COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

British Columbia (Director of Civil Forfeiture) v. Wolff,

 

2012 BCCA 473

Date: 20121122

Docket: CA39722

An Action Under the Civil Forfeiture Act in Rem Against

2003 Dodge Ram

(VIN: 3D7LU38C33G783337)

Between:

Director of Civil Forfeiture

Appellant

(Plaintiff)

And

Frank Albert Wolff

Respondent

(Defendant)

Before:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Hall

The Honourable Madam Justice D. Smith

On Appeal from the Supreme Court of British Columbia, January 24, 2012

(British Columbia (Director of Civil Forfeiture) v. Wolff, 2012 BCSC 100,

Victoria Registry, Docket Number 07-5007.)

Counsel for the Appellant:

J.G. Morley

C. Bargen

Counsel for the Respondent:

D.H. Christie

Place and Date of Hearing:

Victoria, British Columbia

October 25, 2012

Place and Date of Judgment:

Vancouver, British Columbia

November 22, 2012

 


 

 

Written Reasons by:

The Honourable Madam Justice Newbury

Concurred in by:

The Honourable Mr. Justice Hall

The Honourable Madam Justice D. Smith


 

Reasons for Judgment of the Honourable Madam Justice Newbury:

[1]             In 2005, the Province of British Columbia followed the example of other Canadian provinces by enacting the Civil Forfeiture Act, S.B.C. 2005, c. 29.  The Act authorizes the Province to seek and obtain the forfeiture of property, tangible or intangible, that is “proceeds of unlawful activity” or an “instrument of unlawful activity”.  The Act is wide in scope and firm in its application.  It defines “unlawful activity” to mean any act that is an offence under an Act of Canada or the Province, thus extending to any offence in the Criminal Code or in the Controlled Drugs and Substances Act, S.C. 1996, c. 19 (“CDSA”).  Where the Director of Civil Forfeiture under the Act proves that property is proceeds of unlawful activity or is an instrument of such activity, the court “must” make a forfeiture order in respect of the property, subject only to the exceptions stated in s. 6.  The onus is on the offender to show that an exception applies entitling him or her to relief from forfeiture.

[2]      We are concerned in this case with the exception provided by s. 6(1) of the Act.  It states:

6(1)      If a court determines that the forfeiture of property or the whole or a portion of an interest in property under this Act is clearly not in the interests of justice, the court may do any of the following:

(a)        refuse to issue a forfeiture order,

(b)        limit the application of the forfeiture order;

(c)        put conditions on the forfeiture order.  [Emphasis added.]

[3]             This appeal ‒ the first to this court from a trial judgment under the Act ‒ turns on the “interests of justice” exception in the context of a criminal offence the circumstances of which lie near the less egregious end of the spectrum of offences under the CDSA.  The court below declined to make the forfeiture order sought by the Director, concluding it would not be in the interests of justice to do so.  On appeal, the Director submits that the trial judge made certain factual errors and erroneously enunciated certain “blanket rules” applicable to the exercise of the court’s discretion to grant relief from forfeiture.  The Director asks this court to allow the appeal so that the forfeiture may proceed, and perhaps more importantly to the Director, to confirm in our reasons what factors apply, and how they apply, in the determination of the “interests of justice” under s. 6(1).

Factual Background

[4]             The offence giving rise to these proceedings occurred on November 23, 2005, when Mr. Wolff was stopped by an RCMP officer for speeding on Highway 97 just north of Williams Lake.  He was driving a leased Dodge Ram truck.  When Mr. Wolff rolled down his window, the officer smelled burnt marijuana.  He immediately arrested Mr. Wolff for possession of marijuana.  Then, in searching Mr. Wolff’s vehicle incidental to the arrest, the officer found a duffel bag containing a duffle bag which in turn contained a garbage bag containing Mr. Wolff’s personal effects and eight smaller bags of marijuana.  Each bag weighed 225 grams and the total was said to have a local street value of up to $9600.

