Attorney General of Ontario v. $99,210 In Canadian Currency (In Rem), 2025 ONSC 1148

Attorney General of Ontario v. $99,210 In Canadian Currency (In Rem), 2025 ONSC 1148

Court File No.: CV-23-1242-00 Date of Judgment: 2025-02-24 Heard: 2024-11-27, via videoconference Court: Ontario Superior Court of Justice Judge: P.W. Sutherland Applicant Counsel: Jonathan Sydor, David Westcott Respondent Counsel: James Foy (for Branavan Kanapathipillai)

Overview

1The applicant, the Attorney General of Ontario (AG), seeks an order forfeiting the sum of $99,210 in Canadian Currency (the monies seized) pursuant to s. 3 of the Civil Remedies Act, 2001 (the Act).

2The AG contends that the monies were obtained by Branavan Kanapathipillai through unlawful activity, namely money laundering. The AG contends that the monies should remain seized and forfeited. A preservation Order dated April 26, 2023 was granted by Lavine J.

3Mr. Kanapathipillai contends that he is a chronic high-stakes gambler and as such deals in large sums of cash. The monies seized were not from unlawful activity. The AG has not proven that the monies seized were from unlawful activities and thus, the monies seized should be returned to him. At a minimum, the $20,000 from a line of credit should be returned.

4For the reasons to follow, I grant the relief requested by the AG and order the monies forfeited.

Factual Background

5On November 13, 2022, the police seized the monies at Fallsview Casino (the Casino).

6Mr. Kanapathipillai presented the monies seized in cash to a cashier at the Casino at around 6:23 p.m. The monies seized were sorted into five bundles.

7Staff at the Casino notified the Ontario Provincial Police (OPP) and the OPP conducted source of funds interviews.

8The monies seized were kept by the OPP for further investigation. From the investigation, it was concluded that the monies seized were most likely a situation of money laundering and were therefore from unlawful activities.

The Investigation

9The investigation comprised of various interviews with Mr. Kanapathipillai, Casino staff and a tracing analysis which included a review of the sources of the monies, as alleged by Mr. Kanapathipillai. In the tracing analysis, various persons were utilized including the investigating detective, Detective Constable Vic Jevtic, and two experts: Fallon Reid, a Senior Forensic Accountant with the Forensic Accounting Management Group (FAMG) of Public Services and Procurement Canada (PSPC), and Dwayne King, Senior Manager in the National Forensics Practice with Grant Thornton Canada LLP.

10There is no dispute that Mr. Kanapathipillai deals with large sums of monies and cash. The investigation determined, as deposed in the affidavits of Detective Constable Vic Jevtic dated November 14, 2023, and November 28, 2023 (Jevtic Affidavits), that large sums of monies flow through various bank accounts and that Mr. Kanapathipillai has deposited and withdrawn large sums of money over numerous years. This was not denied. The AG contends that through their investigation it was revealed that Mr. Kanapathipillai has created and used 12 different aliases, 14 different addresses, 13 different phone numbers, five different driver’s licences and various dates of birth. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) reports obtained on Mr. Kanapathipillai’s Canadian financial transactions revealed that between August 2, 2010, and October 21, 2022, there were 27 Suspicious Transaction Reports, 179 Large Cash Transaction Reports, 209 Casino Disbursement Reports, and five Electronic Funds Transfer Reports generated concerning Mr. Kanapathipillai, totalling approximately the sum $11,720,520.03 CAD.

11Mr. Kanapathipillai not only had various personal accounts, he also used accounts in the names of corporate entities such as 1999533 Ontario Limited and 1999535 Ontario Limited. A total of 23 financial accounts were examined. They included 19 different bank accounts and four Mastercard accounts.

12Concerning the seized funds, it consisted of:

• Bundle #1: seventy-eight $20 bills.
• Bundle #2: ninety-nine $50 bills.
• Bundle #3: two hundred and eighty-nine $100 bills.
• Bundle #4: three hundred and four $100 bills; and
• Bundle #5: three hundred and thirty-four $100 bills.

