Category Archives: Civil Forfeiture in British Columbia

In the Rai case, Mr. Justice Silverman of the BC Supreme Court articulated the factors that must be taken into account in order to determine whether forfeiture is “clearly not in the interests of justice,” thus establishing a defence pursuant to Section 6(1) of the Civil Forfeiture Act.

In Rai, the Director of Civil Forfeiture sought forfeiture of three homes owned by the Defendant, Sarban Singh Rai. It was common ground that the homes in question had been used for marijuana grow operations. Rai, however, who owned a total of twelve rental properties, claimed that he was unaware of an uninvolved in the grow operations.

Justice Silverman believed Rai’s testimony only partially, finding that although he had no direct involvement in the grow ops, he was aware of them, turned a blind, eye, and collected rental income from those responsible. It was in this context and based on these factual findings that Silverman applied his analysis as to whether forfeiture of the properties, which were valued at a combined total of approximately $1.5 million, was “clearly not in the interests of justice.” He articulated the relevant principles as follows:

“[111] A non-exhaustive list of relevant factors to be considered in cases of this kind includes the following:

1. proportionality;

2. fairness;

3. the degree of culpability, complicity, knowledge, acquiescence, or negligence;

4. the extent of the problem in the community of the sort of unlawful activity in question;

5. the need to remove profit motive;

6. the need for disgorgement of wrongfully obtained profits;

7. the need for compensation;

8. prevention of future harm;

9. general deterrence.

[112] The degree of culpability, complicity, knowledge, acquiescence, or negligence is not relevant to any consideration of a punitive remedy. However, where the degree of those factors is minimal or reduced, their consideration may be relevant to the question of whether the interests of justice call for some relief from forfeiture.

[113] Proportionality and fairness will always be the dominant considerations. They are necessarily related and will often include a consideration of the following:

1. A balancing of the impact of a forfeiture order on, and a balancing of the interests of, the state, the defendant, and other affected parties, such as innocent victims, and/or innocent spouses or children of the defendant.

2. Where the extent of forfeiture of real property is under consideration, the following questions become relevant:

(a) how much equity is there in the property?

(b) how much was the defendant’s legitimate investment in the property before criminal activity commenced?

(c) how much equity has built up as a result of market conditions?

(d) how much equity has built up since an interim preservation order was granted under the Act?

3. Would forfeiture require a drastic lifestyle change for the defendant and/or for innocent family members?

4. Would forfeiture affect employment opportunities?

5. The magnitude of the unlawful activity and/or of its profits, or potential profits.

[114] A purely mathematical analysis will rarely, if ever, be the most suitable approach.”
Ultimately, Justice Silverman concluded that in the circumstances, full forfeiture of all the properties would not be in the interests of justice, but that the relief granted to the Defendant should be less than 50% of the total value. Based on this conclusion, he ordered two of the houses forfeit to the Director, while allowing the Defendant to retain ownership of one house with an assessed value of $528,000.

Rai stands for the proposition that Section 6(1) of the Civil Forfeiture Act can provide some meaningful relief from forfeiture, but is based on a balancing act where the onus falls squarely on the Defendant to demonstrate that they should be able to keep some of their property. Once the Director establishes that a property is probably proceeds and/or an instrument of crime and that the Defendant is probably not an uninvolved interest holder, avoiding a massive forfeiture order becomes an uphill battle indeed.

Decided by the BC Supreme Court on February 16, 2011.
Click here for the full text of the decision.

In Director of Civil Forfeiture v. Angel Acres, the Director of Civil Forfeiture had obtained an interim preservation order pending trial, allowing it to seize the “Angel Acres” clubhouse in Nanaimo, British Columbia, on the basis of information obtained by the police in the “Project Halo” investigation.

Police officers swore affidavits, stating that the clubhouse was heavily fortified and outfitted with surveillance cameras, and that these modifications could provide a safe place for the planning of violent criminal activity. In addition, the investigation found that liquor was being distributed through the facility without a license.

