Category Archives: Civil Forfeiture in British Columbia

Jason Dery’s 2008 Ducati motorcycle was seized by British Columbia’s Director of Civil Forfeiture as a result of a series of Motor Vehicle Act infractions, including an incident in which the Defendant accelerated to speeds of 200-km/h on a rural road outside Victoria, BC.

The Director alleged that the Ducati was an “instrument of unlawful activity … likely to cause serious bodily harm to a person,” and therefore should be subject to forfeiture under the province’s Civil Forfeiture Act. In support of this contention, the Director alleged that Mr. Dery was guilty of dangerous driving, contrary to Section 249(1)(a) of the Criminal Code.

The fact remained, however, that Mr. Dery had not been convicted of dangerous driving. Although he admitted contravening the Motor Vehicle Act on a number of occasions, he had paid the fines for these offences and denied that his behaviour constituted a Criminal Code offence. Furthermore, the provincial Crown had declined to pursue such a charge.

Mr. Justice Bowden of the BC Supreme Court accepted Mr. Dery’s un-contradicted testimony that: “the road was straight and he did not observe any person or vehicle on the road. He had travelled on that road a number of times in the past. It was in a rural area and there were no side streets. It was a sunny and dry day. He was testing the performance of the Ducati after it had been serviced.”

In light of these facts, Justice Bowden was not satisfied that the offence of dangerous driving had occurred and found that the Ducati was not properly subject to forfeiture under British Columbia’s Civil Forfeiture Act:

“[20] The only evidence that was before the Court of unlawful activity was that the defendant was operating the Ducati on four occasions when he exceeded the posted speed limit. There is no evidence of any behaviour of the defendant in operating the Ducati on those days other than speeding, nor is there any evidence that a pedestrian or other vehicle was at risk of harm because of the defendant’s actions…

[32] While I do not want it to be taken from these reasons that I condone the behaviour of the defendant in operating the Ducati at high speeds and contrary to posted speed limits (for which he has incurred substantial penalties), I have concluded that the Director has not established that the Ducati is an instrument of unlawful activity as that term is defined in the CFA. Accordingly, an order forfeiting the Ducati to the government will not be made.”

Decided by the BC Supreme Court on September 5, 2013.
Click here for the full text of the decision.

The Director of Civil Forfeiture alleged that the Defendant, Vu Huy Nguyen, had either participated in or allowed three illegal marijuana grow operations at his Vancouver home between 2001 and 2008. Because Mr. Nguyen had not been directly connected to any of the grow operations in question (which he asserted were established by his tenants without his cooperation), the Director sought the benefit of the lower standard of proof inherent in civil forfeiture proceedings.

Mr. Nguyen’s counsel attempted to forestall the forfeiture proceeding with a constitutional challenge based on the division of powers. Madam Justice Kloegman of the BC Supreme Court characterized the Defendant’s argument on this point as follows:

[35] Thus there is no doubt that the Act is valid legislation. The real complaint of the defendants lies in what their counsel referred to as the “operational conflict” between the Canada Criminal Code, which governs the procedure by which the evidence in forfeiture cases is collected, and the procedures, burdens and presumptions sanctioned in the Act. To the extent that provincial legislation conflicts with federal legislation, the doctrine of paramountcy requires the court to read down or ignore the provincial legislation to the extent necessary to remove the conflict (Canadian Western Bank v. Alberta, 2007 SCC 22 (CanLII), 2007 SCC 22).

Interestingly, the court based its rejection of the Defendant’s “operational conflict” argument on the fact that the same constitutional standard which applies to criminal proceedings also applies to civil forfeiture proceedings:

“[38] Unfortunately, the defendants’ submissions were premised on a misunderstanding of procedure in civil cases. Firstly, evidence in civil cases is subject to the same general common law rules of admissibility of evidence as in criminal cases. If evidence is obtained by a breach of Charter rights, it could be inadmissible under s. 24(2) of the Charter. In British Columbia (Director of Civil Forfeiture) v. Huynh, 2013 BCSC 980 (CanLII), 2013 BCSC 980, there were discrepancies in the information to obtain relied on by the police to obtain evidence of the marihuana grow operation on the residential premises subject to forfeiture. The defendants raised s. 8 of the Charter and submitted that the evidence should be excluded under s. 24(2) of the Charter. A voir dire was held at the commencement of trial. The trial judge applied the same law and cautionary approach to this evidence obtained under the Criminal Code as he would have done in a criminal trial.”

