COURT FILE NO.: CV-21-655275-0000

DATE: 20211217

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Attorney General of Ontario

Applicant

• and -

Contents of TD Bank Account # 1175-6485516, TD Waterhouse Account # 1253-7CXA35A, RBC GIC Account #00160187727 0012, and RBC GIC Account #00160187727 0013 (in rem)

Respondents

Jeffrey Costain for the Applicant

Hue (Chung) Calvin Huong for Huiming Han and Yuyu Han

William E. Pepall, Rebecca Shoom, and Lucy Sun for Kaiwen Luan and Yanchun Lu

HEARD: November 25, 2021

PERELL, J.

REASONS FOR DECISION

A. Introduction. 2

B. Synopsis of the Facts. 2

1. Synopsis of the Lu Story. 2

2. Synopsis of the Han Family Story. 3

C. The Civil Remedies Act, 2001. 3

D. Procedural Background. 8

E. Evidentiary Background. 9

F. Facts. 10

1. Ms. Lu’s Story. 10

2. The Han Family’s Story. 12

3. The Police Investigation. 13

4. The Allegation of Participation in Money Laundering. 15

5. The Allegation of Circumvention of Chinese Currency Control Laws. 16

G. Discussion and Analysis. 18

1. The Case for Forfeiture of the Kaiwen Luan and Yanchun Lu Bank Accounts. 18

2. The Case for Forfeiture of the Huiming Han and Yuyu Han Bank Accounts. 21

H. Conclusion. 22

A. Introduction

[1] In this application under the Civil Remedies Act, 2001,[^1] the Attorney General of Ontario seeks forfeiture of:

a. approximately $600,000 in the jointly held bank accounts of the Respondents Yanchun Lu and Kaiwen (Kevin) Luan; and

b. approximately $3.1 million in the jointly held bank accounts of the Respondents Huiming Han and his daughter Yuyu Han.

[2] The Attorney General seeks forfeiture of these funds as the proceeds and or the instruments of unlawful activity, namely illegal online cannabis sales and money laundering.

[3] For the reasons that follow, the Attorney General’s application is dismissed.

B. Synopsis of the Facts

1. Synopsis of the Lu Story

[4] Yanchun Lu is a Chinese citizen who regularly visits her friend Ju Zhang in Canada. Ms. Zhang is the mother of Kaiwen (Kevin) Luan. While in Canada, Ms. Lu signed an agreement to purchase a condominium unit in Toronto. The condominium was under construction, and in contemplation of paying for the purchase, Ms. Lu opened bank accounts including GIC Accounts jointly with Mr. Luan. Mr. Luan had no beneficial interest in the GICs. Ms. Lu sourced the funds for the bank accounts by a monetary exchange system in the Chinese-Canadian community known as a Hawala. Between 2018 and 2020, Ms. Lu sourced approximately $600,000 through the Hawala. By the Hawala, Ms. Lu paid Chinese currency in China to a designated bank account in China in return for which she received in Canada a more or less equivalent value of Canadian currency by bank drafts from Canadian banks. The bank drafts were deposited in Ms. Lu’s Canadian bank account. Ms. Lu made no profit from this exchange.

[5] In January 2021, the Attorney General brought an application for the forfeiture of the $600,000 of bank drafts deposited in Ms. Lu’s accounts. The Attorney General alleged that the bank drafts and the bank account itself were the proceeds and/or the instruments of unlawful activity, namely illegal online cannabis sales and money laundering.

[6] Ms. Lu submits that the Attorney General has not proven that all of the funds in her bank account were the proceeds or the instruments of unlawful activity. She submits that, in any event, she is entitled to the “uninvolved interest holder” and “responsible owner” exceptions to forfeiture and, if necessary, to the “in the interests of justice” exception granting relief from forfeiture.

2. Synopsis of the Han Family Story

[7] The Han family is comprised of Huiming Han, his wife Juan Wang, and their adult daughter Yuyu. In 2010, the Han family immigrated from China to Canada. Mr. Han is a wealthy industrialist in China and the family has a 38% interest in Shija Technologies, a Chinese corporation trading on the Shenzhen Stock Exchange. Beginning in 2018, Mr. Han used the Hawala monetary exchange system to source Canadian funds for his Canadian bank accounts. He paid Chinese currency in China to designated bank accounts in China, in return for which he received in Canada a more or less equivalent value of Canadian currency by bank drafts from Canadian banks. The currency was deposited in the family’s Canadian bank accounts. Most of the money accumulating in the Canadian bank accounts was earmarked to purchase a home for Yuyu, who had married and was an expectant first-time mother.

[8] In January 2021, the Attorney General brought an application for the forfeiture of the approximately $3.1 million of bank drafts deposited in the Han family’s bank accounts. The Attorney General alleged that the bank drafts and the bank accounts were the proceeds and/or the instruments of unlawful activity, namely illegal online cannabis sales and money laundering.

[9] The Hans submit that the Attorney General has not proven that all of the funds in the bank accounts were the proceeds or the instruments of unlawful activity. The Hans submitted that, in any event, they are entitled to the “uninvolved interest holder” and “responsible owner” exceptions to forfeiture and, if necessary, to the “in the interests of justice” exception granting relief from forfeiture.

C. The Civil Remedies Act, 2001

[10] The Civil Remedies Act, 2001 was enacted to deter crime and to compensate victims of criminal activity.[^2] The Act is independent from the forfeiture provisions of the Criminal Code and the Civil Remedies Act establishes a civil scheme for the forfeiture of property connected with criminal activity.

[11] To achieve its purposes, the Civil Remedies Act, 2001 authorizes in rem forfeiture of property connected to criminal activity.[^3] An application under the Civil Remedies Act, 2001 is a proceeding in rem, being a claim against property rather than against a person. The proceedings are taken against the property itself and can be initiated without joining the owners or possessors as respondents. Any person with a known interest in such property is entitled to notice and is deemed to be a party to the proceeding as if they were a named defendant or respondent.[^4] The Act does not create an offence and is not concerned about the identification, charge, or prosecution, conviction or punishment of an offender.[^5]

[12] Under the Civil Remedies Act, 2001, the Attorney General is authorized to bring a forfeiture application pursuant to section 3 or section 8 of the Act. Sections 3 and 8 of the Civil Remedies Act, 2001 state:

Forfeiture order

3. (1) In a proceeding commenced by the Attorney General, the Superior Court of Justice shall, subject to subsection (3) and except where it would clearly not be in the interests of justice, make an order forfeiting property that is in Ontario to the Crown in right of Ontario if the court finds that the property is proceeds of unlawful activity.

Forfeiture order

8. (1) In a proceeding commenced by the Attorney General, the Superior Court of Justice shall, subject to subsection (3) and except where it would clearly not be in the interests of justice, make an order forfeiting property that is in Ontario to the Crown in right of Ontario if the court finds that the property is an instrument of unlawful activity.

[13] For the purposes of a s. 3 forfeiture order, s. 2 of the Act defines “proceeds of unlawful activity”, “property”, and “unlawful activity” as follows:

Definitions

2. In this Part, …

“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 this Act came into force, but does not include proceeds of a contract for recounting crime within the meaning of the Prohibiting Profiting from Recounting Crimes Act, 2002;

“property” means real or personal property, and includes any interest in property;

“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,

whether the act or omission occurred before or after this Part came into force.