13Mr. Kanapathipillai provided documentation to show that the seized funds were from a third mortgage and were used to purchase a condominium. It was purchased “in trust” by “a friend”, Ms. Singh for a price of $375,000 in October 2022. Of the $375,000, $137,660 was paid to Chopra Law Office and $234,046 was paid to the seller, Ms. Topalis. The seller deposited $220,000 into a bank account that belonged to Mr. Kanapathipillai. A further $75,727.95 was paid to Mr. Kanapathipillai by bank draft from the law firm. Mr. Kanapathipillai received 79% of the purchase funds.

14The Jevtic Affidavits set out a 24-year history of fraudulent activity of Mr. Kanapathipillai dating back to September 2005. Though Mr. Kanapathipillai has not been charged with a criminal offence from the alleged activities of this application.

15Mr. Kanapathipillai owns an information technology consulting business called Kryptek. The office is in India where he sells accounting software. He has had this business since 2018. He also rents cars through a website. Mr. Kanapathipillai represented that his income in 2022 was approximately $200,000 and $150,000 in 2021. The last time he filed his taxes was in 2020.

16Mr. Kanapathipillai purchased an Audi E-Tron in August 2022 for $149,833 plus financing costs of $46,048.58.

17Mr. Kanapathipillai has changed his name at least three times since 1995.

18I will first review the opinions of the two experts.

Expert Evidence

Fallon Reid

19It is not disputed that expert opinion evidence is generally inadmissible. Such evidence is admissible if it meets the requirements of admissibility, and it passes scrutiny at the gatekeeper stage. In this case, generally, there is no dispute that the expert evidence provided meets the requirements of admissibility. Further, it was conceded that the experts presented have the expertise and the qualifications for which their expert opinions were based. Thus, there was no objection taken to the admissibility of this expert opinion evidence. On that concession, the evidence was admitted and relied upon, subject to the Court’s ongoing gatekeeping function.

20Ms. Reid is a professional accountant employed as a Senior Forensic Accountant in the Forensic Accounting Management Group of the PSPS. Ms. Reid has provided a report at the request of the AG to analyze and summarize the activity conducted through the accounts held by Mr. Kanapathipillai, 1999533 Ontario Limited and 1999535 Ontario Limited. This report is dated October 27, 2023 (the Reid Report). From these accounts, Ms. Reid provided an analysis from January 1, 2022, to January 31, 2023. Ms. Reid was asked by the AG to provide:

a. Any information, if available, about indicators of potential money laundering observed through a financial analysis of the personal and corporate entity accounts (the Accounts);

b. Identification, if possible, of the alleged proceeds deposited, if any, from a third mortgage, and where these funds were used; and

c. An analysis of cash transactions leading up to the date that the funds were seized.

21Ms. Reid further described in the Report the methodology of money laundering: placement, layering and integration.

22Placement means that it is the goal to deposit criminal proceeds into a financial system.

23Layering means the goal to conceal the criminal origin of the proceeds.

24Integration takes two forms. Justification means the goal to create an apparent legal origin for criminal proceedings. Investment means the goal to use criminal proceeds for personal benefit.

25After the review of the 23 accounts, Ms. Reid provided the following potential indicators of money laundering:

1. Structure of deposits;
2. Inconsistent account activity;
3. Frequent transfers and/or transfers in and out of an account in a short period of time;
4. Unnecessarily complex transactions;
5. Rounded dollar transactions; and
6. The use of potentially laundered funds for personal benefit.

26In the tracing of funds for the third mortgage Ms. Reid concluded:

Based on the tracing analysis performed, I was not able to identify the deposit of any proceeds from Mr. Kanapathipillai’s third mortgage. The $220,000 of funds received as part of the purchase of 131 Taunton were subsequently withdrawn as cash ($129,000) and transferred to Accounts Not Yet Obtained ($100,000), then combined with additional funds from other accounts ($6,900) and pre-existing balances ($2,130).