[5]             Given this quantity, the officer re-arrested Mr. Wolff for possession of a controlled substance for the purposes of trafficking and took him to the police station.  Mr. Wolff told the police that a friend had asked him to transport the duffle bag to another person on Vancouver Island (where Mr. Wolff resides) and that he had agreed to do so without knowing what was inside the bag.  He refused to divulge the name of his “friend”, being content, in his words, to ‘take his lumps’.  He said that some time before being stopped by the police, he had looked inside the bag, realized what he was carrying and had become concerned.  While trying to decide what to do, he had removed some of the marijuana from the bag and smoked it, keeping the rest in his vehicle.

[6]             Mr. Wolff had no criminal record at the time of the offence and was employed as a fire captain in a community on Vancouver Island.  In due course, he was released on bail and proceeded on his way.

[7]             The Act came into force on April 20, 2006.

[8]             In early June 2007, Mr. Wolff exercised his option to purchase the leased truck and paid $26,177.58 to acquire title.  As a result, his total equity in the vehicle was some $52,000.

[9]             On June 28, 2007, Mr. Wolff pleaded guilty in Provincial Court to the charge of possession of marijuana for the purpose of trafficking.  In the course of a joint submission to the sentencing judge, Crown counsel stated the facts set out above, noting that this case of trafficking was a more “technical” one than most.  She sought a one-year conditional sentence for Mr. Wolff, to be served in the community on terms of the kind usually imposed, including a ten-year firearms prohibition under s. 109 of the Code.  At the same time, since Mr. Wolff was intending to support himself as a hunting guide, the Crown was amenable to an order under s. 113 permitting him to possess a firearm for hunting purposes only.  (Evidently, by the time of his guilty plea, Mr. Wolff had lost his position with his fire department as a result of the offence.  This meant he was unable to work enough years to earn his full pension.)

[10]         After some discussion of the terms of a possible conditional sentence order, Crown counsel advised the Court that defence counsel had evidently misunderstood the nature of a conditional sentence, confusing it with a conditional discharge.  Crown counsel said she would then “change my submissions for a suspended sentence with the same terms that I already proposed.”  Defence counsel made a submission seeking a conditional discharge and ultimately, the sentencing judge acceded to that request, in light of the “enormous consequences [of the conviction], both financial, professional and otherwise for this 51-year-old man”.  The terms of the discharge included a requirement for Mr. Wolff to complete 100 hours of community work and the orders under s.s. 109 and 113 of the Code regarding firearms.  The marijuana was ordered forfeited.

[11]         In December 2007, the Director of Civil Forfeiture commenced the present proceedings, pleading that the truck Mr. Wolff had been driving at the time of the offence was an “instrument of unlawful activity” as defined by the Act, and seeking the forfeiture of all or part thereof to Her Majesty and an order permitting the Director to sell the truck by auction and pay the proceeds into the civil forfeiture account.  In response, Mr. Wolff pleaded among other things that the Act should not be applied “retroactively” to him; that certain sections of the Act “can have no force or effect at law in compliance with the Charter”; and that the Director’s claims “constitute double jeopardy pursuant to the principles enunciated in [R. v. Wigglesworth [1987] 2 S.C.R. 541]”.

[12]         By the time the matter was set for trial, counsel for Mr. Wolff had evidently raised additional issues, making it necessary for the Director’s claim to be heard in two stages.  The first was tried over four days in early 2010 and concerned whether the truck was an instrument of unlawful activity and whether Mr. Wolff was an “uninvolved interest holder” within the meaning of s. 12 of the Act.  These issues were resolved against Mr. Wolff: see 2010 BCSC 774.  The second stage, tried over four days in January 2011, concerned the defences under the Charter and s. 6 of the Act.  The trial judge issued his second set of reasons, which are indexed as 2012 BCSC 100, on January 24, 2012.  It is from the resulting order dismissing the Director’s claim that the appeal is taken.

The Act

[13]         Because of the importance of the trial judge’s reasons, it may be appropriate to begin by describing the general scheme and objectives of the Act.  I have already noted that subject to the granting of relief from forfeiture under s. 6, the court is required by s. 5 to grant an order forfeiting to the Province “property that the court finds is an instrument of unlawful activity” or “the whole of the portion of an interest in property that the court finds is proceeds of unlawful activity.”  Any person who owns such property or an interest therein but did not engage in the unlawful activity (an “uninvolved interest holder”) may apply to have his or her interest protected under s. 13.  The court may refuse to issue such a “protection order” under s. 13(3) “if the issuance is clearly not in the interests of justice.”  All forfeiture proceedings are in rem (s. 15(2)), and findings of fact are to be made on the balance of probabilities: s. 16.  “Unlawful activity” may be found to have occurred even if no one was charged with an offence, or even if a person so charged was acquitted by a criminal court (s. 18), and may have occurred before or after the Act came into force: s. 2.