[14] For the purposes of a s. 8 forfeiture order, s. 7 of the Act, defines “instrument of unlawful activity”, “property”, and “unlawful activity”, as follows:

Definitions

7.(1) In this Part,

“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;

“property” means real or personal property, and includes any interest in property;

“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,

whether the act or omission occurred before or after this Part came into force.

Instruments of unlawful activity

(2) For the purpose of the definition of “instrument of unlawful activity” in subsection (1), proof that property was used to engage in unlawful activity that, in turn, resulted in the acquisition of other property or in serious bodily harm to any person is proof, in the absence of evidence to the contrary, that the property is likely to be used to engage in unlawful activity that, in turn, would be likely to result in the acquisition of other property or in serious bodily harm to any person.

Same

(3) Where property that is the subject of a proceeding or intended proceeding under section 8 was modified or sold or otherwise disposed of before an order is made under subsection 8 (1), the determination of whether the modified property or the property that was realized from the sale or other disposition of the property is an “instrument of unlawful activity” shall be based on whether the property was likely to be used to engage in unlawful activity before it was modified or sold or otherwise disposed of.

[15] Under the Civil Remedies Act, 2001, unlawful activity is not limited to crimes under the Criminal Code and means offences under federal or provincial statutes or offences outside Canada if a similar act or omission would be an offence if committed in Ontario.

a. In Ontario (Attorney General) v. $138,650 in Canada Currency (In Rem),[^6] welfare fraud was found to be an unlawful activity giving rise to a forfeiture.

b. In Ontario (Attorney General) v. Condominium Units 1210 and 1310 at 8 Scollard Street, Toronto (In Rem),[^7] violations of the Consumer Protection Act[^8] constituted an illegal activity.

c. In Ontario (Attorney General) v. $25,610 in Canadian Currency (In Rem)[^9] and Ontario (Attorney General) v. $13,900 in Canadian Currency (In Rem),[^10] trading or exporting vehicles without license to do so was unlawful activity.

d. In Ontario (Attorney General) v. $41,700,[^11] failure to file income tax returns was held to constitute an unlawful activity for the purpose of forfeiture under the Civil Remedies Act, 2001.

[16] A conviction on criminal charges is not required for the court to find that property is proceeds or an instrument of unlawful activity. The statute does not require finding of fault, either criminal or civil, against a person.[^12] The Attorney General does not have to prove that the property in question is related to any particular offence.[^13] However, a respondent's criminal record is admissible and may be probative as similar fact evidence of a respondent’s past unlawful activity.[^14]

[17] Currency may be proceeds of unlawful activity, and the Attorney General can obtain a forfeiture order, if the Attorney General can establish by direct or circumstantial evidence that the money was acquired from crime in general.[^15] Possession of bundled currency is circumstantial evidence that is consistent with the currency having been from drug trafficking which is notoriously a cash business.[^16]

[18] Currency may be an instrument of unlawful activity because drug money can be used to purchase more drugs for resale.[^17]

[19] There are situations where property can be both proceeds of unlawful activity and an instrument of unlawful activity. For example, in Ontario (Attorney General) v. Chow,[^18] the Court accepted that money that was proceeds of unlawful activity (because it was obtained from the sale of drugs) was also an instrument of unlawful activity when it could be used to purchase more drugs.

[20] Where suspicious circumstances are present, the court may draw an adverse inference from the absence of evidence and a respondent’s failure to adduce a credible and reasonable explanation to account for the source and the presence of the funds or property.[^19] A respondent's failure to provide a credible explanation for a legitimate source of the property, for possession of large amounts of money or an explanation for a lavish lifestyle without apparent source of income may be considered by the court as part of the forfeiture analysis.[^20]

[21] The Civil Remedies Act, 2001 provides exceptions to the forfeitures authorized by sections 3 and 8 of the Act. Sections 3 (3) provides an exception for an “uninvolved interest holder” and s. 8 (3) provides an exception for a “responsible owner.”

[22] Section 3 (3) of the Civil Remedies Act, 2001 states:

3. (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 an uninvolved interest holder 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 uninvolved interest holder’s interest in the property.

[23] An “uninvolved interest holder” is defined as follows:

“uninvolved interest holder” 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),

[24] Section 8 (3) of the Civil Remedies Act, 2001 states:

8. (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.

[25] A “responsible owner” is defined as:

“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”.

[26] The “clearly not in the interests of justice” exception to a forfeiture order is narrowly construed, and relief from forfeiture is very much the exception and should be granted only where the party seeking that remedy clearly makes the case that forfeiture would lead to an unequitable and unjust result; the interests of justice exception should only be granted where the party seeking relief from forfeiture has established that forfeiture would be manifestly harsh or draconian. In seeking relief from forfeiture based on the “clearly not in the interests of justice” exception to a forfeiture order, the onus is upon the party seeking relief to demonstrate that in all the circumstances, the forfeiture order will be a manifestly harsh and inequitable result.[^21]

[27] In considering whether to grant relief from forfeiture, the court may consider, among other things:

a. the conduct of the party whose property is the subject of the forfeiture application, including knowledge or constructive knowledge of the unlawful activity, failure to take reasonable steps to prevent the unlawful activity, any profit derived knowingly or unknowingly from the unlawful activity, and any steps taken after the owner became aware of the unlawful activity;

b. the disparity between the value of the property that is proceeds of unlawful activity and the value of the property sought to be forfeited;

c. the interplay between the purposes of the Act (i.e., compensation of victims, crime prevention, deterrence) and the exercise of the discretion to relieve from forfeiture.[^22]

[28] The list of factors is not exhaustive and whether relief from forfeiture should be granted must be determined on a case by case basis.

D. Procedural Background

[29] On January 20, 2021, the Attorney General commenced this application pursuant to the Civil Remedies Act, 2001.

[30] On January 22, 2021, on an ex parte motion, Justice Myers made an interlocutory preservation order for thirty days.

[31] On February 22, 2021, on consent of the parties, Justice Myers extended the interlocutory preservation order for thirty days.

[32] On March 17, 2021, on consent of the parties, Justice Vella extended the interlocutory preservation order.

[33] On March 31, 2021, Justice Pollock heard the contested motion for a preservation order. She reserved judgment.

[34] On April 30, 2021, Justice Pollack granted the preservation order.[^23]

[35] There were case conferences before Justice Diamond on June 17, 2021 and July 30, 2021.

[36] On July 16, 2021, the Attorney General delivered an Amended Notice of Application.

[37] Justice Diamond ordered that the forfeiture application be heard on September 24, 2021.

[38] On September 24, 2021, Justice Sanfilippo adjourned the forfeiture motion to November 25, 2021.[^24]

E. Evidentiary Background

[39] The Attorney General supported the forfeiture application with the following evidence:

• The affidavit dated July 15, 2021 of Lori Blaskavitch. Ms. Blaskavitch is a law clerk for the Crown Law Office, Ministry of the Attorney General.

• The expert’s report dated July 15, 2021 covered by affidavit of Caroline Dixon of Grant Thornton LLP. She was retained to conduct a forensic audit of the bank accounts of the respondents.