27On the third issue to review, cash transactions, Ms. Reid concluded:

A review of the cash withdrawals leading up to and including November 13, 2022 (the date that the cash was seized) showed that, in order for Mr. Kanapathipillai to have accumulated at least $99,210 in cash by this date, he would have needed to accumulate the previous 26 cash withdrawals (totalling $104,000) which began on October 7, 2022.

28From the information available, it appears that from the income generated from Mr. Kanapathipillai's businesses, as well as the sums deposited and withdrawn from the Accounts could not be supported. The sums of monies deposited into, and the withdrawal of accounts not yet obtained, are substantial. Ms. Reid concluded on the source and use of funds that:

a) The largest source of funds in the Accounts were transfers from accounts not yet obtained totalling $489,214 and deposits from identified parties totaling $368,459 which included the receipt of $220,000 from Ms. Topalis.

b) The largest use of funds in the Accounts were transfers of money that was not yet obtained totaling $762,876 and cash withdrawals totalling $413,750.

c) In total 25 additional accounts were identified as account not yet obtained that appear to belong to Mr. Kanapathipillai and/or his businesses.

Dwayne King

29Mr. King presently is employed by Grant Thornton Canada LLP as a Senior Manager in the National Forensics Practice and has 27 years of continuous service with the Toronto Police Service. He worked over 8 years in the Financial Crimes Unit in the Asset Forfeiture Section. He was requested by the AG to provide, if possible, an opinion based on his training and experience that speaks to the following areas:

a) Background information and signs/features of money laundering by individual players in Ontario casinos.

b) Whether, in his opinion, the currency seized at Fallsview Casino on November 13, 2022 bears the hallmarks of money that is laundered by individual players in Ontario casinos.

c) Whether, in his opinion, the currency seized at Fallsview Casino on November 13, 2022 was in fact money that was laundered or about to be laundered by an individual player in an Ontario casino.

30Mr. King described in his report (the King Report) the elements of money laundering as well as the three phases of money laundering: placement, layering and integration. He emphasized that legitimately sourced funds are not money laundered. He further explained:

19. Money laundering investigations often involve working backwards through a complex trail of transactions to discover the original source and true ownership of the funds. An effective criminal or money launderer will attempt to create a paper trail so complex that investigators are not able to, or so significantly hampered/challenged, identify the original source, nor the true ownership of the criminal funds.

20. Money laundering ultimately requires the use of existing financial and economic systems for unlawful means. The depth or complexity of the “laundering” is dependent both on the education level and/or sophistication of the criminal, as well as the amount of money to be laundered. It is much easier to launder 10 to 20 thousand dollars than it is to launder 10 to 20 million dollars. It is my experience that more complex laundering methodologies are required to effectively launder larger amounts of criminal proceeds.

31Mr. King explained the regime in place to monitor financial activity and to recognize money laundering. Through the regime one can detect “red flags”. Red flags are indicators or warning signs that suggest suspicious financial activity. Red flags do not necessarily mean that there is illicit financial activity or money laundering on their own but serve as warning signs.

32Mr. King examined the financial activity and casino activity of Mr. Kanapathipillai. Mr. King noted many red flags in the financial activity of Mr. Kanapathipillai. These red flags included:

a) The use of nominee owners that appear to be owners of property where the property is truly owned by third parties and used for criminal activity. Use of others to purchase casino chips on his behalf in the name of an alias.

b) The uses of nontraditional third-party nominees. Mr. Kanapathipillai was using six names and dates of birth along with five different Ontario Drivers license numbers and in so doing was able to hide or obfuscate the true beneficial ownership of the assets/money.

c) The use of corporations. Three types of business structures are widely used to launder proceeds of crime, they are:

• Shell company – incorporated company with no independent operations, significant assets, ongoing business activities, or employees.
• Front company – fully functioning company with the characteristics of a legitimate business, serving to disguise and obscure illicit financial activity.
• Shelf company – incorporated company with inactive shareholders, directors, and secretary and is left dormant for a longer period even if a customer relationship as already been established.

d) Mr. Kanapathipillai used 6 companies that did not appear to have any expenses nor any potential business revenue. The deposits indicated appear to be inconsistent with business operations.

e) Unknown sourced funds. Mr. Kanapathipillai reported annual income in his tax returns of $160,000 per year. Yet cash transaction reports filed from January 2, 2022, and October 8, 2022 shows deposits of $1,996,500 in Canadian currency. The actual sum of new cash deposits may not fully represent the amount of cash in his possession due to the $10,000 or more requirement for reporting and the “churning” of cash through casinos.