[14]         The Act contemplates the establishment of a special account in the consolidated revenue fund known as the civil forfeiture account.  The Director under the Act is required to pay into that account all cash forfeited under the Act, and all proceeds resulting from the disposition of property forfeited to the government: s. 26.  Section 27 empowers the Director to make payments out of the account to compensate eligible victims, prevent unlawful activity, remediate the effect of unlawful activity, and administer the Act generally.  Section 35 provides for a ten-year limitation period on proceedings taken by the Director under the Act, running from the date on which the unlawful activity occurred.

[15]         The constitutionality of the Act has not been determined by a British Columbia court; but in Chatterjee v. Ontario (Attorney General), 2009 SCC 19, the Supreme Court of Canada considered a constitutional challenge to the Ontario counterpart to the Act, the Civil Remedies Act, 2001, S.O. 2001, c. 28. The facts of Chatterjee involved only the proceeds of unlawful activity and not instruments of unlawful activity, but the Court appears to have upheld the validity of the Ontario statute as a whole, ruling that it had been enacted “in relation to” Property and Civil Rights in the Province and affected criminal law and procedure only incidentally.  (See paras. 30 and 53.)  Binnie J. summarized the “essence” of the Ontario legislation thus:

... the CRA creates a property-based authority to seize money and other things shown on a balance of probabilities to be tainted by crime and thereafter to allocate the proceeds to compensating victims of and remedying the societal effects of criminality.  The practical (and intended) effect is also to take the profit out of crime and to deter its present and would-be perpetrators.  [At para. 23.]

[16]         This court has confirmed the objectives of the Act in terms that are similar to those stated in s. 1 of the Civil Remedies Act, 2001 and accepted by the Court in Chatterjee.  In British Columbia (Director of Civil Forfeiture) v. Onn, 2009 BCCA 402, Madam Justice Garson stated:

The purpose of the Act is threefold:

(a)        to take the profit out of unlawful activity;

(b)        to prevent the use of property to unlawfully acquire wealth or cause bodily injury; and

(c)        to compensate victims of crime and fund crime prevention and remediation.

(See British Columbia, Legislative Assembly, Hansard 2 (17 October 2005) at p. 764 (Hon. John Les).  [Para. 14.] 

[17]         The Act does not, however, require the Director to persuade the court that forfeiture will serve all or some of the statutory objectives in any given case.  Subject only to the statutory exceptions, the Legislature has determined that these purposes generally justify and mandate a forfeiture order.  Thus the process by which the court determines whether forfeiture should be ordered is not in my view analogous to a criminal sentencing in which the court considers whether and to what extent the objectives of the statute apply to the circumstances before it.  Nor is the court bound under s. 5 to try to impose the least intrusive order possible.  As already noted, the court must order forfeiture, regardless of the value, purpose, ownership or condition of the property, unless the offender shows that the order would clearly not be in the interests of justice.  As I will emphasize below, this concept is different from and broader than the public objectives of disgorgement, crime prevention and compensation that underlie the Act.

The Trial Judgment

[18]         The trial judge began his reasons by reviewing briefly the broad outlines of the Act relevant to this case.  He referred to some of the British Columbia case law, in particular the decision of Mr. Justice Silverman in British Columbia (Director of Civil Forfeiture) v. Rai 2011 BCSC 186 and the decision of Mr. Justice Davies in British Columbia (Director of Civil Forfeiture) v. Angel Acres Recreation and Festival Property Ltd. 2009 BCSC 322, aff’d 2010 BCCA 539.  From Angel Acres, which concerned the granting of an interim preservation order under s. 18(5), the trial judge drew two inferences as follows:

... the decision [of Davies J.]  ... suggests that where the goal of prevention of future harm can be achieved through less intrusive means than a preservation order, and I would add, complete forfeiture, the court should consider whether some lesser remedy could meet the goal; otherwise the court risks ordering an excessive remedy contrary to the interests of justice.

