Category Archives: Civil Forfeiture in British Columbia

Governed by BC’s Civil Forfeiture Act, [SBC 2005] CHAPTER 29

British Columbia (Director of Civil Forfeiture) v. Nguyen, 2014 BCCA 460 – “Interests of Justice” a Discretionary Inquiry

The Defendant, Vu Huy Nguyen, appealed an order for full forfeiture of his Vancouver residence. The property in question was used as a “sophisticated” marijuana grow operation and was therefore found to be an instrument of unlawful activity, although “there was insufficient evidence to prove on a balance of probabilities that the Property was initially acquired directly or indirectly as a result of unlawful activity.”

Nguyen argued that forfeiture was contrary to the interests of justice, and further that there is an onus upon the Director to prove that forfeiture is in the interests of justice. The BC Court of Appeal disagreed, finding that “there is a practical, evidentiary burden on the party opposing forfeiture” to demonstrate that forfeiture is not in the interests of justice. “If (the Defendant) sits mute, the trial judge may draw inferences that the evidence already before the court does not support the granting of such an order.”

In the circumstances of the Nguyen case, the Court of Appeal found that an order for full forfeiture was within the trial judge’s discretion, in view of “(i) the evidence of previous marihuana growing operations on the Property; (ii) the evidence that the Property was vacant from 2007 onwards; (iii) the unexplained large sums of money passing through Mr. Nguyen’s bank account around that time; (iv) (the trial judge’s) finding that Mr. Nguyen’s evidence was vague and inconsistent, and that he was unresponsive and evasive during his examination for discovery.” The appeal was therefore dismissed.

Decided by the BC Court of Appeal on November 24, 2014.
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Director of Civil Forfeiture v. Robinson and Allwright, 2014 BCSC 2083 – Director’s Frivolous Claim Puts Defendant to Unnecessary Expense

The Director of Civil Forfeiture sought an interim preservation order of a pickup truck after police received information “from a confidential source” that the truck was being driven by an intoxicated male who was prohibited from driving. By the time police caught up to the truck, the driver had allegedly switched seats with his female passenger, who was not intoxicated and was the lawful owner of the truck.

Section 8 of the Civil Forfeiture Act provides that an interim preservation order may be granted where there is a “serious issue to be tried” that the property in question is proceeds or an instrument of unlawful activity.

Section 1 of the Civil Forfeiture Act defines instrument of unlawful activity as property which “has been used” or “is likely to be used” in unlawful activity that, in turn, “resulted in or was likely to result in the acquisition of property or an interest in property” or “caused or was likely to cause serious bodily harm to a person.”

Mr. Justice Thompson concluded that the definition in Section 1 “requires proof of likelihood,” and that mere speculation about possible harm is not sufficient to establish a serious issue to be tried:

“Driving while impaired certainly can be said to elevate the risk of causing serious bodily harm, but the fact is that the vast majority of individuals who operate a vehicle while impaired do not in fact cause serious bodily harm to other people on any one particular trip.”

Justice Thompson distinguished the case of Director of Civil Forfeiture v. Henry, in which a motorist’s “persistent and recent history of drinking and driving” supported a serious question to be tried:

“Mr. Robinson’s relevant driving record is very dated, the vehicle being targeted by the Director is not his, and the vehicle’s owner has pledged to not allow Mr. Robinson to drive it until he can do so lawfully.”

In conclusion, Justice Thompson found that the seizure of the truck was a “zealous” attempt at forfeiture outside the proper ambit of the Civil Forfeiture Act, which justified costs against the Director:

“Regrettably, this appears to be a case where the office of the Director of Civil Forfeiture has taken zealous measures outside the proper bounds of its home statute with the unfortunate effect of depriving a citizen of lawful possession and use of her property, and putting that citizen to what I suspect is considerable expense and inconvenience to retrieve her property. Costs of this application may be spoken to by making arrangements through the office of Supreme Court Scheduling.”

Decided by the BC Supreme Court on November 5, 2014.
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Director of Civil Forfeiture v. Hells Angels Motorcycle Corporation, 2014 BCCA 330 – Director Must Disclose Wiretap Surveillance Information

The Director of Civil Forfeiture sought to appeal a Supreme Court Chambers judge’s decision to “unseal” various affidavits used to obtain authorizations for wiretap surveillance of the Nanaimo Hells Angels. Although the fruits of the surveillance had initially been used to lay criminal charges, those charges were later stayed, and the Civil Forfeiture Office sought to rely on the same information in support of a bid to seize the Hells Angels clubhouse in Nanaimo.