• The affidavit dated January 16, 2021 of Detective Constable Peter Jadczyk. Detective Jadczyk is a police officer and member of the Calgary Police Service. He was assigned to the Money Laundering and Asset Forfeiture Team that traced the funds.

• The expert’s report dated July 15, 2021 covered by affidavit of Dwayne King. Mr. King is the lead financial crime investigator for Mass Casualty Commission in Nova Scotia. Previously, he was a senior manager in Grant Thornton LLP’s Risk and Forensic Services Group, an employee of TD Bank’s Global Anti-Money Laundering Department and a manager of its Financial Intelligence Unit, and a police officer for 27 years with the Toronto Police.

• The affidavit dated July 12, 2021 of Constable Lucas Kortbeek. Constable Kortbeek is a police officer and member of the Calgary Police Service. He was seconded to the Guns and Gangs Unit of Organized Crime and Offender Management, and he was the primary investigator of Operation Mad Money.

• The expert’s report dated July 16, 2021 covered by affidavit of Jinjuan Shi. Ms. Shi is from Shanghai, of the People’s Republic of China where she is the senior partner at Dentons Chinese law office. She provides an expert opinion on Chinese law.

[40] Mr. Han and Ms. Han resisted the Attorney General’s Application with the following evidence:

• The affidavit dated March 21, 2021 of Yuan Gao. Mr. Gao is a real estate agent currently employed at Homelife Landmark Realty Corp.

• The affidavit dated March 24, 2021 of Ms. Han.

• The affidavit dated March 24, 2021 of Mr. Han.

• The affidavit dated March 24, 2021 of Shuang Yang. Mr. Yang is a translator, and he was retained to translate certain correspondence between Jian Mao and Yuan Gao.

[41] Mr. Luan and Ms. Lu resisted the Attorney General’s Application with the following evidence:

• The affidavit dated March 25, 2021 of Ms. Lu.

• The affidavit dated March 19, 2021 of Mr. Luan.

F. Facts

1. Ms. Lu’s Story

[42] Yanchun Lu is a citizen and resident of China. She is employed as a business consultant for international trading companies. She is also an investor in real estate in China. Ms. Lu does not speak English. She speaks Mandarin Chinese.

[43] Since 2012, for health and social reasons, Ms. Lu annually visits Canada to visit her close friend Ju (Julie) Zhang, who is the mother of Kaiwen (Kevin) Luan.

[44] Ms. Zhang and her son and daughter emigrated from China to Canada in 2011. At that time, her son Kevin was seventeen years old. Ms. Zhang is now fifty-three years old, and a Canadian citizen. She is a director of a real estate development company called Libang Development Inc. She speaks only Mandarin Chinese.

[45] Kevin Luan is now twenty-six years old. He speaks English and Mandarin Chinese. He is a Canadian citizen. He has a bachelor’s degree in finance from the University of Toronto. He spent a year enrolled in a post-graduate program in Beijing, China and lived with Ms. Lu. As an intern, Mr. Luan worked as a banking advisor at the Royal Bank in Canada for eight months from April 2020 to November 2020.

[46] For Ms. Lu, a typical visit to Canada lasts three to four months. Ms. Lu stays with Ms. Zhang. They travel together on trips throughout Canada and the United States.

[47] In 2014, Ms. Lu entered into an agreement to purchase a unit in a condominium to be constructed in downtown Toronto. Ms. Zhang also purchased a unit in the project.

[48] The price of Ms. Lu’s unit was $389,900 and Ms. Zhang lent Ms. Lu the money to make the initial down payment. At the time of the purchase, Ms. Lu did not have a bank account in Canada. Shortly thereafter, Ms. Lu opened a bank account at a branch of the TD Bank in Toronto with Ms. Zhang as her authorized representative.

[49] Beginning in 2014, Ms. Lu began the process of gradually exchanging her Chinese currency for Canadian currency in contemplation of the closing of her condominium purchase once construction was completed.

[50] In 2018, Ms. Lu opened a bank account at the Royal Bank (RBC) where there was Mandarin speaking staff. This time the account was opened jointly with Mr. Luan who managed the account for Ms. Lu. Mr. Luan has no beneficial interest in the account. Ms. Lu would subsequently open additional GIC accounts at the Royal Bank.

[51] The source of all the funds in the Royal Bank account was as follows. Ms. Lu withdrew Chinese currency from her bank account in China and through an informal currency exchange operated by the Chinese community in Canada, Ms. Lu exchanged Chinese currency for Canadian currency. This informal currency exchange is known as “Hawala”. Ms. Lu traded her Chinese currency for Canadian currency in the form of bank drafts. With the aid of an intermediary, Ms. Lu would transfer currency from her own Chinese bank account to another account in China as designated by the intermediary. In Canada, the intermediary would arrange for bank drafts to be delivered to Ms. Lu’s Canadian bank account. Ms. Lu did not make any inquiries about the providence of the bank drafts; i.e., she did not inquire who were the original purchasers of the bank drafts.

[52] More precisely, with the assistance of two Chinese Canadians, Feifei Wang and Jian Xu, Ms. Lu used the Hawala to source the funds in her Canadian bank account. Ms. Lu was confident about the reliability of the Hawala because Jian Xu was associated with a currency exchange company and had provided a copy of her currency exchange company’s FINTRAC Money Services Business registration information.

[53] It is uncontradicted and there is no evidence to the contrary that Ms. Lu paid for the bank drafts. It is uncontradicted and there is no evidence to the contrary that Ms. Lu had no knowledge of the original purchasers of the bank drafts apart from what was noted on the face of the drafts. It is uncontradicted and there is no evidence to the contrary that Ms. Lu had no actual knowledge that the bank drafts were the proceeds of unlawful activity or an instrument of unlawful activity. There is no evidence that Ms. Lu was herself engaged in any unlawful activity in Canada.

[54] On February 24, 2020 (before Mr. Luan began his internship at the bank), Ms. Lu purchased two bank drafts through the Hawala:

a. a $24,000 TD (Toronto Dominion) bank draft originally purchased by an Ontario corporation, and

b. a $76,000 TD bank draft originally purchased by an Ontario corporation.

[55] There is no evidence to connect the original purchasers of the $24,000 and the $76,000 bank drafts to unlawful activity. Indeed, the evidence is that the original purchasers were legitimate business enterprises in Ontario.

[56] On February 26, 2020, the TD bank drafts were deposited into a jointly owned RBC GIC account (RBC Account #0012).

[57] On April 16, 2020, Ms. Lu purchased seven bank drafts:

a. a $50,000 BMO bank draft (Bank of Montreal) (Edmonton branch) originally purchased by 2221468 Alberta Ltd.;

b. a $50,000 BMO bank draft (Langley branch) originally purchased by 243250 B.C. Ltd.;

c. a $50,000 BMO bank draft (Calgary branch) originally purchased by 2239999 Alberta Ltd.;

d. a $50,000 ATB Financial bank draft (Calgary branch) originally purchased by 2239999 Alberta Ltd.;

e. a $50,000 BNS bank draft (Bank of Nova Scotia, Scotiabank) (Langley branch) originally purchased by 1243250 B.C. Ltd.;

f. a $80,000 BNS bank draft (Edmonton, Alberta branch) originally purchased by 2180705 Alberta Ltd.; and

g. a $70,000 CIBC bank draft (Canadian Imperial Bank of Commerce) (Fort McMurray) originally purchased by 2220233 Alberta Ltd.