33In reviewing the above factors (red flags) as a whole, Mr. King concluded that “the currency seized at Fallsview Casino on November 13, 2022, bears the hallmarks of monies that were about to be laundered, by converting the funds to casino chips and then game play, by an individual player in an Ontario casino.”

The Response

34Mr. Kanapathipillai filed an affidavit dated February 2024 (the Responding affidavit). In the Responding affidavit, Mr. Kanapathipillai deposes that he has a gambling problem. He is a high-stakes gambler and has been for the past 20 years. As a high stakes gambler, he utilizes large sums of money.

35He deposes that most of the money came from the funds owed to him from Ms. Singh. He says he took out a third mortgage to assist her in purchasing her condominium in trust from the seller, Ms. Topalis. Mr. Kanapathipillai provided documents to show the transaction of the third mortgage and monies received from the law firms and deposited into his account.

36He also deposed and provided documentation to show that Ms. Singh deposited the $220,000 owed to him in an account. He deposed that he used these funds to gamble.

37Mr. Kanapathipillai also deposed that approximately $20,000 in cash was received from a previous withdrawal from a line of credit. He provided documents to show a withdrawal of $25,000 which he deposed some were used to pay contractors for a renovation on this home and the rest, approximately $20,000, he used as money to gamble.

38Mr. Kanapathipillai admits that he has been convicted of fraud over $5,000 in 2005 but has not been convicted of any other crime.

39On the aliases, he deposed that he has never used a driver’s license that was not in his legal name. As he deposes: “Mahalingam was my father’s name. I decided to change it to my grandfather’s name, Kanapathipillai.”

Legal Framework

40Section 3 of the Act reads:

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. 2001, c. 28, s. 3 (1).

Action or application

(2) The proceeding may be by action or application. 2001, c. 28, s. 3 (2).

Uninvolved interest holder

(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. 2001, c. 28, s. 3 (3); 2020, c. 11, Sched. 3, s. 3 (1).

Same

(4) Without limiting the generality of subsection (3), an order made under subsection (3) may, (a) sever or partition any interest in the property or require any interest in the property to be sold or otherwise disposed of, to protect the uninvolved interest holder’s interest in the property; or (b) provide that the Crown in right of Ontario takes the property subject to the interest of the uninvolved interest holder. 2001, c. 28, s. 3 (4); 2020, c. 11, Sched. 3, s. 3 (2, 3).

Limitation period

(5) A proceeding under this section shall not be commenced after the 15th anniversary of the date proceeds of unlawful activity were first acquired as a result of the unlawful activity that is alleged to have resulted in the acquisition of the property that is the subject of the proceeding. 2001, c. 28, s. 3 (5).

41In Chatterjee, the Supreme Court of Canada described the Act as a way “to make crime in general unprofitable, to capture resources tainted by crime so as to make them unavailable to fund future crime and to help compensate private individuals and public institutions for the costs of past crime.”

42To obtain an order forfeiting property under the Act, the AG must prove, on a balance of probabilities, that the property at issue is either “proceeds of unlawful activity” or an “instrument of unlawful activity.”

43The two-step test for forfeiture under ss. 3 and 8 is set out in Attorney General v. 104,877 in U.S. Currency (in rem). In this case, over $100,000 of American cash (bundled and hidden in socks) was seized along with a small amount of cocaine at the Canadian border. The appellant, Mr. Bourgeois, was charged with money laundering, violating the Controlled Drugs and Substance Act (CDSA), and possession. The AG argued that the money was the product of unlawful activity or an instrument thereof. Mr. Bourgeois argued that the money was his life savings that he earned from working at different casinos. Chapnik J. sets out the test at paras. 29-31:

[29] The test for forfeiture proceedings under the CRA has two steps. First, the Attorney General must satisfy the court that the property is either the proceeds of unlawful activity or the instrument of unlawful activity.