The Court of Appeal, in a two-to-one decision, concluded that the wiretap surveillance was authorized as part of the criminal process. The unsealing process was therefore governed by Part VI of the Criminal Code, which provided no avenue of appeal from a Supreme Court judge’s decision. The Court of Appeal was therefore not able to entertain the Director’s appeal and the unsealing order remained undisturbed.

Mr. Justice Chaisson, in a dissenting opinion, argued that the Court had jurisdiction to consider the appeal, but nevertheless concluded that the Chambers Judge’s decision was correct and that the wiretap authorization documents should be unsealed.

Disclosure of the relevant documents to the Hells Angels could pave the way for some novel Charter arguments in the context of the ongoing litigation over the Nanaimo clubhouse. British Columbia courts have already found that unreasonable searches in the civil forfeiture context engage “exactly the same Charter principles” as criminal law, and the use of wiretap surveillance would appear to be no exception.

Decided by the BC Court of Appeal on August 20, 2014.
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British Columbia (Director of Civil Forfeiture) v. Crowley, 2014 BCSC 1481 – Director Fails to Show that Full Forfeiture in Interest of Justice

The Crowley case was sent back to the BC Supreme Court for consideration of the interests of justice. The BC Court of Appeal determined that Supreme Court judge in a previous hearing had erred in failing to consider the interests of justice before granting default judgement to the Director of Civil Forfeiture.

In considering the case in light of the interests of justice, the Court determined that it would be contrary to the interests of justice to order full forfeiture of the Defendant’s property. Although it was clear that the property had been an instrument of unlawful activity (i.e. trafficking in a controlled substance), the Defendant was 77 years old and had owned the property for 26 years. There was no evidence of unlawful activity prior to 2006.

The Court ordered that 50% of the value of Mr. Crowley’s property be forfeit to the Director. Justice Weatherill specifically noted that he was “not satisfied that complete forfeiture of the Property would clearly be in the interests of justice.” This suggests that although it is the Defendant’s responsibility to elicit evidence regarding the interest of justice, the Director also bears a certain onus in demonstrating the Province’s equitable entitlement to the property in question.

Decided by the BC Supreme Court on August 7, 2014.
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British Columbia (Director of Civil Forfeiture) v. Hells Angels Motorcycle Corporation, 2014 BCCA 207

British Columbia’s Director of Civil Forfeiture applied to remove one the last remaining personal defendants as a party to the long-running Hells Angels Motorcycle Corporation case in an apparent attempt to evade Charter arguments which might be available to individuals but unavailable to the corporate defendant:

“The prize in this application appears to be the availability of a Charter argument in the forfeiture proceedings. The judge referred to the possibility that an argument on admissibility of evidence may be available under the Canadian Charter of Rights and Freedoms to Mr. Widdifield, but not to the registered owner of the property, Angel Acres. If the Charter argument is not available to Angel Acres, proceeding against it alone may provide the Director with an easier route to judgment.”

The Director appealed the denial of its application to remove the personal defendant, but its appeal was dismissed, as follows:

“The judge was well aware of the procedural history of the litigation. He knew there was some basis for a claim on Mr. Widdifield’s part to a commercial or financial interest in the outcome of the action. He knew that he was considering a case in which Mr. Widdifield was alleged to have one or more legal relationship with the registered owner of the real property. Most importantly, he knew he was not considering the addition of a party, but rather the removal of a party after a lengthy period of legal skirmishing. These were matters relevant to Mr. Widdifield being a proper party to the action as it goes forward.”

The Court of Appeal’s decision in this regard may force the Director to adopt a more cautious approach to adding Defendants in future forfeiture proceedings. Once a Defendant has been dragged through years of litigation, the Director cannot simply remove that Defendant when their presence on the style of cause presents a strategic inconvenience.