The Project Halo investigation did not turn up enough hard evidence to support criminal charges against any owners or members of Angel Acres, but was enough to convince BC Supreme Court Justice Davies that there was a “serious issue to be tried” in a civil forfeiture proceeding. Justice Davies therefore issued an interim preservation order giving the Director full control over the clubhouse and surrounding lands, and essentially locking the Defendants out of their own facility.

The Defendants appealed this decision on the grounds that no criminal activity had been discovered and the Director’s claim disclosed no reasonable cause of action. The Court of Appeal dismissed the appeal, stating that there was a serious possibility that the Director could demonstrate illegal activity on a civil standard of proof (i.e. the balance of probabilities), which is all that is necessary to achieve forfeiture.

Over all, this is a very disturbing precedent, which applies the civil standard of proof to forfeiture proceedings in British Columbia. The Court of Appeal ruled that in order to obtain forfeiture of this valuable property, the Director need only prove that it is likely that illegal activity took place on the premises, and that the presumption of innocence found in criminal proceedings simply does not apply. This decision is symbolic of a general lack of respect for private property rights in Canadian constitutional law.

Decided by the BC Court of Appeal on December 30, 2010.
Click here for the full text of the decision.

In the Hyland case, the Defendant Mr. Hyland had purchased 421 lottery tickets from Samuel Hampton, a lottery ticket dealer in Burnaby, BC. The tickets turned out to have a value of $67,200. Mr. Hyland, who had taken the tickets with him to Las Vegas, couriered them back to Mr. Hamptom with the instruction that he use the proceeds to purchase more lottery tickets.

In the mean time, Mr. Hampton was charged under the Gaming Control Act for unauthorized sale of lottery tickets and the tickets in question were seized. The Crown argued that the tickets were “tainted by criminality” and sought a criminal forfeiture order under Section 490(9) of the Criminal Code. Mr. Hyland, meanwhile, argued under Section 490(10) of the Criminal Code that he was the lawful owner of the tickets and entitled to their return.

BC Provincial Court Judge Ehrcke found that Mr. Hampton and Mr. Hyland were involved in an extra-provincial lottery ticket resale scheme, but was not satisfied beyond a reasonable doubt that these particular tickets were possessed unlawfully, and therefore declined to order forfeiture under the Criminal Code.

At this point, the Director of Civil Forfeiture filed a civil action against the proceeds of the tickets, claiming that these monies were, on the balance of probabilities, the proceeds of criminal activity.

The BC Supreme Court found that the doctrine of issue estoppel precluded such an action, but the Court of Appeal overturned this decision, ruling that the same issue had not been before the Provincial Court Judge, and that a distinct issue of whether the tickets were “instruments of crime” remained to be decided.

The Hyland case is a clear example of the civil forfeiture process being used to inflict double jeopardy in regard to property rights which would clearly be unconstitutional in regard to the liberty interests of the accused. In other words, if a criminal prosecution fails, the Hyland precedent allows the Crown to take a second swing at the property of the accused, without definitively proving that it is the proceeds or instrument of crime.

Decided by the BC Court of Appeal on May 4, 2010.
Click here for the full text of the decision.

In the Fischer case, the Director of Civil Forfeiture sought an interim preservation order, pending a trial on the question of forfeiture of a home in Campbell River. The Defendant, Fischer, was the owner and resident of the home and had been caught numerous times in possession of cocaine and other drugs for the purpose of trafficking.

The Director asserted that the home had been used to facilitate the trafficking, although Fischer argued that the home was incidental to his trafficking activity and had been acquired with lawfully acquired funds.

The Defendant did not dispute the Director’s request for an interim preservation order, but argued that he should first be allowed to mortgage the home in order to fund his legal defence, and that the mortgage should take priority over any claim by the Director.

