Court File and Parties
COURT FILE NO.: 1205/20 DATE: 2021-02-08 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: ATTORNEY GENERAL OF ONTARIO, Applicant AND $80 Cdn., $13,490 Cdn. In a Louis Vuitton Fanny Pack, 2 Counterfeit $100 US Bills, 4 gold rings and 2009 BMW Ontario Licence plate CLWT881 (VIN:WBAPH73549E127144)(in rem), Respondents
BEFORE: Justice S. Nicholson
COUNSEL: J. McKeachie for The Attorney General of Ontario No one appearing for the Respondents
HEARD: In Writing
REASONS FOR DECISION
NICHOLSON J.:
[1] The Attorney General of Ontario (“AGO”) brings this motion pursuant to the Civil Remedies Act, 2001, S.O. 2001, c. 28, as amended (the “Act”), to approve a settlement reached with one of five respondents, Tarryn Flynn. Under the proposed settlement the AGO will return the sum of $2,000 and a 2009 BMW Ontario licence plate CLWT881 to Ms. Flynn and the remainder of the seized items will be subject to forfeiture. Ms. Flynn obviously consents to the order sought.
[2] Pursuant to an order dated September 4, 2020 by Leach J., subsequently extended by order dated October 2, 2020 by George J., the following property is being preserved pursuant to s. 4 and 9 of the Act:
• seized $80 CAD • $13,490 CAD in a Louis Vuitton Fanny Pack • two counterfeit $100 USD bills • 4 gold rings seized by the London Police Services • and the aforesaid BMW licence plate.
[3] In addition to returning $2000 and the licence plate the AGO seeks an order that it shall remove the lien registered against the BMW under the Personal Property Security Act, and that the remainder of the property is forfeited to the Crown in right of Ontario pursuant to s. 3 and 8 of the Act.
[4] In addition to Ms. Flynn there are four other respondents including:
• Jacob Gratton • Gregory Brown • Saeed Al-Hjowj • Robert Hubbell
[5] Mr. Al-Hjowj attended before Justice George and advised that he claimed no interest in the property. The three remaining respondents did not serve a notice of appearance nor did they contact the AGO. The AGO proposes to serve them with the motion record in support of the settlement. I am satisfied on the evidence before this court that the five respondents were properly served with the notice of application, preservation motion materials and the order of Justice Leach dated September 4, 2020.
[6] Ms. Flynn and the AGO have reached a settlement agreement, setting out the proposed terms above, namely that she will receive the sum of $2,000 and the BMW licence plate.
[7] The AGO alleges that the seized property represents, on the balance of probabilities, the proceeds and/or instruments of unlawful activity--most likely drug trafficking. Trace amounts of cocaine were detected on the currency. The AGO motion is supported by an affidavit from Detective Constable Jimmy Bulhoes which sets out the relevant facts of the case and his reasons for believing that the seized items relate to “unlawful activity”.
[8] The matter arises out of a hit and run motor vehicle accident that occurred on May 19, 2020. The 2009 BMW was involved in the accident. The driver of that vehicle, described by witnesses as a male in his late 20s or early 30s, fled on foot. The registered owner of the vehicle was Ms. Flynn. Subsequent to the accident several lighters and a cannabis grinder were found within the BMW along with an amount of marihuana deemed to be for personal consumption. The seized items were also found within the vehicle. The currency was found within the Louis Vuitton fanny pack.
[9] Ms. Flynn contacted the police and advised that she had been driving the vehicle at the time of the accident. However, it was determined by police that an associate of hers, Jacob Gratton, fits the description of the driver of the vehicle. Gratton has a criminal record for possession of cocaine.
[10] The BMW had been purchased on April 30, 2020 ostensibly by Ms. Flynn. However, an investigation determined that Al-Hjowj had actually purchased the vehicle and then sold it to Ms. Flynn. He also has a criminal record.
[11] Mr. Hubbell contacted the police and advised that the Canadian currency was his and that he had given it to Ms. Flynn so she could get a cheque from a bank that he could use for a down payment on a house. He indicated that it was $40,000. Mr. Hubbell also has a criminal history.
[12] Mr. Brown contacted the police and advised that he was the driver of the BMW when the accident occurred. However, he is 51 and outside the age range of the suspected driver. He also was unable to give an accurate description of the accident. Mr. Brown has a criminal record.
[13] Ms. Flynn then contacted police and advised that she had loaned the vehicle to a male. She said that she had between $20,000 and $60,000 in a classic brown Louis Vuitton backpack. She tried to prove that the money was hers by providing banking records. The police did not believe the banking information that she provided substantiated her story.
