Court File and Parties

COURT FILE NO. : CV-23-00695920-0000 DATE : 20230330 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Attorney General of Ontario AND: $41,620 in Canadian Currency (in rem)

BEFORE: Justice Chalmers

COUNSEL: L. Brazil for the Applicant D. Pledge for Yuansen Fu

HEARD: In-Writing

Endorsement

Overview

[1] The Applicant/Moving Party brings this motion on notice, seeking an order for the preservation of $41,620 in Canadian currency, pending application for civil forfeiture of the currency to the Crown. The motion is brought pursuant to s. 4(1) and 9(1) of the Civil Remedies Act, 2001, S.O. 2001, c. 28 (CRA). Under sections 4 and 9 of the CRA, the court may make an order for the preservation of property if there are reasonable grounds to believe that the property is the proceeds or an instrument of unlawful activity, unless it would clearly not be in the interests of justice to do so.

[2] The Applicant argues that there are reasonable grounds to believe that the currency is proceeds of an instrument of unlawful activity, and that it would be in the interests of justice to preserve the currency pending the determination of the forfeiture application. Yuansen Fu is a person interested in the currency. He consents to the preservation order.

Factual Background

[3] On October 6, 2021, Mr. Yu checked into room 2805 at the St. Regis Hotel in Toronto. On October 7, 2021, he checked out of the room and moved into room 2112. On October 7, 2021, Mr. Fu called hotel security and said he lost his iPad. The hotel security stated that they would search the hotel for it. Room 2805 was searched, and a handgun magazine was found in one of the nightstand drawers. The Toronto Police were called.

[4] On October 8, 2021, Mr. Fu was arrested for possession of a firearm magazine and ammunition. TPS officers searched Mr. Fu, incident to his arrest, and found $41,620 in Canadian currency (the “Currency”), a pocketknife, and multiple cellular phones. TPS officers conducted a search of the room pursuant to a search warrant, at which time methamphetamine (crystal meth) was found in Mr. Fu’s hotel room. Mr. Fu as charged with possession of ammunition and possession of a Schedule I substance.

[5] On November 23, 2021, Justice of the Peace Chin ordered the seized currency detained until the charges were completed. On January 24, 2022, the Crown withdrew the charges against Mr. Fu. On July 4 2022, the Ontario Court of Justice issued an order for disposition of property requiring the police to return the currency no earlier than August 3, 2022. On September 19, 2022, the Attorney General commenced administrative forfeiture proceedings under the CRA. On February 13, 2023, Mr. Fu served a Notice of Dispute opposing the administrative forfeiture of the currency.

Analysis and Discussion

(i) Reasonable Grounds to Believe the Property is Proceeds or an Instrument of Unlawful Activity

[6] Under section 4 of the CRA, the Court may make an order for the interim preservation of the property if there are reasonable grounds to believe that the property is proceeds of unlawful activity or is an instrument of unlawful activity, unless it would clearly not be in the interests of justice to do so: Act, s. 4.

[7] “Reasonable grounds” is a lower standard of proof than that of the “balance of probabilities”: Ontario (Attorney General) v. $61,688.12 in Canadian Currency (in Rem), [2009] O.J. No.: 3874, at paras. 21-25. This standard requires more than mere suspicion but less than the civil standard of proof on a balance of probabilities: Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40, at para. 114.

[8] “Proceeds of unlawful activity” is defined as any property acquired, directly, or indirectly in whole or in part, as a result of unlawful activity: Act, s.2. “Unlawful activity” is given a broad definition and encompasses any act or omission that is an offence under any Act of Canada, Ontario or another province of territory: CRA, s.2 and s.7. “Proceeds of unlawful activity” are property acquired directly or indirectly, in whole or in part, as a result of unlawful activity: Chatterjee v. Ontario (Attorney General), 2009 SCC 19, at paras. 21, 46 and 47.

[9] Here, Mr. Fu was found with a large amount of cash. Courts regularly draw inferences that large sums of cash are the proceeds or an instrument of unlawful activity such as drug trafficking. The Crown argues that there is an absence of a reasonable innocent explanation for the source of the money and therefore asks the court to draw an adverse inference that the currency is linked to unlawful activity: Attorney General of Ontario and $543,515 in Canadian Currency (in rem), 2021 ONSC 4323, at paras 22-23.