Mr. Justice Punnett of the BC Supreme Court found that although the Director had tendered no evidence that the property was purchased with the “proceeds of crime,” there was ample evidence that it had been used as an “instrument of crime,” and therefore there was a serious question to be tried under the Civil Forfeiture Act.

Given this state of affairs, and the possibility that full forfeiture of the property would be ordered at some point in the future, Just Punnett found that allowing a new first mortgage to take priority over the Director’s claim would defeat the purpose of the interim preservation order itself, namely to protect the Director’s interest in the property:

“While the defendant may wish to use the Property to secure legal counsel, that is at odds with the purposes of the Act. To grant such an exemption would allow the defendant to deplete the asset that is the subject of the litigation. The clear intent of s. 8 is to ensure that defendants cannot dispose of or otherwise affect the subject property so that its value is diminished and the forfeiture action becomes moot or not viable. Thus it would not be in the interests of justice to allow a mortgage in priority to the preservation order.”

This interpretation of the law, while clearly logical from the Director’s point of view, clearly serves the dual purpose of hampering the ability of many defendants to mount an adequate legal defence against civil forfeiture proceedings.

Decided by the BC Supreme Court on April 27, 2010.
Click here for the full text of the decision.

In the Onn case, the Director of Civil Forfeiture had applied for and obtained an interim preservation order over the Defendant’s 7-acre property in Likely, BC, which had been used for a marijuana grow operation, allegedly operated by the Defendant’s nephew. The Director alleged that the Defendant was aware of and profited from the grow operation on her property. The Defendant denied this allegation.

The Supreme Court Chambers Judge found that there was a serious issue to be tried and granted the interim preservation order, pending a trial of the matter. However, he refused to grant certain terms of the interim preservation order sought by the Director, namely that Ms. Onn would:

“…continue to fulfill all the duties and obligations of an owner of real property and in particular, shall:

a. maintain the Property and anything affixed thereto in a good state of repair and to take all steps necessary to preserve and protect the Property, and to prevent waste of any manner, and ensure that all buildings, structures and fixtures are maintained, repaired, serviced and secured;

b. comply with all municipal and other work orders, building codes and bylaws as they related to the Property and any building, structure or fixture thereon;

c. pay all realty and property taxes and all charges for utilities including, where applicable, charges for power, water, sewage, gas, refuse collection and disposal, and condominium fees or other common area costs assessed or incurred in respect of the Property, as they become due, together with any arrears;

d. ensure that the Property is not used in any fashion that is contrary to any statute or regulation of Canada or British Columbia or any by-law of Likely; and

e. insure the Property and all buildings, structures and fixtures thereon against destruction or loss to a value equivalent to their replacement cost and maintain such policy of insurance in good standing.”

These terms, according to the Chambers judge, were overly broad to the point where they were unenforceable.

The Director appealed from this decision and the appeal was granted in part by the Court of Appeal, which stated that “the purpose of the order in the case at bar, is to preserve the value of the property.”

The only orders which the Court of Appeal refused to grant were those proposed in paragraph 7(d), which Madam Justice Garson determined would be unenforceable insofar as it related to matters which were not under the control of Ms. Onn.

“In my opinion sub-paragraph 7(d) is too broad and vague to be enforceable. A permissible order would be one that prohibits the owner from permitting a continuation of the specific alleged unlawful activity on the premises. To be clear, the order sought does not merely require the owner to comply with the law but rather to ensure that no unlawful act take place on her property. This may be unenforceable insofar as it imposes responsibility on the owner for the acts of others not subject to her control.”

All in all, this appeal was a victory for the Director of Civil Forfeiture, in that it allows him to impose positive obligations on a Defendant while an interim preservation order is in effect. This is a major loss for potential Defendants, who may be required to continue paying taxes and maintenance costs on properties that they will ultimately lose.

Decided by the BC Court of Appeal on September 21, 2009.
Click here for the full text of the decision.

The Nguyen case involved $242,505 in US cash, which had been seized from the Defendant, Mr. Nguyen, during a smuggling bust at the Canada-US border in 2003.

