 462.37(3). That being so, the amount is not subject to the exercise of discretion by a judge as to whether any part or all of it should be included in a fine in lieu of forfeiture.

[71] Counsel for Mr. Black asserts that the unresolvable conflict of interest in which he says he finds himself will either force Mr. Black to abandon his s. 7 and 11(d) Charter rights, or accept the risk of increased incarceration that an accused who is either legally aided or has been provided legal assistance pursuant to a Rowbotham application would not have to assume. Being put into such a situation, it is argued, creates a situation of fundamental unfairness that violates s. 7 and 11(d) of the Charter.

[72] Mr. Fishbayn, on behalf of Mr. Black, argues that his client is entitled to know the case that he has to meet, which is a fundamental principle incorporated as part of s. 7 of the Charter. By analogy to a Corbett application, it is argued that an accused has the right to know beforehand if his criminal record can be used against him and, similarly, Mr. Black should know if he will have to face a further period of imprisonment if the Crown proceeds as set forth in para. 18 above. Adopting the language of Mr. Fishbayn from his factum, “the applicant should not be required to play Russian roulette or blind man’s bluff with his liberty”.

Analysis

[73] Counsel for Mr. Black asserts that he is in an irreconcilable conflict of interest. The conflict of interest, it is argued, arises because the application for the release of funds to pay Mr. Black’s legal expenses exposes him to a period of incarceration which a similarly situated offender would not be subjected to. Put differently, if Mr. Black was represented by counsel who was paid by Legal Aid, or alternatively if Mr. Black had proceeded with a Rowbotham application, he would not, in the event he was found guilty of the offences as charged, face any additional period of incarceration that he might now face. Put differently, by proceeding with the application to pay his legal fees, Mr. Black exposes himself to a longer period of incarceration than if he was defended by a lawyer under a Legal Aid certificate.

[74] There are a number of answers to the question now posed by Mr. Fishbayn. Presumably Mr. Black has had the benefit of legal advice in determining whether or not he should proceed with an application for the release of the monies that I have now ordered. In proceeding with that application, presumably Mr. Black would be well aware of the possibility that if he was convicted he may face a fine in lieu of forfeiture. Mr Black is therefore undoubtedly aware that if he is unable to pay the fine levied by the sentencing court that he may, and I emphasize the word may, face a period of incarceration that he would not otherwise suffer as a result of proceeding with counsel who was paid by Legal Aid or, alternatively, proceeding with a Rowbotham application.

[75] With the benefit of the legal advice that this court can infer that he has received, I am of the view that this court can also reasonably infer that Mr Black has waived the potential conflict that Mr Fishbayn has raised.

[76] I agree with the submission of Crown counsel that it is premature to decide the constitutional issue raised by Mr. Fishbayn. In that regard, I am guided by the admonition of Doherty J.A. in R. v. R.K., [2005] O.J. No. 2434198 C.C.C. (3d) 232, where at para. 59 Doherty J.A. admonished trial judges not to decide constitutional questions prematurely, and stated:

It has been repeatedly held that Courts should not decide issues of law, particularly constitutional issues, that are not necessary to the resolution of the matter before the Court.

[77] At this point in the proceedings Mr. Black has not been convicted of any of the offences before the Court. In the absence of a conviction, the Crown cannot make an application for forfeiture of property as proceeds of crime. Even if there is a conviction and an application for forfeiture, there still has to be a determination that the property is in fact proceeds of crime. More importantly, in my view, even if all of the aforesaid events take place and even if the trial Court finds that the property, i.e. the cash, constitutes offence related property and/or proceeds of crime, the Court may still exercise its discretion and not order a fine in lieu of forfeiture. Perhaps even more importantly, even if all of the aforesaid events take place - including the exercise of its discretion to order a fine in lieu of forfeiture, the Court must consider Mr. Black’s ability to pay the fine in lieu of forfeiture and how much time would be required to pay the fine.