[58] On April 24, 2020, Ms. Lu purchased a $80,000 TD bank draft originally purchased by an Ontario corporation. There is no evidence to connect the original purchasers of the $80,000 bank draft to unlawful activity.

[59] As will be explained in more detail below, of the seven bank drafts purchased on April 16, 2020, the Attorney General has identified two, the $50,000 BNS bank draft and the $70,000 CIBC bank draft, to the unlawful activities of illegal cannabis sales by BudExpressNow and Cheapweed.

[60] As will be explained in more detail below, of the seven bank drafts purchased on April 16, 2020, the Attorney General has identified the remaining five bank accounts, which were located in British Columbia and Alberta, as receiving electronic fund transfers with notations of generic slang term terms for cannabis. The Attorney General has only circumstantial inferential evidence that the funds sourcing these five bank drafts arise from unlawful cannabis operations.

[61] On May 25, 2020, the eight bank drafts purchased in April were deposited by Ms. Lu and Mr. Luan into a jointly owned RBC GIC account (RBC Account #0013).

[62] In January 2021, the Attorney General brought an application for the forfeiture of the $500,000 of bank drafts deposited in Ms. Lu’s account. The Attorney General alleged that the bank drafts were the proceeds and/or the instruments of unlawful activity, namely illegal online cannabis sales and money laundering.

[63] Ms. Lu denies the Attorney General’s allegations. She has been unable to complete the purchase of her condominium unit with her funds having been frozen by the preservation order.

2. The Han Family’s Story

[64] In 2010, Mr. Han, his wife Juan Wang, and their daughter Yuyu Han immigrated to Canada. Ms. Han was a grade 11 high school student at the time. She went on to enroll in the University of Toronto.

[65] Mr. Han was the founder of Shija Technologies in China. This corporation trades on the Shenzhen Stock Exchange. It has market capital in the billions of dollars. Mr. Han is now a 4% shareholder. Ms. Wang has a 6% interest, and their daughter Ms. Han has a 28% interest. Mr. Han and his wife are executive officers of the company. They have a combined annual income in excess of $1.0 million from employment and investments in China.

[66] The Han family retained real estate agent Yuan Gao to assist them in purchasing a property municipally in the City of Toronto.

[67] The Hans maintained a business and social relationship with Mr. Gao. In 2018, Mr. Han employed Mr. Gao to use the Hawala system of money exchange. Between 2018 and 2020, Mr. Han acquired millions of Canadian dollars through the Hawala. The funds were deposited in his TD Bank Account. In return for receiving Canadian currency in Canada, Mr. Han paid an approximately equal value of Chinese currency from his Chinese bank account to Chinese accounts designated by Mr. Gao. Mr. Gao deposed that around $1.0 million in Canadian funds came from the proceeds of sale of legitimate real estate transactions in which he had acted as the real estate agent.

[68] In April 2019, Mr. Han asked Mr. Gao to arrange a Hawala transaction to raise Canadian currency to purchase a home for Ms. Han. She had married and was pregnant with the family’s first grandchild. Mr. Gao connected Mr. Han with Mia Jian, who was one of Mr. Gao’s real estate clients. Mr. Jian arranged a Hawala for Chinese-Canadian businessmen who owned supermarket businesses across Canada.

[69] The arrangement was that Mr. Han or Ms. Wang would pay for grocery products in China for the Canadian businesses by making payments to designated bank accounts in China and the Chinese-Canadian businessmen would pay Canadian funds into Mr. Han’s TD bank account in Canada. Mr. Jian would charge the Hans the normal bank exchange rate and a surcharge of 0.1 to 0.15%. for making the transfer arrangements.

[70] In pursuance of this Hawala, from August 2019 to June 2020, 35 deposits of Canadian currency totaling approximately $1.7 million were made into Mr. Han’s TD account and Mr. Han transferred approximately the same amount of Chinese currency to designated accounts in China. Mr. Han never met with Mr. Jian and Mr. Gao acted as the intermediary to facilitate the Hawala. Neither Mr. Gao nor Mr. Han knew who owned the Chinese bank accounts designated by Mr. Jian nor did they know the sources of the Canadian funds arranged by Mr. Jian.

[71] At the end of 2019, the Hans left Canada to visit China. They were unable to return to Canada because of the Covid-19 pandemic which began in China and which led to countries around the world closing their borders and imposing travel restrictions in 2020. By the time that the Hans were faced with travel restrictions, there was approximately $3.1 million from Hawala transactions in Mr. Han’s TD Bank account. These funds had been saved mainly to purchase the home for Ms. Han that Mr. Gao was acting as the family’s real estate agent to acquire.

[72] The Hans’ plans to purchase a home for Ms. Han stalled in August 2020. Mr. Han invested and transferred $3.0 million from his TD account to a more remunerative account, namely the TD Waterhouse account.

[73] On January 22, 2021, the Attorney General obtained an ex parte preservation order under the Civil Remedies Act. The Attorney General seeks forfeiture of $3.1 million.

[74] The Attorney General alleged that 21 bank draft deposits into Mr. Han’s TD Bank Account and the corresponding funds transferred to the TD Waterhouse Account were the proceeds or the instruments of unlawful activity.

[75] The evidence, however, only links 12 bank drafts to “feeder accounts” associated with unlawful activity associated with illegal cannabis sales (approximately $1.4 million).

[76] The Attorney General submits that nine other bank drafts are inconsistent with income derived from employment or investments and are indicative of money laundering.

[77] The Attorney General’s forensic accountants and the Calgary police investigators were unable to trace the source of all of the money deposited into Mr. Han’s bank accounts, but the Attorney General seeks forfeiture of the entirety of the Han family’s bank accounts.

3. The Police Investigation

[78] Beginning in June 2019, the Calgary Police Service were investigating two online websites operating as “BudExpressNow” and “Cheapweed”. The investigators determined that neither website was a registered or licensed producer, distributor, or seller of medical or recreational cannabis or cannabis derivatives under federal or provincial laws and regulations, and thus the websites were operating illegally.

[79] Between June 10 and October 22, 2020, the investigators made a total of five covert purchases of cannabis from BudExpressNow and Cheapweed. Four of the purchases were paid via Electronic Funds Transfers (“ETF”) and one purchase was paid with Bitcoin. In making the covert purchases of marijuana from BudExpressNow, the purchasers were directed to make ETF payments to “BXN” by email to invoicepay1@gmail.com. In making the covert purchases of marijuana from Cheapweed, the purchasers were directed to send payment to payment@shpe.ca and to use “SHPE Canada” as the recipient’s name.

[80] The Calgary Police Service investigators traced the ETF payments to BudExpressNow and Cheapweed to “Feeder Accounts” in Alberta. The investigators traced the four payments to BudExpressNow to two bank accounts domiciled in Alberta; namely: (1) a CIBC bank account registered to 2220233 Alberta Ltd. (the “McLean CIBC Account”); and (2) a Bank of Nova Scotia bank account registered to 2250310 Alberta Ltd. (the “O’Connell BNS Account”).