In early 2006, Mr. Nguyen went bankrupt. Shortly afterwards, the Director of Civil Forfeiture filed an action for forfeiture of the money, which had been held by the RCMP. Mr. Nguyen did not defend against the action, but his bankruptcy trustee, E. Sands & Associates Inc., argued that it was an asset that should be considered in accordance with the Bankruptcy and Insolvency Act.

It was an agreed fact, conceded by the E. Sands & Associates Inc., that the money was proceeds of crime, namely Mr. Nguyen’s involvement in trafficking marijuana in the United States. It was also common ground that the Civil Forfeiture Act (which became law in 2006) did not exist at the time of Mr. Nguyen’s offence. However, the Act itself states that its provisions apply “to an unlawful activity occurring before, on or after the date the Act came into force.”

Mr. Justice R. D. Wilson of the BC Supreme Court ultimately determined that the money was never the lawful property of Mr. Nguyen, and therefore was not an asset within the meaning of the Bankruptcy and Insolvency Act. For this reason, he concluded that E. Sands & Associates Inc. likewise had no rightful claim to the money, and that it should be forfeit to the Director of Civil Forfeiture.

Although fairly straightforward and un-contentious on its facts, this case provides a telling example of the retroactive nature of the Civil Forfeiture Act, which is a frightening feature in any quasi-criminal or potentially punitive legislation.

Decided by the BC Supreme Court on February 17, 2009.
Click here for the full text of the decision.

In this case, a large marijuana grow operation had been found at a residence owned by the Defendant, Mr. Cheung. The Defendant acknowledged that the home had been rented by his brother, who was complicit in the illegal activity.

The residence in question was sold at the outset of the litigation, and this action concerned the proceeds of the sale, being $250,104.73, which were being held in trust by the Defendant’s lawyer. The Director of Civil Forfeiture sought an interim preservation order, preventing the Defendant from accessing the funds until the matter had been either settled or resolved in court.

Mr. Justice Metzger of the BC Supreme Court ruled that the interim preservation order should be granted, on the grounds that there was a “serious issue to be tried,” as follows:

“[21] The evidence is that the Property has been used to engage in unlawful activity, that is, the possession, production and provision of controlled substances within the definitions contained in s. 2 of the CDSA. The evidence reasonably supports the inference that the marijuana was produced for sale, and thus the activity likely resulted in the acquisition of property, namely cash.
[22] In the present case, as in Tse, there are reasonable grounds for the belief that the unlawful activity at the Property generated a financial benefit for the defendant Cheung, being rent received from his brother and sister-in-law, and that financial benefit in turn was used to reduce the debt obligation on the Property.
[23] Thus, I conclude there is a serious issue to be tried.”

This case demonstrates the ability of the Director of Civil Forfeiture to tie up property alleged to be proceeds of crime, pending the resolution of complex and lengthy litigation, thereby preventing Defendants to access their equity in order to fund their legal defence.

Decided by the BC Supreme Court on June 24, 2008.
Click here for the full text of the decision.

This application for an interim preservation arose after the police obtained a search warrant for the home and found a number of illegal knives and drugs, including a one-kilogram brick of cocaine, as well as items related to the production of drugs.

The Director of Civil Forfeiture applied for an interim preservation order of the residence, pending the outcome of the trial. Mr. Justice Williamson of the BC Supreme Court agreed to grant the order, stating that there was a “serious issue to be tried,” as follows:

“[15] Applying that reasoning here, I am satisfied and have reasonable grounds to believe that a portion of the interest in the property is proceeds of an unlawful activity or that the property was the instrument of unlawful activity. Tse was found in the residence. He is the sole registered owner. There were substantial amounts of illegal drugs and related paraphernalia found in the common areas in that residence. I am satisfied, based upon the reasoning in Peterson, that there are reasonable grounds which meet the test set out in the Act.”

Decided by the BC Supreme Court on July 6, 2007.
Click here for the full text of the decision.