COURT FILE NO.: CR-24-0016-00 DATE: 2024-09-05

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

HIS MAJESTY THE KING Respondent Mr. M. Haque, for the Respondent, P.P.S.C.

• and -

Russell Bullock and Michael Prahay Mr. R. Rusonik, for the Applicants Applicants

HEARD: August 21, 2024, at Thunder Bay, Ontario

Madam Justice H.M. Pierce

Reasons on Applications for an Order Granting Access to Monies Seized

Introduction

[1] The applicants, Russell Bullock and Michael Prahay, stand charged by the Thunder Bay Police Service with multiple counts of possession of illegal drugs for the purpose of trafficking, firearm charges, and possession of the proceeds of crime. They challenge the legality of the search warrant that led to these charges.

[2] The sum of $186,269 was seized during the search of the residence in which the two accused were found. They were arrested on April 26, 2022, and remain in custody on these charges.

[3] They apply under ss. 462.34(4), 462.34(1), and 462.341 of the Criminal Code, R.S.C., 1985, c. C-46, and ss. 7, 10(b), 11(d), and 24(1) of the Canadian Charter of Rights and Freedoms for an order granting them access to the seized monies for the purpose of paying reasonable legal expenses to defend the charges against them. They wish to retain Reid Rusonik as their counsel of choice.

[4] At the hearing I concluded that their applications should be granted, for reasons to follow. These are the reasons.

Background

[5] The applicants have been detained in custody since their arrest. Mr. Bullock previously served a lengthy penitentiary term before being released to a half-way house in August 2020, where he remained until May or June of 2021.

[6] Mr. Prahay also served a sentence before being released on parole to a half-way house, where he spent a further seven months. He was at liberty for 18 months prior to his arrest on the current charges. He attempted to secure work as a general labourer, but the Covid pandemic intervened.

[7] The immediate families of the applicants support themselves with modest employment and are unable to assist them financially as they live paycheque to paycheque. Neither applicant has savings, nor assets. Unlike the circumstances in R. v. Beeput (10 June 2022), Central East, CR22-91100421 (Ont. S.C.), the applicants in this case testified in detail about their work history, their time in prison prior to this arrest, their own resources, and the resources of their immediate family. Each has been incarcerated now for more than two years.

[8] Because cash was seized at their arrest, they are presumptively ineligible to apply for Legal Aid. In any event, the applicant’s choice of counsel, Mr. Rusonik, is not prepared to defend the applicants on a Legal Aid retainer.

[9] The applicants exhausted their private resources to pay legal fees when, through no fault of their own, what was planned as a trial in the Ontario Court of Justice was aborted and instead, conducted as a preliminary inquiry.

[10] The applicants challenge the search warrant on constitutional grounds. The first stage of the Garofoli application is scheduled to be heard December 17–19, 2024, and a second stage application is scheduled for March 3–7, 2025. The defence has been ordered to file its materials 60 days in advance of the first hearing date, with the Crown to respond 30 days thereafter. This is not the sort of litigation that an unrepresented person should undertake. It is greatly to the court’s advantage to have experienced counsel representing the accused.

[11] The highest hourly rate permitted by Legal Aid is $187. The Legal Aid plan curtails the amount of preparation time to 15 hours, which the applicants contend is wholly inadequate for a case this serious and complex.

[12] Mr. Rusonik has agreed to represent both applicants based on a reduced hourly rate for preparation of $400, and a counsel fee for trial of $4,000, each exclusive of HST and disbursements. He will be assisted by his articling student, whose time will be charged at the rate of $100 per hour.

[13] The applicants understand that if they are convicted of any “designated offence” pursuant to ss. 462.37(3) and (4) of the Criminal Code, that, in addition to any other sentence they may receive, they may be fined up to the amount depleted from the seized funds for the purpose of paying reasonable legal fees, and they may have to serve consecutive time in jail in lieu of payment of the fine, in accordance with s. 463.37(3)(vi) of the Criminal Code.

[14] The Crown opposes the applications.

The Law

[15] The applicants rely on the following sections of the Criminal Code, as are found in the Proceeds of Crime regime:

462.34(1) Any person who has an interest in property that was seized under a warrant issued pursuant to section 462.32 or in respect of which a restraint order was made under subsection 462.33(3) may, at any time, apply to a judge for

(a) an order under subsection (4);

(b) permission to examine any seized property …

462.34(4) On an application made to a judge under paragraph (1)(a) in respect of any property and after hearing the applicant and the Attorney General and any other person to whom notice was given pursuant to paragraph (2)(b), the judge may order that the property or a part thereof be returned to the applicant or, in the case of a restraint order made under subsection 462.33(3), revoke the order, vary the order to exclude the property or any interest in the property or part thereof from the application of the order or make the order subject to such reasonable conditions as the judge thinks fit…

(c) for the purpose of

(ii) meeting the reasonable business and legal expenses of a person referred to in subparagraph (i)…

If the judge is satisfied that the applicant has no other assets or means available for the purposes set out in this paragraph and that no other person appears to be the lawful owner or lawfully entitled to possession of the property.

462.341 Subsection 462.34(2), paragraph 462.34(4)(c) and subsections 462.34(5), (5.1) and (5.2) apply, with any modifications that the circumstances require, to a person who has an interest in money, bank-notes or virtual currency or other digital assets that are seized under this Act, the Controlled Drugs and Substances Act or the Cannabis Act and in respect of which proceedings may be taken under subsection 462.37(1) or (2.01) or 462.38(2).