In addition, the reasoning in Angel Acres suggests that the Director must demonstrate, albeit on a low threshold, that the instrument of unlawful activity may be prospectively used to engage in future crime; otherwise, the interests of justice will not be served in forfeiting the property.

I accept that the principles articulated in Rai are applicable to the case at bar. I also agree that the principles in Angel Acres are applicable, even though the decision concerned an interim preservation order. The need to consider less intrusive remedies where the concern is prevention of future crime and the low threshold of proof that an instrument may be used in future crimes also apply to claims for final forfeiture.  [At paras. 18-20; emphasis added.]

[19]         Applying these principles to the case at bar, the trial judge was not persuaded the Director had demonstrated that Mr. Wolff’s truck would have been used to engage in future criminal activity, nor that it had been purchased with the proceeds of unlawful activity.  He declined to make a finding that Mr. Wolff had been involved in trafficking prior to the predicate offence or that he otherwise used or intended to use the truck to commit similar offences.  (Para. 24.)  He did find, however, that contrary to what Crown counsel had told the Provincial Court judge at sentencing, Mr. Wolff had been “aware of and benefitted, or expected to benefit, from the trafficking activity.  His involvement in the offence of possession for the purpose of trafficking was more than ‘technical’ and the de minimis defence is not open to Mr. Wolff.”  The Court described Mr. Wolff as a “knowing and willing courier” but noted there was no evidence he had been “knowingly engaged in organized criminal activity” as alleged by the Director.  (Para. 29.)

[20]         The Director’s first ground of appeal is that the trial judge erred in fact in finding Mr. Wolff had not been knowingly engaged in organized criminal activity.  In the Director’s submission, the trial judge failed to consider certain “obvious features” of the evidence and reached this conclusion without evidentiary foundation.  The Director relies on Mr. Wolff’s testimony at trial that as soon as he became aware he was transporting marijuana, he “started to panic” and drove around thinking about what to do.  He said he was “worried that if I threw it away somebody might harm me or my animals”.  The Director says it is an obvious “common sense inference” that a drug trafficking operation with connections in Vancouver Island and in the Interior is “organized”.

[21]         With respect, I am not persuaded the trial judge made a palpable and overriding error on this point, although the finding that Mr. Wolff expected to be paid for his role as a “knowing and willing courier” must give rise to suspicion.  One can be a “courier” for, and fearful of, an individual who is not involved in “organized crime”.  In my view, that phrase connotes the term “criminal organization” as defined by s. 467.1 of the Criminal Code.  Proving the existence of such an organization is a complex matter and the evidence in this case fell far short of proving such an organization.  I would not accede to this ground of appeal.

[22]         The trial judge’s analysis of whether the Director was entitled to forfeiture began at para. 30 of his reasons.  Much of the analysis focussed on the relationship between individual wrongdoing and compensation for “diffuse harms” – such as illegal drug trafficking – suffered by society as a whole. The Director adduced expert evidence from Dr. Svetlana Popova to demonstrate the costs to the provincial healthcare and legal systems said to be attributable to marijuana use in 2005, as well as productivity losses.  According to this expert’s “conservative calculations”, these costs totalled some $140.6 million.  The report of a criminologist, Dr. Plecas, was also relied on by the Director.  It asserted that the marijuana production industry in British Columbia is controlled by organized crime and that “the total value of the marijuana industry in the province [is] $1.2 billion.”  (Para. 39.)

[23]         From this, the Director argued that the intention of the Act was to “make compensation for diffuse but real harms more practical” and that as long as the total amount sought to be forfeited (in this case $52,000) was less than the “total social cost” of marijuana use in the Province, the forfeiture of Mr. Wolff’s truck would be compensatory rather than punitive.  (Para. 41.)  On this point, the Director cited the well-known tort case of Cook v. Lewis [1951] S.C.R. 830.

