Court File and Parties

CITATION: R. v. Khan, 2017 ONSC 4871

COURT FILE NO.: CR 16-90000581-0000

DATE: 20170814

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

SABRULLAH KHAN

Applicant

COUNSEL:

Faiyaz Alibhai and Bari Crackower, for the PPSC/Public Prosecution Service of Canada

Gregory Lafontaine and Ricardo Golec, for the Applicant

HEARD: August 11, 2017

BEFORE: S. F. DUNPHY, J.

Reasons for Judgment

[1] In this application brought under s. 490(10) of the Criminal Code, Mr. Khan seeks the return of $11,700 and US$20 in funds seized by police from his parents’ home three days after his arrest for possession of and trafficking in heroin. He claims to be the lawful owner of the funds. Mr. Khan has provided uncontradicted evidence of the lawful business (scrap metal and used cars) that he was operating for which such amounts of cash were required in the ordinary course. His evidence is entirely uncontradicted and unchallenged.

[2] The Pubic Prosecution Service of Canada resists this application and alleges that I have no jurisdiction to hear it because the PPSC intends to bring a forfeiture application in respect of the funds. There is no suggestion that the funds are in any way connected to the charges currently pending against Mr. Khan and the PPSC has put no evidence before me demonstrating that the funds have their origin in any illegal business, drug-related or otherwise.

[3] The simple question raised by this application is this: do I have jurisdiction to hear an application for the return of seized property that is clearly not connected to pending criminal charges because the PPSC has stated its intention of bringing a forfeiture application if it secures a conviction? There is no doubt that if I have jurisdiction to hear the application, there is no evidence before me to justify turning it down.

[4] In my view, the PPSC’s position would make nonsense of the carefully calibrated system of checks and balances Parliament has incorporated in the forfeiture provisions of the Criminal Code and the Controlled Drugs and Substances Act. The lawful owner of seized property is not to be deprived of the possession or use of their property on the basis of pure speculation about what might eventually emerge in evidence to support a hoped-for forfeiture application. Were the PPSC to have sought permission to seize the money in question today, there is no evidence beyond its mere existence to justify doing so. The test for release of funds already seized can certainly be no higher than the test to seize them. This court’s oversight role is not restricted to receiving without inquiry or verification the PPSC’s assertion that it is acting in good faith and eventually intends to show its hand should a conviction be secured. Parliament did not confer unfettered discretion upon the PPSC to seize and hold any and all property of an accused pending trial without having to justify the reasonableness of its potential forfeiture claim in any fashion whatsoever.

[5] The uncontradicted evidence before me established that Mr. Khan was the lawful owner of the seized funds and there was simply no evidence before me from which I could reasonably conclude that the seized funds arose from an illegal source. I granted Mr. Khan’s application when it came before me for a hearing on August 11, 2017 for reasons to be issued subsequently. These are those reasons.

Background facts

[6] There were no facts in dispute on this application. Mr. Khan was not cross-examined on his affidavit and the PPSC did not seek to file any evidence to contradict his evidence about his ownership of the funds or their origin. What evidence the PPSC filed did not go to the issue of Mr. Khan’s ownership of the funds nor to contradict his assertion that the funds arose from a legal business operation.

[7] On September 24, 2013, Mr. Khan was arrested and charged with possession of heroin and trafficking heroin under the Controlled Drugs and Substances Act. The arrest took place in Toronto. A small quantity of funds was seized following a search of Mr. Khan incidental to his arrest: C$250 and US$50.

[8] On September 27, 2013 police searched the residence of Mr. Khan’s parents in Vaughan pursuant to a warrant obtained for the purpose. Mr. Khan also resided at that address. In the course of executing that search warrant, further funds were seized totaling $11,700 and US$20.

[9] Mr. Khan’s affidavit states that the funds seized from his parents’ home in fact belonged to him and were the cash supply needed for a scrap and used car resale business that he and his brother ran. The affidavit claims that the business in question involves a large number of “one-time” transactions for the purchase of consignments of scrap, used cars and the like for which cash is required due to the lack of an on-going relationship with the vendors. Sales too are often paid for in cash. The unpredictable nature of the business is such that a cash float of the size seized by the police on this occasion was not unusual and was in fact necessary to ensure valuable business opportunities were not lost. Both buyers and sellers in this business operate largely on a cash basis.

[10] In summary, Mr. Khan’s affidavit alleges that he is the lawful owner of the funds seized by the police from his parent’s home and that the funds arose from and were part of a legal business operation. The PPSC has filed no evidence to contradict this nor has the PPSC sought to cross-examine Mr. Khan to obtain admissions that might cast doubt on his statements.

[11] Mr. Khan’s trial is scheduled to be heard on August 28, 2017 in Superior Court. I am advised that the parties expect it to proceed by way of agreed statement of facts and the PPSC provided me with its draft Agreed Statement of Facts that has yet to be finalized. The PPSC’s draft Agreed Statement of Facts makes no reference to the seized funds. .

