2017 ONSC 3819

Court File and Parties

COURT FILE NO.: CV-14-507329 MOTION HEARD: 20170616 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Attorney General of Ontario, Moving Party Applicant AND: $53,990.00 in Canadian Currency (in rem), Respondent

BEFORE: Master Jolley

COUNSEL: Konstantina Chantzis, Counsel for the Moving Party Applicant Jason Bogle, Counsel for the Interested Party Huddy Conserve

HEARD: 16 June 2017

Reasons for Decision

Background

[1] The Attorney General of Ontario brings this motion for an order for answers to undertakings, refusals and questions taken under advisement in the context of an Application for a Forfeiture Order under the Civil Remedies Act, 2001, S.O. 2001, c. 28 (the “Act”).

[2] The application seeks forfeiture of the sum of $53,990.00 in Canadian currency (the “Funds”) found behind a fireplace and in a dryer and seized pursuant to a search warrant from the home of Huddy Conserve (“Mr. Conserve”). The Funds tested positive for recent contact with cocaine.

[3] On 16 June 2016 Mr. Conserve was cross examined on the affidavit he filed in response to this application. During that cross examination he gave a number of undertakings and refusals and took questions under advisement. Before me are two refusals, one undertaking and two questions taken under advisement.

Context of the Civil Forfeiture Application

[4] The Attorney General seeks forfeiture of the Funds on the basis that they are either proceeds of unlawful activity within the meaning of the Act, section 3(1) or are instruments of unlawful activity, as set out in section 8(1) of the Act.

[5] Section 7 of the Act provides that an “instrument of unlawful activity” means property that is likely to be used to engage in unlawful activity that, in turn, would be likely to or is intended to result in the acquisition of other property or in serious bodily harm to any person, and includes any property that is realized from the sale or other disposition of such property. “Proceeds of unlawful activity” means property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity, whether the property was acquired before or after the Act came into force. In turn, “unlawful activity” means an act or omission that (a) is an offence under an Act of Canada, Ontario or another province or territory of Canada, or (b) is an offence under an Act of a jurisdiction outside Canada, if a similar act or omission would be an offence under an Act of Canada or Ontario if it were committed in Ontario.

[6] The “unlawful activity” need not necessarily be linked to the unlawful activity set out in the grounds for the search warrant, provided it falls within the definition of unlawful activity in the Act, above.

[7] Mr. Conserve deposes that he is the owner of the Funds, having saved the Funds over his working life.

[8] While Mr. Conserve was arrested for possession of cocaine during the execution of the search warrant, he was released without being charged. He argues that, as he was not charged with drug possession or trafficking, the Funds should not be subject to challenge. The Act does not require an allegation or proof that Mr. Conserve committed a particular crime or, indeed, any crime, for the Funds to be subject to a forfeiture order (Chatterjee v Ontario (Attorney General), 2009 SCC 19 at paragraph 45). The Attorney General need not establish fault for a person in this in rem proceeding. It need only show that the Funds are the proceeds or instrument of unlawful activity (Ontario (Attorney General) v. $41,700 in Canadian Currency (in rem), 2011 ONSC 2058, paragraph 16).

[9] In this case the Attorney General has specified its position that the Funds are (a) money earned but not declared as taxable income, in contravention of the Income Tax Act, R.S.C. 1985, c. 1, sections 238 and 239; (b) possession of property obtained by crime, in violation of the Criminal Code, R.S.C. 1985, c. C-46, section 354(1) or (c) property obtained as a result of trafficking in a controlled substance contrary to the Controlled Drugs and Substances Act, S.C. 1996, c. 19 and, as a result, are the proceeds of or are instruments of unlawful activity.

[10] The Attorney General argues that the refused questions and those taken under advisement relate to whether the Funds are proceeds or instruments of unlawful activity and to Mr. Conserve’s position that he is the legitimate owner of the Funds and are therefore relevant to the application and should be answered.

Questions

A. Undertaking

Question 45 – to provide documents Mr. Conserve has in relation to the purchase and financing of a Dodge Challenger

[11] Mr. Conserve has not made “best efforts” to locate the documents, contrary to his undertaking. He shall make a genuine and substantial search for the documentation. If his search does not produce the records, he shall advise his counsel exactly what steps he has taken to locate the documentation, including the contact information of the vendor of the Dodge Challenger and the contact information for the user of the vehicle so that Attorney General may follow up directly, should it wish.