[30] Second, if the Attorney General succeeds, the respondent may seek protection from forfeiture under s. 3(3) or s. 8(3) as either a “legitimate owner” or a “responsible owner.” At this stage, the burden of proof shifts to the respondent.

[31] If the Attorney General succeeds at the first step and the respondent fails to prove that she is a legitimate or reasonable owner, the court shall forfeit the property in question unless it is “clearly not in the interests of justice.”

44Furthermore, Chapnik J. summarized relevant principles in the jurisprudence about forfeiture at para. 35:

[35] First, the standard of proof under the CRA is proof on a balance of probabilities: CRA at s. 16; Chatterjee (2009), at para 47. Second, there are situations, such as in this case, where property may be both the proceeds of unlawful activity and an instrument of unlawful activity: Ontario (Attorney General) v. Chow [2003] OJ No. 5387 at para. 23. Third, and most importantly, the CRA does not require the Attorney General to prove that a specific criminal offence was committed by a specific person. As the Court of Appeal held in Ontario (Attorney General v. Chatterjee, 2007 ONCA 406, 225 O.A.C. 40, “Forfeiture proceedings do not require or result in a conviction or finding of guilt or wrongdoing by a named party. The CRA is aimed squarely at the question of the forfeiture of property obtained through unlawful activity and its eventual distribution to the victims of crime and others specified in the regulations, not the punishment of offenders”: at para. 21 affm’d in Chatterjee (2009). Fourth, as stated above, the onus is on the interested party to establish that he or she is a responsible or legitimate owner: Chow at para 33. Fifth, the respondent’s failure to provide a credible explanation for a legitimate source of the property may be considered by the court at both stages of the forfeiture analysis. Suspicious circumstances, such as the possession of large amounts of currency, call for a “credible and reasonable answer”: Ontario (Attorney General) v. $10,000.00 in Canadian Currency (In Rem), 2014 ONSC 944, [2014] O.J. No. 653 at paras 21-32.

45There are two exceptions to forfeiture under s. 3 of the Act. First, s. 3(3) applies where the party seeking to avoid forfeiture “proves” that they are an “uninvolved interest holder of the property”. An 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.” The second is codified in s. 3(1) where the Act says that the court will order forfeiture unless it is “clearly in the interests of justice” not to forfeit the property.

46The Court of Appeal in Ontario (Attorney General) v. 8477 Darlington Crescent articulated the “clearly not in the interests of justice” test, explaining that this test requires considering “all factors that are relevant to the ‘interests of justice’” and making orders that maintain public confidence in the civil justice system, accord with the community’s sense of fairness and are not excessive. The factors certainly include the “closeness of the connection between the property and the illegal activity”. Doherty J.A. recognized that it is not possible to list all of the factors that could properly be considered in assessing the interests of justice analysis, but identified three:

1. The conduct of the party whose property is the subject of the forfeiture application. The meaning of “conduct” extends to “any knowledge of the criminal activity, the failure to take reasonable steps to prevent the criminal activity, any profit derived knowingly or unknowingly from the criminal activity, and any steps taken after the property owner became aware of the of the criminal activity.”
2. The value of the party’s interest in the property compared to the value of the property that is tainted by the unlawful activity.
3. The interplay between the purpose of the Act and the exercise of the “interests of justice discretion in s. 3.”

47The Court of Appeal in Ontario (Attorney General) v. 20 Strike Avenue applied this analysis and provided a helpful reminder at para. 94:

[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.

48The court is not required to precisely trace every dollar of the seized currency to the unlawful activity. The AG only must prove that the “property was acquired in part because of unlawful activity.” Whether the alleged owner has any interest in the property that is tainted by unlawful activity is a consideration to be weighed when determining whether forfeiture is in interest of justice.