After hearing the evidence in Mr. Nguyen’s case, Madam Justice Kloegman was satisfied on a balance of probabilities that the Defendant had repeatedly either participated in or allowed marijuana grow operations on his property.

“[64] In my opinion, the only reasonable inference to draw from the evidence, or lack thereof, is that the defendant Nguyen likely knew, participated or acquiesced in the marihuana growing operations in 2007 and 2008. I am not saying that the evidence would be sufficient to prove a criminal offence under the Controlled Drugs and Substances Act, but in my opinion it is sufficient, on a balance of probabilities, to establish the defendant Nguyen’s involvement in the unlawful activity taking place on the Property.”

On this basis, the court ordered full forfeiture of Mr. Nguyen’s house.

Although Justice Kloegman’s factual findings are not unreasonable on the balance of probabilities, her disposition of the case might be indicative of a fundamental misunderstanding of the interplay between the Civil Forfeiture Act and the Charter.

Justice Kloegman acknowledges at paragraph 38 of her reasons for judgement that civil forfeiture proceedings are subject to the Charter, and that illegally obtained evidence might be excluded pursuant to Section 24(2) thereof. In paragraph 64 of her reasons, however, Kloegman casually discards the notion that a civil forfeiture defendant should be presumed innocent. If the Charter is to be applied consistently in the civil forfeiture context, it would seem that there is an open opportunity for a well-crafted constitutional challenge based on Section 11(d).

Decided by the BC Supreme Court on September 3, 2013.
Click here for the full text of the decision.

The Director of Civil Forfeiture applied for Interim Preservation Orders concerning a piece of real property in the Kootenays, along with $9,251 in cash which had been seized from the property by police.

The Director filed its action against the subject property in May 2012, but took no action concerning an Interim Preservation Order for the intervening period of thirteen months. Given the Director’s failure to act promptly, and the fact that the property was already subject to an order in a foreclosure proceeding (thus giving rise to the risk of inconsistent orders), Justice Dorgan of the BC Supreme Court found that the order requested by the Director was contrary to the interests of justice:

“To make the order the Director seeks today, in effect, allows the Director pre-judgment execution in respect of a property which is in foreclosure and is already the subject of an order of this court. To do so is contrary to the interests of justice.”

In response to the Director’s claims that the property was “wasting” or might be used for an “illegal purpose,” Justice Dorgan had no difficulty concluding that the evidence relied upon by the Director was “not persuasive,” and was indeed contradicted by the evidence of a local realtor who had been marketing the property in question for over a year:

In regard to the cash seized from Bill Pundick, a tenant at the subject property, Justice Dorgan concluded that the Director’s case was based on “suspicion only.” Mr. Pundick provided evidence that he was a currency collector, and that all of the circumstances supported Pundick’s version of events:

“What is found in the cabin he occupied at the Powell Road property? Wooden boxes with paper bills neatly filed in envelopes, in boxes beside what appear to be catalogues in respect of paper Canadian currency, all of which is consistent with Mr. Pundick’s evidence.”

On this basis, the both of the Director’s Interim Preservation Order applications were dismissed.

Eleven months later, the Globe and Mail reported that the Civil Forfeiture Office had abandoned its case against the Powell Road property.

Decided by the BC Supreme Court on June 21, 2013.
Click here for the full text of the decision.

The Appellant, Hong Thu Thi Vo, appealed a Chambers judge’s decision allowing amendments to the Director of Civil Forfeiture’s Notice of Civil Claim against her property.

The Appellant argued that the Director should be required to particularize the alleged “unlawful activity” involving her property, and to add Thanh Le as a Defendant, in view of the Director’s allegation that Mr. Le possessed a trust interest in the property in question.