[24]         The Director also argued ‒ presumably in the alternative ‒ that the value of any instrument used in unlawful activity provides “at least a prima facie measure of compensatory value”, relying on another well-known case, Dunlop Pneumatic Tyre Company v. New Garage and Motor Company [1915] A.C. 79 (H.L.).  Dunlop involved a liquidated damages clause in a price-maintenance contract where an accurate pre-estimate of the damages that would flow from a breach was impossible.  The House of Lords found that the clause was not penal and was therefore enforceable.  Lord Dunedin, citing Webster v. Bosanquet [1912] A.C. 394 (J.C.P.C.), stated that if the sum stipulated for in the contract under consideration is “extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach”, it will be held to be a penalty.  (At 87.)  Building on Dunlop Tyre, the Director submitted in the case at bar that like a liquidated damages clause, a “compensatory forfeiture” must be based on a “reasonable estimate of the actual harm caused or contributed to” by the wrong in question.  (Para. 42.)

[25]         Perhaps not surprisingly, the judge rejected the notion that Mr. Wolff should be held liable for any amount up to the total social cost of the marijuana industry in British Columbia.  Proportionality and fairness required that he be held liable for the harm emanating from his individual actions but not, the Court said, for the “actions of others ...”.  (Para. 45.)  In the trial judge’s words:

I cannot accept the estimates of the societal costs of marijuana as an accurate depiction of individual liability for the harm the marijuana industry has caused society. While these studies may be useful to assist government in developing policy, they are of little assistance to the court in attributing liability to individuals for the harm their actions have caused.

and:

This submission fails because the evidence demonstrated, as common sense suggests, that not all of those involved in the marijuana industry are detected. It would not be in the interests of justice to hold Mr. Wolff responsible, not only for other people involved in the marijuana industry but those who are undetected as well.

Additionally, Mr. Wolff cannot be as liable, or possibly more liable, than an individual who is caught with a significantly larger amount of marijuana, but either does not own a vehicle, or owns a vehicle of significantly less value. To make such a finding would be capricious and unfair.   [At paras. 46, 50-1.]

[26]         It will be recalled that Mr. Wolff had no previous criminal record and was not shown to have acquired his truck with illegal profits or for unlawful purposes.  In these circumstances, the trial judge said, “it would be ... punitive to require full forfeiture.”  (Para. 34.)  He disagreed with the Director’s argument, based on Chatterjee, that a valid purpose “to compensate private individuals and public institutions for the costs of past crime” could extend to “instruments of crime derived from and primarily used for a lawful purpose.”  In his words:

This contention, if accepted, would impose liability on Mr. Wolff for the past conduct of other people engaged in unlawful activity. In my opinion, that would be grossly disproportionate and unfair in the present circumstances.

It would also be contrary to common law principles of individual responsibility. Situations where collective guilt and collective responsibility are imposed, such as joint and several liabilities in tort actions or class action lawsuits, apply to a discrete and measurable population and do not apply to compensate society as a whole.

I do not accept that Chatterjee mandates or supports such a result. In any event, the evidence relied on by the Director to support the compensatory claim illustrates how disproportionate and unfair such a result would be. Instead, for a finding of forfeiture based on compensatory principles, there must be evidence to demonstrate that the use of the Truck caused harm or damage that is sufficiently measureable to require compensation.  [At paras. 35-7; emphasis added.]

[27]         The Court also rejected the Director’s argument that the goal of prevention supported forfeiture in this case because there was a “substantial risk” the truck would be used for further illegal activities.  The offence had taken place nearly four years earlier and there was no evidence Mr. Wolff had engaged in any further unlawful activity.  Even if the truck were forfeited, he could easily borrow or rent another vehicle if he chose to engage in similar activities in the future.  (Para. 57.)  The judge also touched on the issue of timeliness, stating:

Furthermore, I do not agree that prevention should be elevated above the dominant considerations of proportionality and fairness. If the Director’s true motive was to prevent prospective unlawful activity, then the Director would have moved in a timelier manner to initiate the proceedings. Instead, the Director waited until December 2007, after Mr. Wolff had been convicted, sentenced, and had legitimately bought out the lease on the Truck, before commencing these proceedings. While I recognize that the CFA does not impose a limitation period in which to commence an action, I do not agree that it is in the interests of justice for the Director to wait an inordinate amount of time and then rest his case on the goal of prevention.  [At para. 58; emphasis added.]

(As noted earlier, s. 35 of the Act establishes a ten-year limitation.)