49In a recent application of the Act, Attorney General of Ontario and $48,575 in Canadian Currency (in Rem), the AG’s position was that the seized funds were proceeds of crime because they were found in the respondent, Ross-Young’s, possession and that he has been involved in unlawful activity. The respondent’s position was that the AG had “not met the requisite evidentiary threshold to establish its case.” He argued that “the mere possession of funds and a general allegation of unlawful activity is not sufficient to establish a direct connection between the seized funds and the alleged unlawful activity” and that by failing to directly link the property to the unlawful conduct, the AG’s position is based “solely on speculation and assumptions.” Goodman A.J. disagreed with the respondent and summarized:

[24] The jurisprudence also provides that a respondent's failure to provide a credible explanation or to establish a legitimate source for the property will favour a forfeiture order; suspicious circumstances call for a "credible and reasonable answer". The court may take note and draw an adverse inference from a respondent’s failure to adduce such credible evidence.

50Courts in Ontario have held that suspicious circumstances, such as the possession of large amounts of currency, call for a credible and reasonable explanation. A court is entitled to consider the lack of credible explanation as to the source or purpose of the money and to draw adverse inferences.

51The Ontario Court of Appeal shared this same perspective in Ontario (Attorney General) v. 855 Darby Road, Welland (In Rem). The trial judge was asked to determine whether: i) the residence was used as a Hells Angels’ (Hells Angels Motorcycle Club or HAMC) clubhouse; and ii) whether the Hells Angels’ paraphernalia ought to be forfeited under the Act. The applicant relied on evidence that: the clubhouse operated as an illegal bar, drug deals took place at the property, and that the Hells Angels planned their criminal activity at “church meetings” on the property. The respondent argued that the evidence did not support the finding that unlawful activity took place. The trial judge determined that the property was an instrument of unlawful activity, and a subset of the paraphernalia was seized as well. The respondent appealed. One of the issues on appeal was whether the trial judge erred in holding that the property constituted proceeds of unlawful activity. The appellant maintained that there was insufficient evidence to conclude that the property’s mortgage was paid through unlawful activity and amounted to pure speculation. The Court of Appeal disagreed saying:

[43] … A precise tracing and proof that every payment made in acquiring the asset was funded from criminal activity are not required. Pursuant to s. 3(1) of the CRA, an order forfeiting property is made where the property is found to be proceeds of unlawful activity. Section 2 of the CRA defines proceeds of unlawful activity as “property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity”.

[44] The Crown, therefore, need only prove that property was acquired in part as a result of unlawful activity. Should a difference exist between the value of an interest in the property and the value of the property that is tainted by unlawful activity, that consideration is more properly weighed when determining whether forfeiture is clearly not in the interests of justice: Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, 333 D.L.R. (4th) 326, at paras. 98, 104-106.

[45] The evidence led by the Crown clearly established that the mortgage on 855 Darby Road was paid down using monthly dues paid by members of the Niagara HAMC Chapter ... Based on this evidence and the balance of the record showing widespread criminal activity within the HAMC, it was open to the application judge to draw the inference that the mortgage was indeed paid down at least in part using funds acquired through unlawful activity. A precise forensic tracing of specific criminally-acquired funds into identifiable payments made to the mortgage was not required.

52This sentiment was adopted by Perell J. in Ontario (Attorney General) v. Contents of Bank Accounts (in rem). Perell J. considered monies being paid into an account from a monetary exchange used in the Chinese-Canadian community, Hawala. Perell J. surmised as follows:

[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. Possession of bundled currency is circumstantial evidence that is consistent with the currency having been from drug trafficking which is notoriously a cash business.

[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. 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.

Analysis and Conclusions

53The evidentiary burden is on the AG to prove on the balance of probabilities that the monies seized were proceeds of unlawful activity and/or an instrument of unlawful activity. A specific criminal activity need not be proved. If the AG meets this evidentiary burden either through direct or circumstantial evidence, the onus shifts to the party whose property is the subject matter of the forfeiture to show they are the responsible owner of the property or an uninvolved interest holder. Failure of that party to provide a credible explanation for a legitimate source of the property may be considered by the court. Suspicious circumstances require a “credible and reasonable answer”.