The Court of Appeal confirmed the Chambers judge’s decision that because the Director was not required to prove a specific offence in order to achieve forfeiture, the particulars sought by the Defendant were not required:

“[26] In my opinion, the chambers judge reached the correct conclusion. In Chatterjee, at para. 21, Binnie J. held that the Attorney General as applicant in that case was not required to prove any particular offence against any particular offender. As the respondent is similarly not required to prove any particular offence against any particular offender, it follows that he is not required to plead specific transactions or provide particulars thereof.”

In regard to Mr. Le, however, the Court of Appeal found that the Director could not have it both ways, and must either drop his claim against Mr. Le’s interest in the property or alternatively add him as a co-Defendant:

“[17] As the pleadings presently stand, the respondent seeks to affect what he has described as Mr. Le’s resulting trust interest in the 41st Property. If such an interest continues to be alleged, Mr. Le must be named as a defendant in the proceedings pursuant to s. 4 of the Act. If such an interest is no longer alleged, the respondent must amend his notice of civil claim to delete that allegation. He then faces the prospect that any interest that Mr. Le may have in the 41st Property will not be defeated by the proceedings where he is not named as a defendant.”

In view of Ms. Vo’s substantial success on the issue regarding Mr. Le, the Court of Appeal awarded costs of the entire appeal in favour of the Defendant.

Decided by the BC Court of Appeal on June 7, 2013.
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The Director of Civil Forfeiture’s ongoing action against the Angel Acres Recreation and Festival Property Ltd. which has been the subject of litigation since 2007, was subject to an application that the Director be required to particularize all of the unlawful acts in which the Angel Acres property had been involved.

Mr. Justice Davies of the BC Supreme Court agreed with the Defendants that several paragraphs of the Director’s Notice of Civil Claim were inadequate, and found that the Director had an obligation to specify each of the alleged unlawful acts which would ultimately be used to support an order for forfeiture:

“[72]        Without such particularization, the issues to be met at trial will not be sufficiently known to the defendants. It would also not be possible to assess the relevance of the evidence sought to be adduced at trial. In those circumstances, a trial which is now scheduled to last at least 16 weeks could become an even longer and unrestrained inquiry into the defendants’ alleged unlawful activity generally with no connection to the NHAMC Clubhouse or its Contents of which forfeiture is sought.

[73]        If there are specific unlawful activities which the Director now seeks to rely upon in alleging that the property of which forfeiture is sought was used to engage in unlawful activity or is likely to be so used, which have not yet been identified, those should now either be pleaded in paragraph 17 or elsewhere in the Amended Notice of Civil Claim or, alternatively, after consideration of this ruling, provided by way of further and better particulars.”

Justice Davies stopped short of requiring the Director to specify how the Angel Acres property was used in each of the unlawful activities in question, finding that such a requirement would effectively require the Director to plead evidence, essentially going beyond the normal purpose of pleadings:

“[106]     In making the pleadings decisions I have made, I have specifically not required the Director to plead how the NHAMC Clubhouse or its Contents were used, or likely to be used, in respect of any specific unlawful activity.

[107]     I did not require that to be pleaded because I have agreed with the Director’s submission that what the defendants are seeking to know by that demand for particularity is the evidence upon which the Director intends to rely in proving his claims.

[108]     That is not the purpose of either pleadings or particulars as a sub-set of pleadings. How the NHAMC Clubhouse and its Contents were allegedly used in respect of any alleged specific unlawful activity is not a material fact that must be pleaded or particularized to define the issues to be decided.

[109]     The defendants’ demands for particulars with respect to how the property of which forfeiture is sought was used in the commission of any specific unlawful act need not be further answered.”

Decided by the BC Supreme Court on June 6, 2013.
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The Director of Civil Forfeiture’s applied to force the sale of the defendants’ property, which was subject to an interim preservation order and in the process of foreclosure.