[78] The most important consideration, in my view, with respect to the potential jeopardy that Mr. Fishbayn asserts his client faces, having proceeded with his application and now succeeded, is the possibility that he faces incarceration if he is unable to pay a fine in lieu of forfeiture. In that regard, it is quite fundamental in our criminal justice system that an offender will not be incarcerated if it can be established that he or she is truly incapable of paying a fine. As the Supreme Court of Canada in R. v. Wu, 2003 SCC 73, at para. 67 noted:

If, as the trial judge anticipated, the respondent had continued simply to be unable to pay, the Crown, on its own acknowledgment to this Court, would not have sought such a committal. If on the other hand the respondent had come into money to pay all or part of the debt, he should quite properly had been required to do so.

[79] Our Canadian criminal justice system is not founded on a principle that an offender unable to pay a fine will face “debtor’s prison”. If Mr. Black faces the potential for a fine in lieu of forfeiture, it will be incumbent upon him to demonstrate that he has been unable to pay the fine within the period of time designated by the sentencing Court.

[80] Ultimately, I expect that in cases like this where an accused is successful in an application for the release of seized funds for the payment of legal fees, and where it can be established that an accused had no other means or assets to pay his legal expenses and there is no evidence that the accused has squandered any other assets, or chosen to divert assets for other purposes except to pay for his or her legal expenses, the most likely outcome will be the exercise of the Court’s discretion not to order a fine in lieu of forfeiture, with the possibility of a period of imprisonment if the fine is not paid.

[81] In my view, the analysis of Croll J. in R. v. Rafilovich, 2013 ONSC 7293, at para. 61 through 68, is the type of analysis that answers the questions posed by Mr. Fishbayn in his application. At para. 69, Croll J. concludes her Reasons as follows:

Finally as provided in section 462.37(4), if the offender does not pay the fine, he or she is subject to imprisonment. For Mr. Rafilovich, the imprisonment would be between 12 and 18 months. This would subject Mr. Rafilovich to a longer term of imprisonment than a similarly situated offender who had funds for his or her legal expenses or who qualified for Legal Aid. For all of these reasons the Crown’s application for a fine in lieu of forfeiture equal to the amount of legal fees released is denied.

[82] I would add to the comments of Croll J. that Mr. Black may be facing a longer term of imprisonment than a similar situated offender who had funds for his or her legal expenses or qualified for Legal Aid, or someone who might have been successful in a Rowbotham application. I cannot presume how a Court would have dealt with a Rowbotham application had Mr. Black proceeded with such an application, but given the comments of Chaffe J. quoted in para. 1 above, it seems inconceivable to me that such an application would not have found favour with the Court.

[83] I cannot tie the hands of the sentencing judge in the event Mr. Black were to be convicted. It would be presumptuous of me to do so. However, it seems to me that the guidance provided by Croll J. in Rafilovich, supra, is the type of guidance that any sentencing Court would take into account. Certainly, given the position taken by the Crown in argument and in its factum with its emphasis placed on the fact that an offender would not be incarcerated if he is truly incapable of paying a fine in lieu of forfeiture, it would be incongruous in my view – should Mr. Black be convicted, for the Crown to then turn around and seek a period of imprisonment where Mr. Black truly cannot pay a fine in lieu of forfeiture. Facts may surface that might demonstrate an ability to pay a fine in lieu of forfeiture, but given the evidence that I heard on the voir dire I am satisfied that at this stage in the proceedings Mr. Black has no other income and no other assets available to him to assist in the payment of his legal fees. If those facts continue to be the case were he convicted, the unfairness of exposing him to a longer term of imprisonment than a similarly situated offender funded by Legal Aid or a Rowbotham application would create an unfairness that the sentencing judge undoubtedly would take into account.

[84] The declaratory relief sought by Mr. Fishbayn, on behalf of Mr. Black, and his application for a stay of proceedings is therefore dismissed. Counsel are requested to draft the necessary order to give effect to the release of the funds as ordered in para. 58 and 59 of these Reasons.

Justice M.L. Edwards

Released: June 10, 2016

NOTE: As noted in court, on the record, this written decision is to be considered the official version and takes precedent over the oral reasons read into the court. If any discrepancies between the oral and written versions, it is the official written decision that is to be relied upon.

R. v. Black, 2016 ONSC 3702 ONTARIO SUPERIOR COURT OF JUSTICE HER MAJESTY THE QUEEN – and – MARQUIS BLACK REASONS for ruling The Honourable Justice M.L. Edwards Released: June 10, 2016