SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Her Majesty the Queen v. Neff Kitchen Manufacturers Limited and F J & M Enterprises Inc.
BEFORE: D. E. Harris J.
COUNSEL: M. Comiskey, Counsel for the Applicant
D. Rechstshaffen, Counsel for the Respondents Frank Bozzo and F J & M Enterprises Inc.
HEARD: February 3, 2020
E N D O R S E M E N T
1The Applicant Crown applies under Section 490(3) of the Criminal Code to request an additional period of detention for property originally seized by search warrants on January 5, 2019 from two separate locations in Ontario. After the initial seizure, detention order extensions were granted to enable the investigators to study the documents seized. About 13 months have now passed.
2The Crown requests a detention order for a period of an additional 14 months from the expiry date of the previous orders on January 9, 2020. Three of the respondents consent. Frank Bozzo, and F J & M Enterprises Inc., a company Mr. Bozzo’s serves as a director, do not consent. In their view, no further detention ought to be permitted.
3The allegations being investigated are a GST fraud, evasion of remittance of payroll deductions and a failure to report taxable income by Frank Bozzo. The total amount involved approaches $10 million.
4The rule of thumb under Section 490(1) is that property should be returned to its lawful owner after seizure unless required for investigation or court proceedings. Section 490(2) permits a justice to make a detention order extending for up to one year from the date of seizure. Subsequent applications for further detention are permitted under Section 490(3) based on the “complex nature of the investigation.”
5The leading case on what constitutes complexity is Justice Durno’s decision in Canada Revenue Agency v. Okoroafor, 2010 ONSC 2477, 259 C.C.C. (3d) 87 where he said:
20 A complex investigation is one that has many varied interrelated parts, patterns, or elements and consequently is hard to understand fully. It is an investigation that involves many parts, aspects, details, and notions necessitating earnest study or examination to understand or cope with: Alberta (Attorney General) at para. 23.
6A judge is tasked under Section 490(3) with overseeing the progress of a law enforcement investigation. There are numerous imponderables which can make this illusive. First, it is quite difficult for law enforcement personnel to effectively present the complexities of a case. This is not only a laborious obligation but one in which there are linguistic and logistical limitations, at least in fraud cases like this one. Second, even if skilfully presented, it is still not easy for a judge to have a real appreciation of what is involved or how much time is required.
7To take a random example, it is said that the investigators must analyze, reconcile and determine the total amount of income received by Frank Bozzo from F J & M Enterprises Inc., a company of which he was a director, over a two- year period. On this statement, it is quite impossible to say how much work is or ought to be involved in completing the job. While it could be said that the investigators should have attempted to be more specific and precise, this would be difficult to accomplish with respect to each of the numerous tasks involved. The materials in support of this application, already quite voluminous, could mushroom out of all proportion.
8However, one potential solution, in a case like this where a lengthy detention is requested, is to docket the time required for a particular task or tasks. Although this might not be easy, lawyers and other professionals do it routinely. Docketing and putting forward the raw material and the finished work in some form or another would go a long way to taking the guess work out of the judicial function required under Section 490(3).
9In any case, given the difficulties with estimating a reasonable time for detention, and in light of the onus on the applicant under Section 490(3), when in doubt, as a general rule it may be reasonable for the judge to err on the side of a shorter detention period as opposed to a longer one. It is a basic law of human behaviour that an activity will rarely be completed in a shorter time than is permitted. The corollary is that a longer period may function as an invitation to conduct a leisurely investigation. That, obviously, should be avoided.
10If more time is required, the authorities can request it. A subsequent application for further detention will likely be more focussed and specific and require less guess work for the judge.
11In this instance, I would grant a further detention review but would cap it at 8 months, not the 14 months requested. I have no doubt that this investigation is a complex one within the meaning of Justice Durno’s words in Okoroafor although not so complex as to justify 14 months additional detention. The authorities have already had 13 months with the fruit of the search warrants.
12In summary, there is an impressive array of moving, interrelated parts. There are approximately 9 corporations being investigated and 5 individuals. Many of these are related and operate at non-arms length. The flow of funds between these entities is intricate and complicated. The paper trail is said to be confusing but in my view this is somewhat overstated. Still, there is a significant quantity of paper and documentary trails to be followed and explored.
13The investigators wish to interview over 100 potential witnesses. There were 153 boxes seized by the search warrants, 6 hard drives, and 48 CD-ROMS. These must be thoroughly examined. Numerous production orders have been sought and obtained and at least 25 remain to be obtained. Some of the banks have been slow to comply. Once the accounts are produced, other production orders will likely be required. While the original production orders are supposed to take 15-30 days, subsequent ones may take up to three months further. FINTRAC payment information was requested in October 2019 but takes six months to be produced. Much like with the production orders, once this is produced, further investigative steps may be required.
14Once the primary investigation is complete, if there are grounds to proceed with charges, a prosecution report must be drafted putting together all the evidence, accounting opinion, and law in a comprehensible manner. This will take several months.
15Mr. Rechstshaffen argued that there was prejudice to his client. The civil arm of CRA claims that he owes a substantial amount of tax which is arguably related to this alleged fraud. I do not believe that is the type of prejudice germane in this situation. There may well be a cloud over his head. But that is to a large degree separate from the detention itself. As pointed out by Crown counsel, the civil arm of CRA is independent of the criminal investigation side of things. This is a Charter protected interdiction: R. v. Jarvis, 2002 SCC 73, [2002] 3 S.C.R. 757.
16Counsel largely focussed his argument, not surprisingly, on his personal and corporate client. However, this investigation is examining five entities in total. The allegations against these entities are intertwined. That is a vital contextual factor in the assessment of complexity and, ultimately, the application for further detention.
17Five investigators have been assigned to this investigation. That is sufficient person power for the job: compare Moyer (Re) 1994 CarswellOnt 1831 (Gen. Div.) at paras. 22, 25.
18In the end, the volume of materials, the tasks to be completed and the labyrinthian nature of the investigation investigating numerous different corporations and entities, are sufficient to justify a further period of detention. I would grant a further 8 months running from the expiry of the last detention on January 9, 2020.
Harris J.
DATE: March 6, 2020
COURT FILE NO.: 1946/19
DATE: 2020 03 06
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Her Majesty the Queen v. Neff Kitchen Manufacturers Limited and F J & M Enterprises Inc.
COUNSEL:
M. Comiskey, Counsel for the Applicant
D. Rechstshaffen, Counsel for the Respondents Frank Bozzo and F J & M Enterprises Inc.
ENDORSEMENT
Harris J
DATE: March 6, 2020