BC Supreme Court Justice Bowden ruled that forced sale is a remedy available to the Director of Civil Forfeiture if the Director’s interest in the property is in danger of eroding while the sale is delayed:

[13] The result of the order is that the Director may proceed with the steps necessary to sell the Property. While that may seem harsh in its result, it should be noted that the Director acquired his rights under an IPO which was consented to by the defendants. Further, the exercise by the Director of his right to sell the Property only arises because the defendants failed to keep their mortgages current and pay the property taxes when due. The Director has made it clear to the defendants that if the taxes are paid and the mortgages are brought into good standing he will not proceed with the sale of the Property. If that is not done, then foreclosure proceedings will likely take place or a tax sale may occur, both of which will likely erode the value of the Director’s interest in the Property.

This case is a sobering reminder of the financial burden placed on civil forfeiture defendants. Not only is the defendant responsible for funding his own legal defence (even if he is indigent), but the slightest delinquency in mortgage or tax payments can result in complete financial devastation. The effect of this process is to crush and demoralize defendants regardless of their potential innocence or lawful interest in the property at stake.

Decided by the Supreme Court of British Columbia on April 11, 2013.
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The Defendant, Ali Kazan, admitted that an 80-plant marijuana grow op had been located on the upper floor of his home, but argued that it was disproportionate and clearly not in the interests of justice to order forfeiture of his home on this basis. He also claimed that he had no knowledge of a sophisticated marijuana processing operation located in the two-bedroom basement suite of the same house, where police had seized some 41 kilograms of marijuana after obtaining a search warrant.

Mr. Justice Pearlman of the BC Supreme Court found that Mr. Kazan’s testimony was not credible and that he must have had knowledge of the marijuana processing operation in his basement, which was in fact operated by two individuals who he admitted were his friends.

Based on these conclusions, Justice Pearlman found that the interests of justice did not require relief from full forfeiture and that the Defendant’s equity in the property (valued at approximately $50,000) should be transferred to the Crown:

“[118] In considering the interests of justice, and whether full forfeiture would be disproportionate or unfair, I bear in mind that the defendant not only used the 74th Avenue Property for a marijuana grow operation, but also was aware of and permitted the use of the two-bedroom basement suite to store and process stolen marijuana. Here, there is evidence of gang activity associated with the 74th Avenue Property.

[119] On weighing all of the factors I have discussed, I find that the unlawful activity conducted in the two-bedroom basement suite with the defendant’s knowledge tips the scales in favour of full forfeiture in this case.”

Interestingly, the reasons for judgement suggest that were it not for the Defendant’s knowledge of the criminal activity downstairs, the court would have granted some relief from forfeiture based on the interests of justice. This case does not answer the question of whether a single, small-scale grow op is sufficient to warrant full forfeiture of a home.

Decided by the BC Supreme Court on March 12, 2013.
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The Defendant, Mr. Flynn, had argued in a pre-trial motion that forfeiture of real property as an “instrument of crime” was contrary to common law principles of statutory interpretation. The Chambers judge was not satisfied that the Director’s claim disclosed no reasonable cause of action, and found that the proper place to consider the statutory interpretation argument was in the context of a trial:

[57] The arguments raised by the applicant here are novel. On reflection, I conclude that it is not plain and obvious on the record before me that the Director’s pleadings, insofar as they allege that the properties in question are instruments of unlawful activity, disclose no reasonable cause of action. I incline towards the Director’s counter-argument that forfeiture of a parcel of land within common law includes interests in it. It is an “immovable” piece of property and cannot literally be taken. As to the wording of the [Civil Forfeiture Act], while it is possible to interpret it as counsel for the applicant have tried to do, it is sufficiently internally coherent to support the plain and obvious meanings supplied by the legal context, including the implied “interests” of others in the named properties.

In considering Mr. Flynn’s appeal, the BC Court of Appeal upheld the Chambers judge’s discretion to defer the statutory interpretation issue:

[15] While it was open to the chambers judge to have carried out the comprehensive analysis of the submissions of the parties necessary to resolve the statutory interpretation issue raised by Mr. Flynn, he was not required to do so. Rather, it was open to him, in the exercise of his discretion, to leave that matter to be decided at trial. That being so, this Court should not interfere with his decision.

Although resolved against the Defendant on the grounds of judicial discretion, this case leaves unanswered some interesting questions about the interpretation and application of civil forfeiture statues across Canada.