Decided by the BC Court of Appeal on June 2, 2014.
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British Columbia (Director of Civil Forfeiture) v. Johnson, 2014 BCCA 268 – Trial Judge Retains Significant Discretion Over Charter Litigation Procedure

The Johnson case involved an application for leave to appeal from a summary trial decision, in which the Defendants’ Charter challenge was found to be inappropriate for summary determination. The Defendants sought to appeal the decision on the basis that the warrant to search the subject property “was unlawfully issued, unreasonably executed, and that all the evidence derived from the search was obtained in breach of the Johnsons’ Charter rights.”

Unlike Director of Civil Forfeitrue v. Lloydsmith, in which police lacked judicial authorization to enter the subject property, the Johnson Defendants took issue with the legality of the warrant. Because of the complexity of the issues involved and the absence of certain necessary evidence, Justice Abrioux concluded that summary determination of Charter issues was not appropriate.

The Court of Appeal denied leave to appeal, finding that the Justice Abrioux “was in the best position to determine whether he had sufficient evidence to fairly answer the questions before him.”

Johnson, when read alongside Lloydsmith, demonstrates that the course of Charter litigation in the civil forfeiture context is a discretionary and fact-specific exercise. While the law is clear that trial judges must consider Charter issues, different judges have taken varying approaches to how this is done, and the Court of Appeal will show considerable deference to these discretionary decisions.

Decided by the BC Court of Appeal on May 16, 2014.
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British Columbia (Director, Civil Forfeiture Act) v. Wong, 2014 BCSC 359 – Director Freezes Defendant’s Accounts Despite Prior Civil Settlement

The Defendants, Arthur and Jessie Wong, were accused of defrauding their employer, Unique Real Estate Accommodations Inc., for upwards of $350,000. The Director of Civil Forfeiture sought an Interim Preservation Order, so as to effectively freeze the contents of the Defendants’ bank accounts.

The Defendants had apparently acknowledged the existence of a debt to their employer, and had already settled that debt on mutually-agreeable terms. Furthermore, there was no evidence to connect the impugned bank accounts to the alleged fraud.

Nevertheless, the Director was successful in obtaining an Interim Preservation Order against the bank accounts with deposit activity after May 28, 2007, the date upon which Mr. Wong commenced his employment with Unique.

Courts have previously recognized that, for public policy reasons, the criminal process should not be used as a means to collect private debts (see: R. v. Thore, 2001 BCSC 507). The Wong case represents a troubling reversal of this principle, and establishes a back door by which the machinery of the state might be used against civil debtors, even after the debt in question has been settled. The effect of this decision may be to disincentivize the amicable settlement of debts through the normal channels of civil litigation.

Decided by the BC Supreme Court on March 4, 2014.
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Director of Civil Forfeiture v. Lloydsmith, 2014 BCCA 72 – Pre-Trial Charter Applications Allowable in Civil Forfeiture Context

In a landmark decision which will no doubt set the procedural framework for many civil forfeiture cases to come, the BC Court of Appeal upheld the “bifurcation” decision of Mr. Justice Leask, endorsing the idea that constitutional issues involving the exclusion of evidence may be heard in advance of a trial on the merits of a given case.

The Court of Appeal in Lloydsmith recognized the “power difference” between the Director of Civil Forfeiture and individuals defending forfeiture actions:

“Having to maintain a costly defence is a risk every person in the community is vulnerable to. There is, however, an extra element in the civil forfeiture cases, and that is the jeopardy faced by a civilian, at risk of losing a great deal and at risk of being labelled for criminal behaviour. This jeopardy arises from evidence gained by police using their special authority but without the case ever having fed into the criminal proceedings stream, with the defendant now caught in a proceeding that requires presentation for cross-examination at an examination for discovery. All of this is allowed by the legislation. Given these very high stakes for the individual and the power difference between the parties, it is not surprising that there has been an assortment of applications seeking to challenge the legitimacy of the evidence gathering actions of the police, seeking to postpone discovery until that legitimacy has been determined, and seeking avenues for just redress where such activities have been found to be in violation of a person’s Charter rights.”

On this basis, the Court found that it is within the jurisdiction of the trial judge to bifurcate the proceedings and hold the equivalent of a criminal voir dire (before trial) in order to determine whether Charter violations have occurred and whether the evidence obtained is admissible.