[12] Based on the uncontradicted evidence before me, I can only conclude on this application that: (i) Mr. Khan is the lawful owner of the funds seized by the police, (ii) the funds in question arise from a lawful business operation and (iii) the funds are not connected in any way to events leading to the charges that Mr. Khan will face at his trial scheduled to commence on August 28, 2017.

[13] Mr. Khan brought this application pursuant to s. 490(10) of the Criminal Code for the return of the seized funds. He seeks the return of all of the seized funds. The PPSC did not oppose the return of the funds seized from Mr. Khan at the time of his arrest but did oppose the application as it related to the larger quantity of funds seized from his parents’ home.

[14] On behalf of the PPSC, Mr. Alibhai candidly admitted that he had no evidence to cast doubt on any of these conclusions. There was no question of needing more time to place further material before me – the application was discussed in correspondence late in 2016 and was scheduled for a hearing five months ago. There has been more than enough time to respond to it.

Issues Raised

[15] The issue therefore is solely whether I have jurisdiction to consider whether to release the funds in light of the PPSC’s assertion that it would intend to seek to apply for a forfeiture order pursuant to s. 16(2) of the CDSA if a conviction is eventually obtained.

[16] I shall therefore review the jurisdictional argument and my reasons for rejecting it.

Analysis and Discussion

[17] I start by reviewing the statutory foundation of the forfeiture application the PPSC intends to bring should it obtain a conviction on the trial of Mr. Khan scheduled for later this month.

[18] Mr. Khan is charged with possession and trafficking of heroin under the CDSA. Pursuant to s. 16(2) of the CDSA, where a person is convicted of a designated substance offence and “the court is satisfied, beyond a reasonable doubt, that the property is offence-related property, the court may make an order of forfeiture under subsection (1) in relation to that property”.

[19] The jurisdictional requirements for a forfeiture application are thus that the person be convicted of a designated offence and that the property in question be “offence-related property”. It is to be noted that the application may be made in respect of any offence-related property following conviction – it is not restricted to property seized at the time or arrest or even property that has actually been seized at all. All property of any kind is potentially subject to forfeiture, including property located outside of Canada: CDSA s. 16(2.1).

[20] The term “offence-related property” is defined in s. 1 of the CDSA as follows:

“offence-related property means, with the exception of a controlled substance, any property, within or outside Canada,

(a) by means of or in respect of which a designated substance offence is committed,

(b) that is used in any manner in connection with the commission of a designated substance offence, or

(c) that is intended for use for the purpose of committing a designated substance offence.”

[21] The PPSC has admitted that the funds seized were not in any way connected to the designated substance offence for which Mr. Khan currently awaits trial. Beyond the fact of the existence of the money (it being a relatively large amount) and the prospect of a possible future conviction of Mr. Khan for a designated substance offence that is admittedly unconnected to the actual money seized, the PPSC has placed no evidence before me from which it might be concluded that it has any basis to argue that the funds seized are in fact “offence-related property” as so defined. It is to be recalled that proof of that fact is required to be made beyond a reasonable doubt should a conviction be obtained and a future forfeiture application be brought.

[22] Even were I to assume all of the allegations contained in the indictment (or even the PPSC’s draft agreed statement of facts) to be true, the sum total of the evidence before me does not constitute sufficient evidence to warrant a seizure of the property (had same not already occurred) let along grounds that might sustain an actual order of forfeiture if proved.

[23] I turn now to the jurisdictional foundation of the application brought by Mr. Khan. His application is founded on s. 490(10) of the Criminal Code which provides as follows:

“(10) Subject to this or any other Act of Parliament, a person, other than a person who may make an application under subsection (7), who claims to be the lawful owner or person lawfully entitled to possession of anything seized and brought before or reported to a justice under section 489.1 may, at any time, on three clear days’ notice to the Attorney General and the person from whom the thing was seized, apply summarily to

(a) a judge referred to in subsection (7), where a judge ordered the detention of the thing seized under subsection (3), or

(b) a justice, in any other case,

for an order that the thing detained be returned to the applicant.”

[24] Mr. Alibhai has not placed before me any Act of Parliament that precludes an application being brought under s. 490(10) of the Criminal Code at this time. An application may be brought “at any time, on three clear days’ notice”. This application has been brought on five months’ notice. It may be brought by any person “who claims to be the lawful owner or person lawfully entitled to possession” – Mr. Khan so claims and his evidence is entirely uncontradicted.

[25] The PPSC’s submits that such an application may only be brought by a person “other than a person who may make an application under subsection (7)”. The PPSC takes the position that Mr. Khan is a person referred to under subsection (7) and is thus precluded from making this application. In my view, the submission is a distinction without a difference. I shall return to this objection below.

[26] When an application is made under s. 490(10), the justice hearing the application must first “be satisfied” (emphasis added) that the applicant is the lawful owner or entitled to possession of the thing seized and that “proceedings have not been instituted in which the thing detained may be required”: Criminal Code, s. 490(11). In such case, the judge shall order the thing seized to be returned to the applicant: Criminal Code, s. 490(11)(c). I intentionally emphasized the phrase “be satisfied” because the wording used suggests quite plainly that a factual inquiry into the question is to be made. Where a factual inquiry must be made, it stands to reason that Parliament conferred jurisdiction upon the judge charged with making the inquiry to do so.