[81] The investigators discovered the following with respect to the McLean CIBC Account:

a. On June 30, 2019, Stephanie McLean incorporated 2220233 Alberta Ltd. She is its sole director and shareholder. Ms. McLean is its sales and service manager.

b. On September 30, 2019, 2220233 Alberta Ltd. opened an account at a CIBC branch in Alberta.

c. Between October 2019 and June 2020, $1,049,539 was deposited in the McLean CIBC Account, of which $718,985 was received by EFTs. The average EFT payment was $172.58. The senders of the EFTs provided the following as the recipient’s contact name: “BudExpressNow”, “bxn5”, “Bud ex” and “BXN”.

d. During the same period $954,874 was withdrawn or transferred from the McLean CIBC Account typically by bank drafts.

e. Between June and August 2020, there was at least $62,881.50 in payments to different BC Hydro accounts (the “BC Hydro Accounts”). The investigators determined that these payments were utility payments for three large-scale illegal cannabis grow operations based in British Columbia.

f. Prior to October 2020, when the McLean CIBC Bank Account was closed, its funds were depleted by a series of bank drafts. The final bank draft was $1,904.28, which was deposited into a BNS bank account registered to 2220233 Alberta Ltd. (the “McLean BNS Account”).

[82] The investigators discovered the following with respect to the McLean BNS Account:

a. The McLean BNS Account was opened on October 8, 2019, approximately one week after the McLean CIBC Account was opened.

b. From October 2019 until August 2020, $1,102,128.47 was deposited into the McLean BNS Account, of which $1,092,201.95 were EFTs. The average amount of each EFT was $159.

c. The senders of the EFTs provided the following as the recipient’s contact name: “BudEx”, “@BXN”, “BBEXNOW”, “Bc bud”, “BCExpressNow”, “BXCanada”, BXN Online”, “EdandBills”, “Edibles”, “Weedguy”, “Beexpressnow” and “Invoicepay ”.

[83] The investigators discovered the following with respect to the O’Connell BNS Account:

a. The account was opened on April 7, 2020 by Oriana O’Connell under the name of 2250310 Alberta Ltd.

b. 2250310 Alberta Ltd. was incorporated on March 3, 2020. Ms. O’Connell is listed as the sole director and shareholder.

c. Between April and June 2020, by ETF $215,110 was deposited into the account. The average transaction amount was $184.96. The senders of the EFTs provided the following as the recipient’s contact name: “BXN”, “budex”, “BX Canada” and BXNow”.

d. During the same period, there were approximately $179,358 in debits from the account.

[84] Based on the tracing of the payments for their covert purchases of marijuana to the McLean CIBC Account and the subsequent tracing of funds to the McLean BNS Account, the average amount of each EFT transaction, references to cannabis-related slang in the EFTs, and overall account activities, the investigators concluded that the majority of the funds that were deposited into the two accounts were the proceeds of illegal online cannabis sales from BudExpressNow and Cheapweed, and that the accounts were used for the purpose of money laundering.

[85] In the course of its investigation, the Calgary Police Service identified an additional 18 “Feeder Accounts” that were being used in the same manner as the McLean and O’Connell accounts, namely, to receive payments from BudExpressNow and/or Cheapweed and then to funnel the funds to other accounts.

4. The Allegation of Participation in Money Laundering

[86] Based on the expert report of Mr. King, the Attorney General alleges that the Lu/Luan Respondents and the Han Respondents were participants in money laundering or ought to have known that their use of the Hawala currency exchange was a vehicle for money laundering that they should not have participated in.

[87] Mr. King’s report is speculative, and he makes inferences that both belie his objectivity and impartiality as an expert witness and also go beyond the boundaries of proper opinion evidence. But more important than the frailties of Mr. King’s expert opinion, the actual evidence on the application and the actual absence of evidence of the respondents being knowing participants or conspirators in money laundering refutes the Attorney General’s allegation that any of the respondents knew or ought to have known that they were involved in money laundering. Mr. King may be stereotypically correct about many of his inferences about the proceeds of unlawful activity, the instruments of unlawful activity, and money laundering, but his inferences are not borne out by the evidence in the immediate case.

a. There is no evidence that the respondents in the immediate application were engaged in unlawful activities.

b. There is no evidence to establish that the respondents had the intent to conceal or convert property obtained or derived from the commission of a Canadian crime.

c. The evidence establishes that Ms. Lu converted legitimately earned Chinese currency into Canadian dollars to pay for her extended visits to Canada and to purchase a condominium unit in Toronto.

d. The evidence establishes that the Han family converted legitimately earned Chinese currency into Canadian dollars to live in Canada and to purchase a home for their daughter and grandchild.

e. The Lu/Luan Respondents proffered banking and other documentation proving that they acquired the bank drafts for fair value. Ms. Lu paid legitimately earned Chinese currency at an exchange rate comparable to the bank rate for foreign currency exchange transactions.

f. Similarly, the Hans proved that they acquired their bank drafts for fair value. The Hans paid legitimately earned Chinese currency at an exchange rate comparable to the bank rate for foreign currency exchange transactions.

g. The Respondents had no personal knowledge of or involvement in the affairs of “BudExpressNow” or “Cheapweed” before this forfeiture proceeding, and they have never known or communicated with the individuals associated with the other bank accounts at issue in this proceeding.

h. The Respondents did not know and could not reasonably have known that they had acquired funds that had been money laundered, and, as the discussion below will reveal, much of the money in their bank accounts has not been proven to be laundered money.

[88] The Attorney General argued that the respondents ought to have known that the bank drafts were the product of money laundering because they were reckless in using the unregulated Hawala. The Attorney General submitted that the respondents made no inquiries about the providence of the bank drafts and this showed their recklessness.

[89] I find as a fact that the respondents were not reckless and that there was nothing untoward in their employing the Hawala to obtain Canadian currency for which they paid fair exchange value. The Attorney General’s witnesses conceded that the Hawala was not illegal as such.

[90] The Attorney General had no answer when I pointed out during argument that had the respondents used their Chinese currency to purchase shares on the Toronto stock exchange - a highly regulated market - they could not be faulted for not knowing the providence of the shares which could also be converted proceeds of unlawful activity by the original owner of the shares.

[91] The factual findings to emphasize are that: (a) the respondents were not engaged in unlawful activities; (b) the respondents were not reckless; (c) there is nothing illegal about the use of the Hawala; (d) the respondents made adequate inquiries about the integrity of their intermediaries before using the Hawala; and (e) the respondents have engaged in lawful activities in Canada and their plans for the Canadian currency are not to facilitate crime but to purchase homes in Ontario.

5. The Allegation of Circumvention of Chinese Currency Control Laws

[92] Before discussing the Attorney General’s applications for forfeiture of Ms. Lu’s bank accounts ($500,000) and Mr. Han’s bank accounts ($3.1 million), it is necessary to discuss the matter of the Attorney General’s allegations that Ms. Lu and the Hans respectively contravened Chinese currency control laws.

[93] The materiality and relevancy of these allegations of violation of Chinese law are doubtful.

[94] If the allegation of violation of Chinese law is being made to suggest that Ms. Lu’s Chinese currency and the Hans’ Chinese currency is the proceeds of unlawful activity, then there is no basis for this allegation. In any event, an allegation of violation of Chinese law as a basis for a forfeiture under the Civil Remedies Act is immaterial for three reasons.