Although just one step along a lengthy and frustrating road of litigation for Mr. Lloydsmith, this decision sets a valuable precedent for civil forfeiture defendants generally, making it possible to raise discreet issues of admissibility of evidence in advance of trial, without unnecessarily undergoing the enormous cost of a trial against the immense power and limitless resources of the Civil Forfeiture Office.

Decided by the BC Court of Appeal on February 21, 2014.
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British Columbia (Director of Civil Forfeiture) v. McCluskey, 2013 BCSC 2376

The Defendants, David Johnson, Jennifer Johnson, and Anthony McCluskey, applied for summary dismissal of the Director of Civil Forfeiture’s action against a Surrey residence and $135,000 cash which had been discovered therein. The Director argued that a marijuana grow operation was located in the basement of the residence, and that both the cash and the residence itself were proceeds of unlawful activity.

The Defendants, who had already defeated criminal charges on the basis that they had not been tried within a reasonable time, now argued for summary dismissal on grounds that the evidence against them had been illegally obtained.

Justice Abrioux of the BC Supreme Court refused the Defendants’ application due to inadequacies in the evidentiary record.

“42 I conclude that I am unable, on the whole of the evidentiary record before me, to find the facts necessary to decide the issues of fact and law on these applications. I am also of the view that it would be unjust to decide the issues by way of a summary trial or summary judgment on the evidentiary record as it currently stands.”

Unlike the Defendants in previous cases such as Huynh and Lloydsmith, McCluskey and the Johnsons had not obtained an order for “bifurcation” of the action. Given that the decision in Lloydsmith was under appeal at the time of this decision, it seems that Justice Abrioux opted to ‘play it safe’ rather than making a decision on the basis of a potentially incomplete evidentiary record.

The McCluskey decision demonstrates the importance of establishing the case for bifurcation in advance of an application to strike a civil forfeiture action on constitutional grounds.

Decided by the BC Supreme Court on December 27, 2013.
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British Columbia (Director of Civil Forfeiture) v. Lam, 2013 BCSC 1877 – Court Places Onus on Defendant to Resist Interim Preservation Order

In the course of investigating an alleged drug trafficking network, the Vancouver Police Department raided a penthouse condominium owned by Louise Ching Man Kwok.

Inside the residence (which Ms. Kwok had rented to Mr. Hoang Nam Lam and Ms. Lisa Bui), police discovered “2.03 kilograms of cocaine, 1 gram of heroin, 2 grams of marijuana and 13.2 kilograms of caffeine anhydrous, a known cutting agent for cocaine,” along with $41,825 in cash.

The Director of Civil Forfeiture applied for an Interim Preservation Order on the property, despite the fact that Ms. Kwok had no criminal record and was not directly implicated in any unlawful activity.

The Director alleged that Ms. Kwok did not have sufficient legitimate income to have purchased the residence in question, and was a “nominee owner” for other individuals who were using it to facilitate drug trafficking. To support this proposition, the Director pointed to circumstantial evidence tying Ms. Kwok with an individual “known to the police as an associate of gang members connected to Asian organized crime.”

Although Kwok denied any knowledge of the drug activity taking place in her apartment, Justice Greyell of the BC Supreme Court noted that she had not provided a detailed accounting of the funds used to purchase the apartment, nor had she explained her past “relationship” with an individual who was “known to police”:

“[43] I accept the defendant Mr. Lam was only under a written lease agreement with Ms. Kwok for a short period of time. However, Ms. Kwok, notwithstanding her knowledge of the Director’s position that she did not have the means to finance the purchase of the Property because of her “modest” income, made no attempt in her affidavit material in response to the application to either disclose her source of funding when she purchased the Property or to explain how she raised the difference between the mortgage amount and the balance of the purchase price.

[44] Ms. Kwok made no effort to explain how she was able to pay out the amount owing on her Mercedes SUV or how she purchased or leased her new Mercedes. She did not try to explain her relationship with Bryan Pang.”

This decision demonstrates the remarkably low onus that the Director must meet in order to qualify for an Interim Preservation Order. Even where the Defendant is not implicated in unlawful activity, a mere failure to respond in detail to circumstantial allegations can be sufficient to establish a “serious issue to be tried” under the Civil Forfeiture Act.

Decided by the BC Supreme Court on October 16, 2013.
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