[27] Whether or not Mr. Khan may be considered to be the person from whom the property was seized, there is no material difference to be drawn between this application and one brought under s. 490(9)(c) of the Criminal Code if the funds were seized from him. This is why I have described the objection as being a distinction without a difference.

[28] If the property is viewed as having been seized from Mr. Khan, then s. 490(7) of the Criminal Code authorizes him to apply summarily for an order under s. 490(9)(c) of the Criminal Code. Such an application is subject to the exact same requirement that the judge hearing it must be “satisfied that … proceedings have not been instituted in which the thing detained may be required”. As I have observed, it stands to reason that if the judge must be “satisfied” that the property “may be required” for another proceeding then the judge hearing the application at the very least has jurisdiction to consider whether, on the evidence, he or she is in fact satisfied.

[29] The only proceedings that have been instituted at this stage are the criminal proceedings under the CDSA charging Mr. Khan with possession and trafficking in heroin on a particular occasion. It is conceded that the seized property is in no way connected to those particular charges. It cannot therefore be contended that the seized property may be required for that proceeding since it is clear that it is not. None of the charges pending relate to possession of the proceeds of crime.

[30] The PPSC takes the position that the indictment charging Mr. Khan with possession and trafficking of heroin constitutes a proceeding “in which the thing detained may be required” by reason of its bare assertion of an intention to bring forfeiture proceedings in respect of the seized property if a conviction is obtained. That assertion alone – without inquiry into the reasonableness of the claim – is said by the PPSC to deprive me of jurisdiction to proceed any further.

[31] In my view, that statement is impossibly overbroad. Subsection 490(9) (or Section 490(11)(b) as the case may be) of the Criminal Code requires the judge and not the PPSC to be satisfied that property “may be required”. When Parliament requires a judge to be satisfied of something, more than a rubber stamp is intended.

[32] If I am to be satisfied that the property in question “may be required” for future forfeiture proceedings, there must be some evidence before me from which I could conclude that this is so. The bare assertion of a future conditional intent coupled with an assurance of good faith does not meet this requirement. If I am required by Parliament to inquire into the future use of the property seized in a pending proceeding, I must necessarily have also been granted the jurisdiction to do so.

[33] In the present case, there is simply no evidence whatsoever before me that the seized property is “offence-related property” that might reasonably be made the object of an application under s. 16(2) of the CDSA. All of the cases placed before me by the parties dealt with property that clearly was offence-related property in relation to the very offence (i.e. s. 16(1) of the CDSA). That is not the case here. The funds in question are not claimed to be related to the actual crime charged. Even assuming that all of the facts alleged in the indictment or indeed in the draft agreed statement of facts were true, the evidence does not come close to establishing a case that the seized funds are “offence-related property” as defined.

[34] How much evidence would be required to satisfy me that the property “may be required” for a potential future forfeiture application? The PPSC submits that the matter is exclusively a question for the trial judge hearing a potential future forfeiture application.

[35] Since virtually any property could potentially be the object of a forfeiture application at the end of a prosecution under the CDSA, relying solely upon the assertion by the PPSC of its intention to bring a proceeding without capacity to assess the grounds would gut the provisions of s. 490 of the Criminal Code of any meaning at all. Neither the provisions of s. 490 of the Criminal Code nor those of s. 16 of the CDSA can be construed to confer as unfettered a discretion t in the state as that claimed by the PPSC here.

[36] I need not decide for present purposes what depth of inquiry is required in order to be satisfied that seized property may be required for a proceeding that has been instituted. The bare assertion that the funds are “a lot of money” and that Mr. Khan may yet be found – on a single identified occasion – to have been engaged in trafficking heroin in circumstances where it is not even alleged that money changed hands is clearly not enough. While proof of the exact offence giving rise to the property held is not required to conclude that a given amount of seized funds are “offence-related property”, there must at a minimum be evidence sufficient to satisfy the judge hearing the application that the claim has a reasonable foundation. As I observed above, even if I were to assume that all of the facts alleged in the indictment or in the draft agreed statement of facts were true, I could not possibly find that the PPSC has proved beyond a reasonable doubt that the subject funds are “offence-related property”.

[37] Based on the record before me I concluded that I was not satisfied that a proceeding has been instituted in which the property detained may be required and that the application must therefore be granted based upon the uncontested facts.

S. F. Dunphy, J.

Released: August 14, 2017

CITATION: R. v. Khan, 2017 ONSC 4871

COURT FILE NO.: CR 16-90000581-0000

DATE: 20170814

ONTARIO

SUPERIOR COURT OF JUSTICE

HER MAJESTY THE QUEEN

– and –

SABRULLAH KHAN

Applicant

REASONS FOR JUDGMENT

S. F. Dunphy, J.

Released: August 14, 2017