B. Refusals

Question 24 – to provide documentation for Mr. Conserve’s Royal Bank account for up to six years.

[12] Mr. Conserve takes the position that he earned the Funds through various jobs over his working life. In his affidavit he deposes that he did not earn more than $30,000 while working in Montreal, yet he apparently leases an apartment for $2,400 a month.

[13] Mr. Conserve objects to the timeframe of six years. Given Mr. Conserve’s means are in issue, including his means to save the Funds, which are substantial, and given he has stated that he earned the Funds over many years, the question and timeframe are relevant and he is required to answer this refusal.

[14] Mr. Conserve stated that he could not locate his home bank branch but there is no information before the court as to what he did to find it and whether he made best efforts to locate his documentation. In answer to this refusal, Mr. Conserve is to, among other things, contact the closest branch to his former branch and the head office in Montreal and/or Toronto and make a written request for the information. If the documentation is not provided, he is to provide the Attorney General, through his counsel, with an outline of the steps he took to locate the documents, including providing a copy of his correspondence to the bank, to demonstrate that he has used his best efforts to locate the documentation from his RBC account.

Question 188 – to provide the lease agreement for 120 Harrison Garden Blvd.

[15] Mr. Conserve takes the position that this document is irrelevant as it post-dates the date of seizure of the Funds.

[16] Mr. Conserve has deposed that his rent is approximately $2,400 per month. The agreement will disclose when he commenced occupancy, will confirm the rent and may have information about Mr. Conserve’s means, his employment and assist in determining whether the Funds are proceeds of or an instrument of unlawful activity. The agreement is to be produced. If the landlord will not provide a copy of the agreement, Mr. Conserve is to provide the Attorney General with a copy of his written request for the agreement so that he can demonstrate his best efforts.

C. Questions Taken Under Advisement

Question 104 – produce your T4 slips, T5 slips, income tax returns, schedules, credits and benefits for the past six years and, if you filed returns, your Notices of Assessment for those past six years

[17] Mr. Conserve takes the position that, as there is no allegation of fraud or tax evasion, he should not be required to produce these documents. Further, he says he has made best efforts. He asked his mother, who took care of his papers, for the name of the accountant who filed his taxes and she could not remember. His mother also indicated that she no longer had copies of his records.

[18] Mr. Conserve’s means to save the Funds is an issue before the court on the return of this application. The application also puts in issue whether Mr. Conserve was required to file an income tax return and whether he evaded payment of tax. These documents will assist in probing Mr. Conserve’s assertion that the Funds are legitimately his and are not, as alleged by the Attorney General, funds held in contravention of the Income Tax Act. Not only are they relevant to the issue of whether the Funds were proceeds or instruments of unlawful activity, they will also be relevant to demonstrating Mr. Conserve’s means, the source of his income and the legitimacy of the Funds.

[19] There is no indication that Mr. Conserve has asked Canada Revenue Agency for this information and he is required to do so.

Question 165 – to provide a copy of Mr. Conserve’s rental application for 85 East Liberty Street, his prior place of residence and the location from which the Funds were seized

[20] Counsel for Mr. Conserve advised that his client did request this document which request ultimately resulted in the landlord serving Mr. Conserve with contempt proceedings. It does appear that Mr. Conserve was served with a contempt notice but it is not clear that it was a result of his request for the rental application.

[21] The rental application may shed light on Mr. Conserve’s financial means which are relevant to his claim that he is a legitimate owner of the Funds.

Conclusion

[22] In summary, the questions that inquire into Mr. Conserve’s financial resources go to both the issue of legitimate ownership, which he raises, and to whether the Funds are proceeds or instruments of unlawful activity. The questions concerning the reporting of his income also go to both whether the Funds are proceeds or instruments of unlawful activity and to the claim of legitimate ownership.

[23] Mr. Conserve is to provide answers to the undertaking, the two refused questions and the two questions taken under advisement within 20 days of today’s date.

[24] If the parties cannot agree on costs, the Attorney General may file costs submissions of no more than 2 pages, along with a costs outline, by 27 June 2017. Mr. Conserve shall respond similarly by 7 July 2017.

Master Jolley Date: 20 June 2017