54Further, the AG need not provide a forensic accounting that the property in question is directly from unlawful activity or the instrument of unlawful activity. The AG needs to prove through direct or circumstantial evidence that on the balance of probability that part or some of the property in question generally is from unlawful activity or an instrument of unlawful activity. The AG needs to show, at least, suspicious circumstances that there is unlawful activity. Again, if the AG has proven such, the burden shifts to the party who wishes to have the property returned to provide a credible and reasonable answer.

55The Court has the overall discretion to not order forfeiture if it is clearly in the interest of justice to do so.

56There is no question that Mr. Kanapathipillai is the owner of the funds seized and that the monies came from his accounts.

57In my view, the AG has established through the evidence provided that on the balance of probabilities that part or all the monies seized are from unlawful activity. These evidentiary indicators include:

a. The number of aliases. The numerous changes of names.

b. The number of drivers licences.

c. The number of accounts, individual and in corporate names, along with corporations which do not appear to be active business corporations with legitimate business activities and expenses.

d. The amount of money that has flowed through the accounts of Mr. Kanapathipillai and his corporations and the purchases of vehicle and property that cannot be supported by his annual income as declared in his income tax returns or his representations. Be it the sum of $11,720,520.03 CAD from 2010 to 2022 or from January 2, 2022, and October 8, 2022 deposits of $1,996,500 CAD.

58In addition, Mr. Kanapathipillai has not provided an explanation or the source of the vast sums that have flowed through the various accounts that are under his control.

59The income stated in the income tax returns and the stated income by Mr. Kanapathipillai clearly cannot support the monies flowing through his various accounts. He has provided no evidence to justify the use of the various corporations or why the monies have flowed to him. The corporations, as mentioned before, show no indicators of an active continuing business purpose. They appear to be tools to flow money in and out.

60Mr. Kanapathipillai has argued that the monies in question are from legitimate sources: the third mortgage and line of credit. As such, the monies should not be forfeited. First, there is no onus of the AG to prove on the balance of probabilities that the specific funds in question are fully from unlawful activities or the instruments of unlawful activities. The AG need only provide that generally the funds are from unlawful activities. Second, the evidence provided by Mr. Kanapathipillai is suspect and he does not, in my view, provide a credible and reasonable explanation of the source of the monies that have flowed through his and the corporations accounts. The sources for the purchases outlined do not demonstrate why these vast sums of monies have flowed into and from the accounts.

61The structure of the transactions on the alleged money owed to him and the source monies deposited into the line of credit are suspect. The vast sums of monies with no stated source and the structure of these transactions allowing him to withdraw monies from various bank accounts, personal and corporate, are all in suspicious circumstances. The explanation by Mr. Kanapathipillai in obtaining 79% of the proceeds of sale from that property is suspect. As well, the structure of the purchase is suspect. The fact that he signed the Agreement of Purchase and Sale, and that the trust agreement appears to be back dated. The mortgage commitment for a one-year mortgage was not signed by the lender, Sadhu Aggarwal. The mortgage was not renewed and after the one-year power of sale proceedings were commenced. Mr. Kanapathipillai defended the action pleading that the lender and his counsel are trying to steal his properties.

62Moreover, there was no affidavit evidence provided from Ms. Singh or Ms. Topalis to support the contention of Mr. Kanapathipillai that monies were owed to him, the source of the funds were legitimate, that the payment from the sale proceeds were a legitimate transaction to pay the alleged debt owing and that the property was not Mr. Kanapathipillai’s property.

63Thus, Mr. Kanapathipillai has not provided convincing evidence to support his allegations that the monies seized were from legitimate source(s) and were not in part from unlawful activities. The lack of evidence from parties involved in the transaction leads the Court to adopt an adverse inference against Mr. Kanapathipillai. That inference is that the parties involved would not provide evidence to support his contention that the source of the funds that have flowed through the accounts, the alleged debt owed, and the line of credit were not supported or funded all or in part from unlawful activities.