[28]         Taking into account the interests of proportionality and fairness, as well as Mr. Wolff’s degree of culpability as demonstrated by the evidence, the judge concluded that the forfeiture of the whole of the truck was clearly not in the interests of justice and would “effectively constitute a punitive fine”.  (Para. 61.)  After recounting the financial details of Mr. Wolff’s acquisition of the truck, he also rejected the Director’s contention that the offender had “intentionally leased his vehicle to avoid liability in order to traffic marijuana”.  The Court then reiterated its concern that the Director had “waited” until after Mr. Wolff had acquired title to the truck, before commencing the forfeiture proceeding.  Again in the judge’s words:

I do not agree that it would serve the interests of justice to compel forfeiture of instruments that were not owned at the time the offence was committed. Furthermore, as already stated, I am gravely concerned that the Director waited until after Mr. Wolff acquired title to the Truck before commencing this proceeding. To, in effect, now impose a fine (in a necessarily arbitrary amount given the lack of evidence) as a condition of returning the Truck to Mr. Wolff is, given the overall circumstances, including the delay, clearly not in the interests of justice.

Further, while this proceeding is in rem, it must be recognized that but for the actions of Mr. Wolff, the Truck would not have been used in the commission of unlawful activity. Therefore, it is Mr. Wolff, not the Truck, that the Director seeks to prevent and Mr. Wolff upon whom the Director seeks to impose liability for compensation. In this regard, I cannot find that the interests of justice would be served to compel the forfeiture of the lawfully acquired funds that Mr. Wolff used to buy out his Truck after he was convicted and a sentence was imposed.  [At paras. 67-8; emphasis added.]

[29]         In the result, he declined to order forfeiture of the truck in whole or in part and dismissed the Director’s claim.  (The Court’s later order regarding costs is the subject of a separate appeal.)

On Appeal

[30]         I have already dealt with the Director’s first ground of appeal at paras. 20 and 21 above.  The remaining grounds are stated in the Director’s factum as follows:

·                  It was a palpable and overriding error to find the Director “waited” until after Mr. Wolff acquired title to the Truck before commencing the action to the extent this implies a conscious delay and to find Mr. Wolff acquired full title to the truck after he was sentenced.

·                  The trial judge erred in law in giving weight to pre-action delay when that delay was not in excess of the limitation period and there was no evidence of the reasons for the delay.

·                  The trial judge erred in law in holding that forfeiture of an instrument cannot be justified on the basis of compensation if the instrument is primarily used for lawful purposes.

·                  The trial judge erred in law in holding that it would be unfair to hold the Truck and Mr. Wolff accountable for the costs caused by marijuana trafficking as a whole.

·                  The trial judge erred in law in considering as a factor the fact that those who are undetected or use less valuable property do not also compensate for the harm they cause.

·                  The trial judge erred in law in placing the onus on the Director in the interests of justice analysis to show the Truck would be used for illegal purposes in the future.

·                  The trial judge erred in law in considering the possibility that Mr. Wolff would use different property for illegal purposes.

Timing

[31]         The first two grounds listed above, relating to the timing of the Director’s claim, may be considered together, although the first asserts an error of fact and the second an error of law.  I agree with the Director’s submission that in using the word “waited”, the trial judge seemed to suggest that the Director had deliberately delayed bringing his claim until Mr. Wolff had bought out the lease on his truck and thus substantially increased his equity in it.  There is no evidence to indicate the Director knew ahead of time or suspected Mr. Wolff would buy out the lease, or even that the Director was aware of how much equity Mr. Wolff had in the truck until discoveries had been completed in this proceeding.  Thus while I accept that inordinate delay on the Director’s part might be relevant to the “interests of justice”, I agree that the trial judge did err in inferring that the Director had deliberately delayed until the lease was bought out.  Indeed, it seems more likely that the Director waited until the criminal charge against Mr. Wolff had been disposed of.  In any event, the delay in this case should not in my view have been determinative of the question of relief from forfeiture.

[32]         I also disagree with the trial judge’s statement, if it was intended as a general rule, that it would not serve the interests of justice “to compel forfeiture of instruments that were not owned at the time the offence was committed.”  The Act does not require that an instrument of unlawful activity have been owned by the offender at the time of the offence.  It focuses on the property itself (operating in rem) and its use by anyone for unlawful ends.  Where an “uninvolved interest holder” owns the whole or a portion of an interest in property that is an instrument of unlawful activity, a protective order may be made under s. 13, but failing such an order, the asset remains subject to forfeiture, whenever it was acquired.