[14] No criminal charges are being laid. A detention order for the seized items had been obtained for three months. It expired on August 27, 2020.
Legal Analysis:
[15] The Civil Remedies Act, 2001, was enacted to deter crime and to compensate victims by authorizing in rem forfeiture of property connected to criminal activity. The property which may be subject to forfeiture must be either “proceeds of unlawful activity” or an “instrument of unlawful activity”.
[16] Under Part II of the Act (s.2), “proceeds of unlawful activity” means “property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity”. Under Part III of the Act (s. 7), “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 of such property”.
[17] “Unlawful activity” means an act or omission that is an offence under an Act of Canada or Ontario in both Part II and Part III of the Act.
[18] Section 3 of the Act grants a Justice of the Superior Court, except where it would clearly not be in the interests of justice, to make an order forfeiting property that is in Ontario to the Crown in right of Ontario if the judge finds that the property is proceeds of an unlawful activity.
[19] However, subsection 3(3) allows the court to make “such order as it considers necessary to protect the uninvolved interest holder’s interest in the property” if a party to the proceeding proves that she is an uninvolved interest holder of the property.
[20] “Uninvolved interest holder” means a person who did not, directly or indirectly, acquire the property as a result of unlawful activity committed by the person, and who was the rightful owner of the property before the unlawful activity occurred or innocently acquired the property without knowing it was the proceeds of unlawful activity.
[21] Part III of the Act essentially repeats the provisions in Part II but in relation to “instruments of unlawful activity”. Accordingly, s. 8 is identical to s. 3 of the Act but pertains to “instruments of unlawful activity”. “Uninvolved interest holder” is replaced with “responsible owner”. Thus, if a party can prove that they were a responsible owner of the property that is an instrument of unlawful activity, the court shall make such order as it considers necessary to protect that party’s interest, except where it would clearly not be in the interests of justice.
[22] Importantly, under subsection 17(2) of the Act, an offence may be found to have been committed even if no person has been charged with the offence.
[23] In dealing with claims for forfeiture of seized proceeds or instruments of unlawful activity, the courts have applied a two-step analysis, as set out by the Ontario Court of Appeal in Ontario (Attorney General) v. $104,877 in U.S. Currency (In Rem), 2016 ONCA 71. First, the AGO must satisfy the court that the property is either the proceeds of unlawful activity or the instrument of unlawful activity. Second, the respondent may seek protection from forfeiture under s.3(3) or s. 8(3) as either a “uninvolved interest holder” or a “responsible owner”.
[24] On review of the affidavit of Detective Constable Jimmy Bulhoes in which he sets out indicia often seen in drug trafficking, I am satisfied on the balance of probabilities that the items listed are proceeds or an instrument of unlawful activity, namely drug trafficking. Specifically, I have considered the following:
• the cast of characters involved and their criminal records (see: Ontario (Attorney General) v. $9,616.98 in Canadian Currency, 2011 ONSC 3820); • the inconsistencies between all the stories told by these characters; • the fact that the driver of the BMW fled; • the large amount of cash on hand and the denominations of the cash, as there were 582 $20 bills. DC Bulhoes sets out that $20 bills are commonly used in drug trafficking; • the traces of cocaine found on some of the currency; • the drug paraphernalia found in the BMW; • the counterfeit currency; • the presence of the jewelry as DC Bulhoes noted that drug addicts will commonly exchange rings and other jewelry for drugs.
[25] S.18.1 of the Act provides as follows:
Settlements
18.1 (1) Despite anything to the contrary in this Act, the court may approve a settlement in relation to a proceeding under this Act, on the motion or application of the Attorney General or of any other party to the proceeding with the Attorney General’s consent;
Forfeiture
(2) For greater certainty, the power to approve a settlement under subsection (1) includes a power to approve a settlement that provides for the full or partial forfeiture of the property that is the subject of the proceeding.
Payments in lieu
(3) For greater certainty, the power to approve a settlement under subsection (1) includes a power to approve a settlement that provides for payment of a monetary amount instead of the full or partial forfeiture of the property that is the subject of the proceeding.
[26] Thus, s. 18.1 of the Act authorizes a court to approve a settlement, despite anything contrary in the Act. This includes approving a settlement that provides for the full or partial forfeiture of the property that is the subject of the proceeding. Undoubtedly, the inclusion of the words “despite anything to the contrary in this Act” grants a wide discretion to the court in approving settlements.