[10] The Crown relies on the affidavit evidence of D.C. Elaine Saeed. She deposed to the following:

• Mr. Fu was arrested late at night carrying a large amount of currency. The Currency was bundled with elastic bands in mixed denominations and stored in a backpack. This is consistent with drug trafficking and not with currency obtained from a lawful source, such as a bank.
• The Currency was found in proximity to the Crystal Meth, a pocketknife, the handgun magazine, the ammunition and three cellular phones, which are indicia of drug trafficking. Mr. Fu has not provided any explanation for the source of the Currency, let alone a reasonable and credible explanation as to why the Currency is not connected to unlawful activity.
• Mr. Fu told officers during his arrest that he was coming from an “underground casino”. This admission establishes reasonable grounds to believe that the Currency is the proceeds or an instrument of illegal gambling in breach of the Criminal Code sections 201, 202 or 203.
• The Currency was discovered in proximity to cellular phones and identification in several other people’s names. At least one piece of identification had Mr. Fu’s photo but another person’s name. This constitutes reasonable grounds to believe that the Currency was the proceeds or an instrument of fraud in breach of s. 380(1) of the Criminal Code.
• Mr. Fu is currently wanted for numerous for-profit crimes, including three counts of fraud over $5,000, identity theft, and forgery. This is similar-fact evidence that Mr. Fu regularly engages in for-profit crimes similar to drug trafficking, illegal gambling, and fraud.

[11] I am satisfied on the evidence before me that the Crown has established reasonable grounds to believe that the seized currency is the proceeds of unlawful activity.

(ii) Preservation of the Currency is in the Interest of Justice

[12] The preservation order will not be granted if the preservation is clearly not in the interests of justice. The “clearly not in the interests of justice” exception is narrow and is not routinely exercised. The “interests of justice” concerns will be engaged where the person seeking relief establishes that it would be “manifestly harsh” or “draconian” to make the preservation order: Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (in Rem), 2011 ONCA 363, at paras. 84 and 85.

[13] The Applicant seeks an order for the preservation of property pending a forfeiture hearing. The “interest of justice” exception for a preservation order should be applied more stringently than in a forfeiture hearing because the preservation motion is an interim order that does not finally determine the status of the property or the legal rights of interested persons: Ontario (Attorney General) v. $51,000.00 in Canadian Currency (In Rem), 2012 ONSC 4958, at para. 38.

[14] In determining whether it would be “manifestly harsh” or “draconian” to order forfeiture of a property, the court is to consider the following factors:

(a) the closeness of the connection between the property and the illegal activity; (b) whether there is any disparity between the party’s interest in the property compared to the overall value of the property; (c) The conduct of the party whose property is the subject of the forfeiture application, in particular the reasonableness of the breaching party’s conduct, including the knowledge of the unlawful activity; and (d) Whether forfeiture is onside with the purposes of the CRA: Ontario (Attorney General) v. 1140 Aubin Road, Windsor and 3142 Halpin Road, Windsor (in Rem), 2011 ONCA 363, at paras. 84 and 85.

[15] I have considered these factors. I am satisfied that there is no basis for the application of the “clearly not in the interests of justice” exception. The evidence establishes that there is a connection between the seized currency and the unlawful activity namely trafficking in schedule I substances, or illegal gambling. I am also satisfied that the preservation of the seized currency will promote the purposes of the Act. The preservation order will result in the preservation of the seized currency for an interim period. Without preservation of the currency, the money would likely be dissipated and would not be available as evidence on the forfeiture application.

[16] I am satisfied that there is nothing harsh or draconian about preserving the currency. As noted above, Mr. Fu consents to the preservation order.

Disposition

[17] I am satisfied that the Applicant has established that the $41,620 seized from Mr. Fu is the proceeds of unlawful activity. I am also of the view that there is no basis for the “clearly not in the interests of justice” exception to apply.

[18] I grant the relief sought. The Order shall go in accordance with the draft order filed and signed by me.

Date: March 30, 2023