[95] The first reason is that under the Civil Remedies Act, a violation of Chinese law is not an “unlawful activity.” The Act defines unlawful activity as follows:

“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,

whether the act or omission occurred before or after this Part came into force.

[96] A violation of Chinese currency law does not come within this definition of unlawful activity.

[97] Second, as a factual matter, insofar as the Respondents are concerned, Chinese currency never left China and thus the Chinese currency never was property in Ontario that could be subject to forfeiture and thus the allegation is immaterial, irrelevant, and ultimately makes no sense. Moreover, and further as a factual matter, there is no evidence that Ms. Lu or Mr. Han participated in the Hawala for the purpose of evading Chinese currency controls.

[98] Third, the Attorney General failed to prove what was the Chinese law or that there was a violation of Chinese law. The Attorney General relied on the expert testimony of Ms. Shi to prove Chinese law, specifically with respect to currency controls. Her evidence, however, was vague and of little utility or reliability. Visualize:

a. She referred to Article 45 of Regulation of the People’s Republic of China on Foreign Exchange Administration (2008 Revision), which imposes a penalty where the amount of foreign exchange purchased or sold in disguise is “rather large”. She did not explain what constitutes purchasing “in disguise”, or how the standard of “rather large” is applied.

b. She referred to Article 225 of Criminal Law of the People’s Republic of China (2020 Amendment), which imposes a sentence for business acts “which disrupt the market order and when the circumstances are serious”. She did not explain what constitutes disturbing the financial market order, or what circumstances are considered serious.

c. Ms. Shi referred to numerous regulations, laws, codes, cases, and secondary sources, with no indication of the primacy of these documents in relation to each other.

d. Ms. Shi’s conclusions that there were violations of Chinese laws has little analysis of how those conclusions were reached, and she draws inferences about the motivations and state of mind of the respondents without supporting evidence.

e. Some of Ms. Shi’s underlying assumptions of fact are wrong. She suggests that the Lu/Luan Respondents exchanged more than RMB 5 million, which is not correct.

[99] I do not admit Ms. Shi’s evidence as proof of Chinese law.

[100] If the allegation of violation of Chinese law is made to disqualify the Lu/Luan Respondents or the Han Respondents from the exemptions to forfeiture provided under the Civil Remedies Act because it would not be in the interests of justice to exempt lawbreakers from the forfeiture provisions of the Civil Remedies Act, then once again this allegation wants for materiality and relevancy for the above three reasons and for a fourth reason.

[101] The fourth reason is that it is not the proper role of an Ontario jurisdiction to enforce Chinese criminal law or Chinese currency law.

[102] Little more needs to be said about the Attorney General’s immaterial, irrelevant, unproven, and ultimately meaningless allegation that the respondents evaded or contravened Chinese law.

G. Discussion and Analysis

1. The Case for Forfeiture of the Kaiwen Luan and Yanchun Lu Bank Accounts

[103] There is no case for the forfeiture of Ms. Lu’s bank accounts.

[104] Based on the record for this forfeiture application, I find as a fact that the evidence establishes that:

a. The $24,000 TD Bank Draft, the $76,000 TD Bank Draft, and the $80,000 TD Bank Draft are neither the proceeds of unlawful activity nor the instrument of unlawful activity. ($180,000)

b. The Attorney General has not proven on a balance of probabilities that the $50,000 BMO (Edmonton) bank draft, the $50,000 BMO (Langley) bank draft, the $50,000 BMO (Calgary) bank draft, the $50,000 ATB Financial bank draft, and the $80,000 BNS bank draft are either the proceeds of unlawful activity or the instrument of unlawful activity. ($280,000)

c. The Attorney General has proven on the balance of probabilities that the $50,000 BNS bank draft and the $70,000 CIBC bank draft are the proceeds of unlawful activity or the instrument of unlawful activity. ($120,000)

d. Ms. Lu and Mr. Luan are uninvolved interest holders and responsible owners with respect to the $120,000 proven to be the proceeds of unlawful activity or the instrument of unlawful activity.

e. Therefore, there shall be no forfeiture ordered against the bank accounts of Ms. Lu and Mr. Luan.

f. If relief from forfeiture were necessary, which it is not, I would have exercised my discretion to grant relief from forfeiture. Forfeiture would be harsh and punitive and would not serve the policy objectives of the Civil Remedies Act.

[105] By way of elucidation of these conclusions, I begin by saying that the Attorney General never had a basis for forfeiture with respect to the $24,000 TD Bank Draft, the $76,000 TD Bank Draft, and the $80,000 TD Bank Draft ($180,000). Ms. Lu entered into lawful money exchange agreements and paid good value for these three bank drafts.

[106] The Attorney General knew from his investigation that these bank drafts were not connected to unlawful activities. The Attorney General’s baseless and repugnant argument was that since some of Ms. Lu’s bank accounts could be connected to two feeder accounts for which he had an arguable case for forfeiture, therefore, it followed that all of Ms. Lu’s bank accounts must be forfeited. That guilt by mere association result, however, does not logically or legally follow.

[107] The Attorney General repeated his baseless argument to submit that there was a basis for forfeiture for the $50,000 BMO (Edmonton) bank draft, the $50,000 BMO (Langley) bank draft, the $50,000 BMO (Calgary) bank draft, the $50,000 ATB Financial bank draft, and the $80,000 BNS bank draft ($280,000). However, there was insufficient evidence to connect these bank drafts to unlawful activity. The argument again was that these bank drafts were tainted by the two bank drafts that the Attorney General could connect to unlawful activity. Once again, this tainting argument does not logically or legally follow.

[108] When the dust settled, all the Attorney General had was circumstantial evidence that some bank drafts came from what might be so-called feeder accounts for the purchases of marijuana and the purchases might be unlawful. All the Attorney General had to make its case for forfeiture of the $280,000 worth of bank drafts was that a large number of etransfers referencing the term “kicks”. However, that is insufficient and does not establish a connection to unlawful activity or to BudExpressNow, Cheapweed, or any other cannabis operation. The Attorney General did not establish a link between these accounts and unlawful activity, and therefore he did not meet the burden of establishing that these funds are proceeds of unlawful activity.

[109] In any event, Ms. Lu and her proxy Mr. Luan qualify as “uninvolved interest holders” or “responsible owners” in accordance with the Civil Remedies Act, which exempt such persons from forfeiture should it be the case that they have property that is the proceeds or an instrument of unlawful activity.

[110] In so far as the uninvolved interest holder exception is concerned, Ms. Lu and her proxy Mr. Luan did not acquire the bank drafts as a result of unlawful activity. Ms. Lu acquired the bank drafts as a result of exchanging currency pursuant to a Hawala, which is not an illegal activity. She acquired the bank drafts for fair value after the unlawful activity of others had occurred and she did not know and could not reasonably have known when she obtained the bank drafts that some of them (a few of them) were proceeds of unlawful activity. It is clearly not in the interests of justice to order forfeiture of the few money orders that were proceeds of unlawful activity.

