The Ontario Court of Appeal clarified the built in exception portion of s. 3(1) of the Civil Remedies Act, 2001 (the “Act”), which gives the court discretion to refuse to grant a s. 3(1) forfeiture application that has otherwise been established, where to grant the application would “clearly not be in the interests of justice.”
In order to establish a forfeiture application brought under s.3(1) of the Act, the Attorney General must show that the property constitutes the “proceeds of unlawful activity.” The court held that the source of the funds used to pay the mortgages on the properties is a relevant factor in this determination. Accordingly, an applicant is required to respond to questions regarding the income sources used to make both down payments and mortgage payments. If an applicant refuses to answer, it is within the discretion of the trial judge to draw an adverse inference.
The “interests of justice” exception operates where the Crown has otherwise established a valid forfeiture application and where the owner is unable to bring themselves under the Act’s s.3(2) “legitimate owner” exception. The court held that to fall under the “clearly not in the interests of justice” exception it must be demonstrated that forfeiture would otherwise be “manifestly harsh” and result in an “inequitable result.” Justice Doherty went on to hold that while s. 3(1) forfeiture orders are meant to further the purposes of the Act, as set out in s.1, this does not mean that the “interests of justice” can be directly equated to these purposes. The “interests of justice” are broader and include maintaining public confidence in the justice system; this confidence requires promoting the community's sense of fairness in forfeiture orders. Accordingly, the court is required to take into consideration all relevant factors. Justice Doherty held that these factors would vary with each case, but that there were three relevant factors for the case at bar. First, the reasonableness of the conduct of the party whose property is subject to the forfeiture application as that conduct related to the unlawful activity. Second, it was relevant to consider the value of that party’s interest in the property, as compared to the value of the property tainted by the unlawful activity. This factor is particularly important where the property owner is not implicated in, or is unaware of, the criminal activity. Finally, the third relevant factor is the interplay between the purposes of the Act and discretionary relief from forfeiture. Where the owner has no knowledge of the criminal activity the deterrence purpose of the Act is not furthered, and may in fact be undermined, by a forfeiture order.
Finally, Justice Doherty went on to hold that there is no unfairness in the bringing of a forfeiture application under the Act even if it is brought immediately after withdrawal of criminal charges against the property owner.
May 10, 2011
Link to Decision
Steve Holinski
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