[27] Importantly, this section had not been enacted at the time the Divisional Court decided Ontario (Attorney General) v. $29,900 in Canadian Currency (in rem), 2017 ONSC 2003. Arguably, at that time, the judges presiding over forfeiture proceedings under the Act were required to either make a forfeiture Order or not. The settlement provision in s.18.1 now provides a middle ground to the parties to the application.
[28] In $29,900 in Canadian Currency, supra, the AGO and a respondent sought to enforce an agreement by which the respondent would retain $4,000 and the balance of the funds would be forfeited. Justice Faieta interpreted the Act, as it then read, as not permitting a portion of the funds to be forfeited and a portion returned. As the respondent could not bring herself within the exceptions in s.3(3), the entire sum was subject to forfeiture. On appeal, Justice Nordheimer agreed with that analysis, determining that the requirements of the Act had to be strictly complied with.
[29] Section 18.1 of the Act, in my view, recognizes the benefits to both the Attorney General and any participating respondent, including those with a valid claim to the property, of being able to compromise their respective positions to avoid an all or nothing outcome on a hearing in respect of forfeiture. It permits parties to evaluate the strengths and weaknesses of their case. It then allows a court to evaluate the proposed settlement in relation to the strengths and weaknesses of each party’s position to ensure that the settlement does not offend the aims of the Act. If the court is satisfied of the reasonableness of the settlement, the court may exercise its discretion to approve the settlement. The purpose of including a provision relating to settlement in the legislation must be to permit the Attorney General to enter good faith compromises for practical reasons. All parties to a forfeiture application derive some benefit to such a provision.
[30] The concerns of Justice Nordheimer in $29,900, supra, that there may be other persons whose interests in the disputed property need to be considered are valid. In determining the reasonableness of the proposed settlement, the court is in position to evaluate the settlement from the perspective of all those impacted by the settlement, including those that may not be before the court.
[31] In the within case, it is far from clear on the evidence that Ms. Flynn would be able to bring herself within the class of persons who ought to have the protection from forfeiture offered by s. 3(3) or 8(3) of the Act. At a hearing, the onus would be upon Ms. Flynn to establish that she meets the definition of an “uninvolved interest holder” or a “responsible owner”. She has furnished no evidence in that regard for this application. However, it must be kept in mind that, from her perspective, she reached an agreement with the AGO and the lack of evidence from her is accordingly unsurprising. Had no agreement been reached, I presume that she would have made some effort to meet that onus. It would be unfair for her to enter into a good faith settlement and then not enforce it because she did not then prove her entitlement to the property.
[32] While the ownership of the cash is clearly contentious, the ultimate amount of the settlement from the perspective of both parties is practical in relation to the modest sums in question. Furthermore, the other respondents have either failed to participate despite being given ample notice of these proceedings or renounced their interest. The true owners of the rings, for example, are not likely to ever be identified.
[33] In my view, the settlement proposed is reasonable considering the value of the amounts involved in the settlement and the value of the seized items. A forfeiture hearing over the amount of $2,000 and a damaged motor vehicle is impractical.
[34] With respect to the remainder of the items being held, I have already stated that on a balance of probabilities I am satisfied that they represent the proceeds of unlawful activity. Furthermore, there is no evidence that forfeiture of these items is “clearly not in the interests of justice”. The Ontario Court of Appeal addressed that phrase in Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363. Doherty J.A, at para. 85, stated that the word “clearly” speaks to the cogency of the claim advanced for relief of forfeiture. The party seeking such relief must show that in the circumstances the forfeiture order would be a manifestly harsh and inequitable result. No such circumstances have been shown in this case.
[35] Accordingly, this court orders that:
(a) the sum of $2,000 in Canadian Currency and the 2009 BMW Ontario Licence plate CLWT881 (VIN:WBAPH73549E127144) be returned to Tarryn Flynn;
(b) the AGO shall remove the lien registered under the Personal Property Security Act;
(c) the remainder of the property is forfeited to the Crown in right of Ontario, pursuant to sections 3 and 8 of the Civil Remedies Act;
(d) upon receipt of this order, the London Police Service shall pay:
(i) $2,000 in Canadian Currency to Tarryn Flynn; and
(ii) The remaining seized currency, plus all accumulated interest, to the Minister of Finance;
(e) there shall be no costs of these proceedings; and
(f) this order shall be effective as of the time it is signed regardless of whether it is entered. If counsel is not able to have this order entered, the London Police Service is directed to act on this order as signed upon receiving counsel for the applicant’s written confirmation that the order that they proffer is a true copy of this order signed.
Justice Spencer Nicholson
Date: February 8, 2021