[16] The seminal case is R. v. Rafilovich, 2019 SCC 51, 442 D.L.R. (4th) 539. At para. 4, the court set out the following procedure for these types of applications:

(1) determine whether the accused actually needs any of the seized property to pay for reasonable legal fees (ss. 462.34(4) and 462.34(5));

(2) determine what amounts may be returned; and

(3) determine the appropriate terms related to the return of the funds (s. 462.34(4)) and order them held in trust by legal counsel so that they are no longer considered as seized property held by the state.

[17] In Terezakis v. Canada (Department of Justice), 1999 3104 (B.C.S.C), at para. 26, the court held that evidence tendered by the Crown justifying seizure of the property is sufficient to establish possessory interest for the purpose of these applications.

[18] As Justice Trafford held in Canada (Attorney General) v. Markovic, [2000] O.J. No. 3528 (Ont. S.C.), at para. 3, the applicants are not required to establish the lawfulness of their possession of these funds as a condition precedent to the application; they need only demonstrate that they have a possessory interest in the seized funds on a balance of probabilities, the reasonableness of their request for legal expenses, and the absence of other means to pay them.

Discussion

[19] The Crown concedes that the applicants have met the first branch of the test under s. 462.34(4)(c): they have established a valid interest in the funds seized. However, the Crown objects on the grounds that a third person appears to have an interest in the funds seized, and therefore the applicants have not met the second branch of the test: that no other person appears to lawfully own the funds.

[20] The Crown submits that this third person, Natasha DeGuzman, was charged as a co-accused with the applicants. Ms. DeGuzman rented the AirBnB where all three were found when the search warrant was executed and the funds seized.

[21] The Crown acknowledges that Ms. DeGuzman has absconded and a bench warrant has been issued for her arrest. The defence argues that she has not asserted any claim to these funds in the two or more years since she absconded and has therefore forfeited her right to a claim. The applicants further contend that absconding is a disentitling act under Canadian criminal law, resulting in forfeiture of bail, the right to a jury trial, and the right to appeal.

[22] I agree with these submissions. The Crown’s position rests on a hypothetical claim that Ms. DeGuzman has not advanced. There is no interest asserted by her that is entitled to protection. In other words, there is no competing claim to the seized funds for the court to consider. The applicants have met the second branch of the test.

[23] The Crown also objects on the grounds that the applicants have not shown that Legal Aid Ontario has refused them representation. Counsel agree that the law in Ontario is unsettled with respect to whether applicants must seek Legal Aid before applying for access to seized funds to pay legal fees: see R. v. Janisse, 2020 ONSC 1537, at para. 11.

[24] As part of their applications, the applicants have filed three Legal Aid refusals, issued to other individuals, requiring them to retain counsel privately in view of large amounts of money seized. The most recent refusal was dated November 2022.

[25] Counsel for the applicants submitted that he had never had a client who applied for Legal Aid in similar circumstances and had a certificate granted, except when that client failed to disclose the seizure of funds. He added that, once Legal Aid was correctly advised of the seizure of funds, the certificate was cancelled.

[26] In my view, it would be pointless to force the applicants to go through the exercise of applying for Legal Aid knowing that refusal was a foregone conclusion. I also take into account that the pretrial applications scheduled for this case are lengthy and complex, such that the time allowed by Legal Aid to prepare for and attend at the hearings would not allow the applicants to make full answer and defence with counsel of their choice.

[27] The defence also points out that the applicants previously retained another lawyer to conduct their trials in the Ontario Court of Justice. A mistrial was declared when the judge ruled on an application without hearing defence submissions. Consequently, the proceedings were conducted as a preliminary inquiry and the retainer of the applicant’s previous counsel was exhausted. The applicants were left without representation for their trial in the Superior Court.

[28] In my view, the applicants have established that they would not qualify for Legal Aid if a s. 462.34(4) application of this type was available to them. While the Criminal Code requires the court, when fixing legal fees under this application, to consider the Legal Aid tariff in the province, it is not a prerequisite that the applicants apply for Legal Aid funding prior to making a s. 462.34(4) application. It remains open to the applicants to retain counsel of their choice, provided the funding, as approved, is acceptable to their lawyer.

Reasonable Legal Expenses

[29] As I have said, the court must consider the provincial Legal Aid tariff when determining legal fees; however, it is not determinative. Mr. Rusonik made in camera submissions with respect to the nature of the defence and what he suggested would be reasonable legal fees.

[30] Justice Hill considered the matter of fees in R. v. Murtaza, 2011 ONSC 7577. Mr. Murtaza’s counsel asked the court to authorize fees of $250 per hour and $2,500 a day. At para. 49 of the decision, Justice Hill, in concluding that the submitted legal expenses were reasonable, reviewed the following hourly rates accepted in other cases: Su at $325/hour and $3,000 a day of trial; Paryniuk at $250/hour and $2,500 a day of trial; and Bedi at $250/hour and $2,000 a day of trial.

[31] The highest Legal Aid rate is $187/hour.

[32] In my view, the reduced hourly rates claimed by counsel - $400 per hour and $4,000 for each day of trial and $100/hour for his articling student, exclusive of HST and disbursements - are reasonable when compared with the rates reviewed in Murtaza, a case which is now 13 years-old. Mr. Rusonik was called to the Bar in 1989 and is therefore a senior counsel at the criminal defence bar, with a practice based in Toronto.

[33] Mr. Rusonik’s presence at court in Thunder Bay will be required for three days in December and a further five days in March. Travel and lodging will also be required. Counsel will have carriage of the defence for two clients with a complex and lengthy Garofoli application.

Conclusion

[34] The application for access to monies seized is granted to both applicants. An order will issue in accordance with Schedule “A” attached hereto.

The Hon. Madam Justice H.M. Pierce

Released: September 5, 2024