Decided by the BC Court of Appeal on March 4, 2013.
Click here for the full text of the decision.

The Crowley case involved an application for forfeiture of a home in which police had found a prohibited firearm, a controlled substance, and approximately $93,000 in cash. Most of the money had already been forfeit to the Canada Revenue Agency and federal government. The Director apparently saw this forfeiture as an insufficient penalty for simple possession of a firearm and a narcotic, and argued that the property where the items had been found should also be forfeit.

Although the Defendant initially filed a Response to Civil Claim, he failed to comply with his disclosure obligations in a timely manner, leading the court to strike his Response and remove him as a party to the action. When the Director applied for default judgement, the Defendant appeared and attempted to make submissions against forfeiture. Mr. Justice Rogers ruled that Mr. Crowley was no longer a party to the action and could not make submissions. He subsequently heard from counsel for the Director and made an order for forfeiture of the property, without giving reasons for judgement.

In considering this situation, the BC Court of Appeal found that Justice Rogers had erred in finding he had no discretion to hear from Mr. Crowley, and further erred in failing to give reasons for judgement.

The absence of reasons for judgement, according to the Court of Appeal, made it impossible to determine whether Justice Rogers had considered whether forfeiture in the circumstances was “clearly not in the interests of justice,” a relevant factor which must be considered before granting default judgement:

[82] The Director took the position that forfeiture orders could be made solely on the basis of the allegations of fact in his notice of civil claim, but he also adduced evidence relevant to the interests of justice. In the absence of any reasons for judgment, it is not possible to know whether the judge considered that he had an obligation to determine whether forfeiture, in whole or in part, clearly was not in the interests of justice. It is not possible to determine if he made such a determination.

[83] Section 5 of the Act contains two bases on which forfeiture may be ordered: if the property is “proceeds of unlawful activity” or is “an instrument of unlawful activity”. The appellant contends that the absence of reasons for judgment deprive him of the ability to know on what basis the Property was forfeited and makes appellate review extremely difficult, if not impossible. I agree.

The matter was remitted to the BC Supreme Court for further deliberation on the interests of justice in Mr. Crowley’s case.

This decision is a good demonstration of the rule that the “interests of justice” be fully examined by the court before forfeiture is granted, even by way of default judgement.

Decided by the BC Court of Appeal on February 27, 2013.
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The Lloydsmith case centered around an alleged marijuana grow operation found in a residence in Mission, British Columbia, and the application of Charter principles to the manner in which evidence for a civil forfeiture action is obtained.

A police officer knocked on the door of the Defendant’s residence after a 911 call was traced to that address. The Defendant told the officer that nobody had called 911 and there were no problems at the residence. Rather than accepting this, the officer forced his way into the residence, injuring the Defendant in the process. As a result of this forced entry, a marijuana grow operation was allegedly discovered.

Mr. Justice Leask of the BC Supreme Court ordered a bifurcated trial in which Charter issues would be addressed separately. In considering the Charter issues, he accepted that erroneous 911 calls are sometimes received as a result of technical malfunctions in the telecommunications infrastructure.

Justice Leask further confirmed that the Charter applies to the manner in which evidence is obtained for civil forfeiture actions:

“[55] The search conducted by Corporal Chung and constable Sabo was a warrantless search which is prima facie unreasonable and a breach of s. 8. The burden is on the state, in this case the Director, to establish exigent circumstances.”

In conclusion, Justice Leask determined that illegally-obtained evidence should be excised from the Information to Obtain, and that the police therefore lacked reasonable grounds to enter Mr. Lloydsmith’s residence.

“[63] In terms of the contents of the warrant, of course because of my finding that the warrantless search was not justified by exigent circumstances, I would delete from Corporal Chung’s ITO the reference to what Constable Sabo and himself saw in their warrantless search. The result is with those particulars deleted, there is nothing left in the Information to Obtain to make the warrant valid, so I find that the warrant could not have been properly issued.”

This is one of a growing number of authorities in British Columbia and other provinces in which evidence has been excluded in the civil context as a result of Charter violations.

Decided by the BC Supreme Court on April 2, 2013.
Click here for the full text of the decision.