[111] In so far as the responsible owner exception is concerned, Ms. Lu was the legitimate owner of the bank drafts for which she paid good value and she had done all that could reasonably be done to prevent the bank notes being used to engage in unlawful activity. Ms. Lu could not do anything to prevent persons from using the Hawala as a means to launder money no more than she could stop persons from using any marketplace regulated or not regulated as a means to launder the proceeds of unlawful activity. She made reasonable inquiries about the reliability of using the Hawala. She used responsible intermediaries. She had no reason to suspect that the Hawala had been compromised by unlawful activity of which she was not a knowing participant. She was a responsible owner. It would clearly not be in the interests of justice to order forfeiture.

[112] The Attorney General submits that neither of these exceptions are available because the Lu/Luan Respondents (a) were “likely directly involved in the illegal online cannabis sales”, and/or (b) participated in money laundering by “the transfer of funds from the Feeder Accounts to their own, and through their Hawala transfers intended to circumvent Chinese currency remittance laws”. These submissions are without merit.

a. For the reasons provided above there is no merit to the allegation that Ms. Lu violated Chinese law.

b. There is no evidence that Ms. Lu and Mr. Luan had any involvement in the cannabis operations underlying the Attorney General’s application.

c. There is no evidence that any of the bank transfers might be part of a money laundering scheme.

d. Participation in a Hawala transfer is not proof of money laundering. The Attorney General’s own expert acknowledged that money transfers of this nature are not inherently illegal.

[113] The Lu/Luan Respondents have not admitted that they engaged in the relevant currency transfers with the intention of circumventing Chinese currency remittance laws. In any event, as noted above this exception refers to “unlawful activity” as defined in the Civil Remedies Act, which limits the term to what is an offence in Canada. Canada has no offence equivalent to the Chinese currency controls on which the Attorney General relies.

[114] It is not necessary to go this far, but if Ms. Lu did not qualify as an uninvolved interest holder or a responsible owner, she would be entitled to relief from forfeiture. She herself was not a perpetrator of an unlawful activity. She had no knowledge or constructive knowledge about the activities of the illegal marijuana sales or that the Hawala was being used to launder money from illegal activities. She did not profit from the unlawful activities knowingly or unknowingly. There is a great disparity between what the Attorney General seeks to forfeit and what he proved to be the proceeds of unlawful activity. She has explained that she had lawful purposes for the purchase of Canadian currency for which she paid fair value in Chinese currency.

[115] Relief from forfeiture in the interests of justice is the fail-safe measure to ensure that the substantial force of the Civil Remedies Act power to divest a person of his or her property is not abused and accords with what the community would regard as fair and just. In Ontario (Attorney General) v. 20 Strike Avenue,[^25] Justice Cronk stated:

93 Moreover, as this court emphasized in Darlington, at para. 100, elementary justice requires that care be taken on a CRA forfeiture application to distinguish between a property owner “who had no involvement in the criminal activity, was unaware of that activity, had acted reasonably throughout and did not profit from the activity” and a property owner “who was involved in and directly profited from the unlawful activity”.

94. While involvement in criminal activity is not a prerequisite to a forfeiture order under s. 8(1) (Darlington at paras. 99 and 100), forfeiture under the CRA is not intended to penalize the undeserving or the innocent. Justice Doherty put it this way in Darlington, at para. 101:

[T]aking a person’s property away from that person has a punitive component. The interests of justice require that punitive orders made by the courts be reasonably perceived by the community as being deserved by those against whom they are made.

[116] In Darlington, which is reported as Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (In Rem),[^26] Justice Doherty stated at para. 100:

100. In holding that the property owner’s conduct as it relates to the unlawful activity is an important consideration in determining whether to grant relief from forfeiture, I do not suggest that actual involvement in the criminal activity is in any way a prerequisite to a forfeiture order under the CRA. It is not. However, nothing in the CRA precludes the common-sense recognition that the conduct of the property owner will be important when deciding whether it is clearly not in the interests of justice to order forfeiture. Surely, a property owner who had no involvement in the criminal activity, was unaware of that activity, had acted reasonably throughout and did not profit from the activity, should, as a matter of elementary justice, be treated differently on a forfeiture application than the property owner who was involved in and directly profited from the unlawful activity. If 170 Glenville Road, King, at para. 78, stands for the proposition that a consideration of the property owner’s involvement in the criminal activity in issue is irrelevant to the “interests of justice”, I must, with respect, disagree.

[117] In so far as Ms. Lu and Mr. Luan are concerned, the Attorney General’s application is dismissed.

2. The Case for Forfeiture of the Huiming Han and Yuyu Han Bank Accounts

[118] There is no case for the forfeiture of the Han family’s bank accounts.

[119] Based on the evidentiary record for this forfeiture application, I find as a fact that the evidence establishes that:

a. The Attorney General has not established on a balance of probabilities that approximately $1.7 million of the funds deposited in the Han family’s bank accounts are either the proceeds of unlawful activity or the instrument of unlawful activity.

b. The Attorney General has established on a balance of probabilities that approximately $1.4 million of the funds deposited in the Han family’s bank accounts are either the proceeds of unlawful activity or the instrument of unlawful activity.

c. Mr. Han and Ms. Han are uninvolved interest holders and responsible owners with respect to the funds proven to be the proceeds of unlawful activity or the instrument of unlawful activity.

d. There shall be no forfeiture ordered against the bank accounts of the Han family.

e. If relief from forfeiture was necessary, which it is not, I would have exercised my discretion to grant relief from forfeiture. Forfeiture would be harsh and punitive and would not serve the policy objectives of the Civil Remedies Act.

[120] By way of elucidation of these conclusions, the Hans acquired Canadian funds for fair value in the Hawala transaction. They did not know, nor could they reasonably have known that the funds were tainted or derived from unlawful cannabis sales.

[121] There is nothing unlawful about Hawala transactions and the Hans were not remotely involved in any illegal activities themselves. They did not have the intent to money launder. They had no reason to suspect that they were being used in a money laundering scheme, and the Attorney General did not prove that more than $1.4 million was attributable to unlawful activities while the Hans proved that they entered into legitimate transactions in which they paid good value in Chinese currency transferred in China to obtain Canadian currency in Canada. The Hans were legitimate owners of the Canadian currency that they purchased.

[122] The Hans were responsible owners of their Canadian currency. They were not aware of any criminal activities associated with the money, and their own plan for it was to use the Canadian funds for the innocent purpose of purchasing a home for their daughter and her newborn. They purposefully purchased Canadian dollars at fair market value to purchase a new home for their daughter and they had the good fortune of being wealthy enough from their Chinese business and investments to make this gift.

[123] There was nothing nefarious in their use of the Hawala and in their reliance on Mr. Gao as intermediary, and the Hans were not willfully blind to evidence that could have suggested that the Hawala was being used as a vehicle for money laundering. Before the Hawala transactions that attracted the attention of police investigators, the Hans had only positive experiences with the use of the Hawala.

[124] In so far as the uninvolved interest holder exception is concerned, the Hans did not acquire the bank drafts as a result of unlawful activity. The Hans acquired the bank drafts as a result of exchanging currency pursuant to a Hawala, which is not an illegal activity. They acquired the bank drafts for fair value after the unlawful activity of others had occurred, and they did not know and could not reasonably have known when they obtained the bank drafts that some of them were proceeds of unlawful activity. It is not in the interests of justice to order forfeiture of the money.