64There are numerous red flags exhibited on the descriptors of unlawful activity, namely money laundering. Taking all together, I am satisfied that the AG has proven on the balance of probabilities that the monies seized are from unlawful activities.

65I will also consider whether returning the monies to Mr. Kanapathipillai is in the interest of justice. Though Mr. Kanapathipillai did not argue that the monies seized should be returned to him on that basis, I will consider whether I should exercise my discretion accordingly.

66On the basis of the evidence provided, I conclude quite definitely that there is no evidentiary basis that would compel this Court to exercise its direction in the interest of justice in favour of Mr. Kanapathipillai. There is nothing provided that would give this Court pause on whether granting the order for forfeiture would diminish public confidence in the civil legal system and not be in the interest of justice to do so. Hence, I do not find support that would justify this Court to not exercise its discretion to grant forfeiture.

67I therefore conclude that the AG is successful in its application and that the monies in question be forfeited to the AG.

Disposition

68I find in favour of the AG and order that the sum of $99,210 plus any accumulated interest be forfeited to the AG per s. 3(1) of the Act.

Justice P.W. Sutherland Released: February 25, 2025.

Endnotes

1. S.O. 2002, c. 28.
2. King Report at para. 78.
3. Churning is the act of depositing and withdrawing the same cash of multiple different days and/or legitimate casino winnings.
4. King Report at p.33.
5. Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] 1 S.C.R. 624, at para. 4.
6. For a useful summary of the principles from the jurisprudence, see Ontario (Attorney General) v. $163,015.29 in Canadian Currency (In Rem), 2019 ONSC 3973, at para. 9.
7. 2014 ONSC 5688, aff’d Ontario (Attorney General) v. $104,877 in U.S. Currency (In rem), 2016 ONCA 71, 129 O.R. (3d) 312.
8. Attorney General v. 104,877 in U.S. Currency (in rem), at para. 2.
9. AGO v. $80 Cdn., et al., 2021 ONSC 988, at para. 20; Civil Remedies Act, at s. 2.
10. Civil Remedies Act, at ss. 3(3) and 3(1); Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, 333 D.L.R. (4th) 326, at para. 13.
11. 2011 ONCA 363, 333 D.L.R. (4th) 326.
12. Ontario (Attorney General) v. 8477 Darlington Crescent, at paras. 96-97; Attorney General of Ontario and $48,575 in Canadian Currency (in Rem), 2024 ONSC 2859, at para. 21.
13. Ontario (Attorney General) v. 8477 Darlington Crescent, at para. 97.
14. Ontario (Attorney General) v. 8477 Darlington Crescent, at paras. 97-99; Ontario (Attorney General) v. Contents of Bank Accounts (in rem), 2021 ONSC 8304, at paras. 26-28; Attorney General of Ontario and $48,575 in Canadian Currency (In Rem), 2024 ONSC 2859, at para. 21.
15. 2014 ONCA 395, 120 O.R. (3d) 377.
16. Ontario (Attorney General) v. $163,015.29 in Canadian Currency, at para. 9.
17. Ontario (Attorney General) v. 855 Darby Road, Welland (In Rem), 2019 ONCA 31, 431 D.L.R. (4th) 243, at para. 44.
18. Attorney General of Ontario v. 855 Darby Road, Welland (In Rem), at paras. 43-45; Attorney General of Ontario v. $163,015.29 in Canadian Currency, at para. 9(11).
19. 2024 ONSC 2859.
20. Attorney General of Ontario and $48,575 in Canadian Currency, at para. 13.
21. Attorney General of Ontario and $48,575 in Canadian Currency, at para. 13.
22. Ontario (Attorney General) v. $1,650 in Canadian Currency (in Rem), [2008] O.J. No. 2076, at para. 3.
23. 2019 ONCA 31, 431 D.L.R. (4th) 243.
24. Attorney General (Ontario) v. 855 Darby Road, Welland et al, 2017 ONSC 4953, at para. 96.
25. Ontario (Attorney General) v. 855 Darby Road, Welland (In Rem), at para. 42.
26. 2021 ONSC 8304.