[125] In so far as the responsible owner exception is concerned, just as was the case with Ms. Lu and for the same reasons, the Hans were responsible owners. It would clearly not be in the interests of justice to order forfeiture.

[126] As was the case with Ms. Lu, it is not necessary to go this far, but if the Hans did not qualify as uninvolved interest holders or as responsible owners, they would be entitled to relief from forfeiture.

[127] In so far as the Hans are concerned, the Attorney General’s application is dismissed.

H. Conclusion

[128] For the above reasons, the Attorney General’s application is dismissed.

[129] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the submissions of Ms. Lu and Mr. Luan and of Mr. Han and Ms. Han respectively, within twenty days of the release of these Reasons for Decision followed by the Attorney General’s submissions within a further twenty days.

Perell, J.

Released: December 17, 2021

COURT FILE NO.: CV-21-655275-0000

DATE: 20211217

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Attorney General of Ontario

Applicant

• and -

Contents of TD Bank Account # 1175-6485516, TD Waterhouse Account # 1253-7CXA35A, RBC GIC Account #00160187727 0012, and RBC GIC Account #00160187727 0013 (in rem)

Respondents

REASONS FOR DECISION

PERELL J.

Released: December 17, 2021

[^1]: S.O. 2001, c. 28. [^2]: Chatterjee v. Ontario (Attorney General), 2009 SCC 19 at para. 17. [^3]: Chatterjee v. Ontario (Attorney General), 2009 SCC 19 at paras. 3 and 4. [^4]: Civil Remedies Act, 2001, S.O. 2001, c. 30, Sched. A.ss. 15.5(2) and 15.6; Chatterjee v. Ontario (Attorney General), 2009 SCC 19) at para. 21. [^5]: Ontario (Attorney General) v. Chatterjee, 2007 ONCA 406, [2007] O.J. No. 2102 (C.A.), aff’d 2009 SCC 19. [^6]: 2012 ONSC 7230. [^7]: 2011 ONSC 3067. [^8]: 2002, S.O. 2002, c. 30, Sched. A. [^9]: 2017 ONSC 708. [^10]: 2015 ONSC 2267. [^11]: 2011 ONSC 2058 (Master). [^12]: Ontario (Attorney General) v. Chatterjee, 2007 ONCA 406, [2007] O.J. No. 2102 (C.A.), aff’d 2009 SCC 19; Ontario (Attorney General) v. Chow, [2003] O.J. No. 5387 (S.C.J). [^13]: Chatterjee v. Ontario (Attorney General), 2009 SCC 91 at para. 21; Ontario (Attorney General) v. $10,000.00 in Canadian Currency (In Rem), 2014 ONSC 944 at para. 7. [^14]: Ontario (Attorney General) v. $5,545 in Canadian Currency (In Rem), 2011 ONSC 2827 at paras. 29-30 (Div. Ct.); Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (In Rem), 2011 ONCA 363 at para. 46; Ontario (Attorney General) v. $9,616.98 in Canadian Currency (In Rem), 2011 ONSC 3820 (Div. Ct.); Ontario (Attorney General) v. $10,000.00 in Canadian Currency (In Rem), 2014 ONSC 944. [^15]: Ontario (Attorney General) v. $44,425 in Canadian Currency (In Rem), 2015 ONSC 7382; Ontario (Attorney General) v. $13,900 in Canadian Currency (In Rem) 2015 ONSC 2267; Ontario (Attorney General) v. Chatterjee, 2007 ONCA 406, [2007] O.J. No. 2102 (C.A.), aff’d 2009 SCC 19. [^16]: Ontario (Attorney General) v. $10,000.00 in Canadian Currency (In Rem), 2014 ONSC 944 at para. 14; Ontario (Attorney General) v. $9,616.98 in Canadian Currency (In Rem), 2011 ONSC 3820 at para. 7 (Div. Ct.). [^17]: Ontario (Attorney General) v. $138,650 in Canada Currency (In Rem), 2012 ONSC 7230; Ontario (Attorney General) v. 170 Glenville Road, King (in rem), [2010] O.J. No. 2865 (S.C.J.), aff’d 2011 ONCA 444; Ontario (Attorney General) v. Jinarern, [2005] O.J. No. 6008 (S.C.J.); Ontario (Attorney General) v. Chow, [2003] O.J. No. 5387 (S.C.J). [^18]: [2003] O.J. No. 5387 (S.C.J). See also Ontario (Attorney General) v. $104,877 in U.S. Currency (In Rem), 2014 ONSC 5688. [^19]: Attorney General of Ontario v. $52,820 Canadian, 2019 ONSC 4746 at para. 23; Ontario (Attorney General) v. $13,900 in Canadian Currency (In Rem), 2015 ONSC 2267 at paras. 47-48; Ontario (Attorney General) v. $10,000.00 in Canadian Currency (In Rem), 2014 ONSC 944 at paras. 21, 32; Ontario (Attorney General) v. $150,000 (In Rem), [2014] O.J. No. 2204 paras. 1-2 (S.C.J.), paras 1-2; Attorney General of Ontario v. $9,616.98 in Canadian Currency, 2011 ONSC 3820 at paras. 5-7 (Div. Ct.). [^20]: Ontario (Attorney General) v. $14,700.00 in Canadian Currency (In Rem), 2016 ONSC 910 at para. 42; Ontario (Attorney General) v. $104,877 in U.S. Currency (In Rem), 2014 ONSC 5688 at para. 35; Ontario (Attorney General) v. $9,475 in Canadian Currency (In Rem), 2014 ONSC 3711; Ontario (Attorney General) v. $10,000.00 in Canadian Currency (In Rem), 2014 ONSC 944, at paras. 21 and 32; Ontario (Attorney General) v. $25,680 in Canadian Currency (in Rem), [2009] O.J. No. 3734 (S.C.J.); Ontario (Attorney General) v. $1,650 in Canadian Currency (In Rem), [2008] O.J. No. 2076 (S.C.J.). [^21]: Ontario (Attorney General) v. $104,877 in U.S. Currency (In Rem), 2014 ONSC 5688 at para. 49; Ontario (Attorney General) v. 20 Strike Avenue, Bowmanville, Ontario (Pin #26932-0115(LT)) (In Rem), 2014 ONCA 395; Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (In Rem), 2011 ONCA 363. [^22]: Ontario (Attorney General) v. 855 Darby Road, Welland (In Rem) 2017 ONSC 4953 at paras. 142-150; Ontario (Attorney General) v. $18,550.00 in Canadian currency (In Rem), 2016 ONSC 2237 at paras. 148-153; Ontario (Attorney General) v. $51,000.00 in Canadian Currency (In Rem), 2013 ONSC 1321 at para. 41; Ontario (Attorney General) v. 20 Strike Avenue, Bowmanville, Ontario (Pin #26932-0115(LT)) (In Rem), 2013 ONSC 2130 at paras. 16-19, aff’d 2014 ONCA 395; Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (In Rem), 2011 ONCA 363. [^23]: Attorney General of Ontario v. REM, 2021 ONSC 3094. [^24]: Attorney General of Ontario v. Contents of TD Bank Account #1175-6485516, 2021 ONSC 6386 [^25]: 2014 ONCA 395 at paras. 93-94. [^26]: 2011 ONCA 363.