Compensation

[33]         The third remaining ground of appeal relates to compensation, one of the three objectives of the Act noted by this court in Onn, supra.  As noted above, the Act requires the court, subject only to the statutory exceptions, to grant an order forfeiting “property that the court finds is an instrument of unlawful activity” or “the whole of the portion of an interest in property that the court finds is proceeds of unlawful activity.”  The term “instrument of unlawful activity” is defined to mean “... property that has been used to engage in unlawful activity ...” and that meets the other stated criteria.  There is no requirement that its primary use has been unlawful, or, is likely to be in future.  I disagree, then, with the trial judge’s reasoning that Mr. Wolff’s truck should not be forfeited because a valid compensatory purpose cannot extend to property that was or is used primarily for lawful purposes.  (See paras. 34-5 of his reasons, referred to above at para. 26.)  To the extent this was intended as a statement of general application, it was in my respectful view erroneous.

[34]         By the same token, the Director’s contention that it would be appropriate to hold Mr. Wolff responsible (by means of forfeiture of the truck belonging to him) for any amount up to $140.6 million – the assumed cost to the Province of the illegal drug trade – runs contrary to the general scheme of the Act.  It does not depend, nor could it, on drawing a direct connection between the property sought to be forfeited, and the “diffuse harms” of criminal offences such as illegal drug trafficking. Mr. Morley argued on the appeal that the Act is designed to overcome this difficulty, but it does not do so by supplying such a connection.  Rather, it provides a ‘broad brush’ scheme of forfeiture in rem, while at the same time allowing the individual circumstances of each case to be considered under the rubric of the “interests of justice”.

The Interests of Justice

[35]         The fourth and fifth remaining grounds of appeal bring us squarely to the “interests of justice”.  It is perhaps unnecessary to observe that the phrase confers a very broad discretion on the court, although the discretion must of course be exercised judiciously.  This discretion may be contrasted with the narrower discretion given to the court by the CDSA, which provides for the (criminal) forfeiture of “offence-related property”.  Where that property is real property, s. 19.1(3) specifies that relief against forfeiture may be granted where the impact of such an order “would be disproportionate to the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the criminal record, if any, of the persons charged with or convicted of the offence”.  (See generally R. v. Craig 2009 SCC 23.)

[36]         Relief from forfeiture in the civil context has been available in Equity since the 15th century (see John McGhee, Snell’s Equity (31st ed., 2005) at §11-05 and is now codified in the Law and Equity Act, R.S.B.C. 1996, c. 253.  Section 24 thereof provides:

The court may relieve against all penalties and forfeitures, and in granting the relief may impose any terms as to costs, expenses, damages, compensations and all other matters that the court thinks fit.

In Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co. [1994] 2 S.C.R. 490, it was said that the factors to be considered where the equitable remedy is sought are the applicant’s conduct, the gravity of his or her breach of contract, and the disparity between the value of the property to be forfeited and the damage caused by the breach.  (At 504.)

[37]         In Ontario (Attorney General) v. 8477 Darlington Crescent 2011 ONCA 363, 333 D.L.R. (4th) 326, the Ontario Court of Appeal compared the equitable remedy of relief from forfeiture with the relief provided for by s. 3(1) of the Civil Remedies Act, 2001.  Doherty J.A., writing for the Court, observed that Ontario’s counterpart to s. 6(1) “does not contemplate that the question of forfeiture will be decided on a mere balancing of the pros and cons of making a forfeiture order ...  The party seeking relief must demonstrate that ... the forfeiture order would be a manifestly harsh and inequitable result.”  (Para. 85.)  He noted that the discretion in both statute and Equity is “framed in broad terms that invite a case-by-case consideration of specific circumstances” and that relief “is very much the exception and will be granted only where the party seeking that remedy clearly makes the case that forfeiture would be an inequitable and unjust order in all of the circumstances.”  (Para. 93.)  He continued:

While I regard the “interests of justice” exception in s. 3(1) as a relief from forfeiture provision that has much in common with the more generic form of that remedy, I acknowledge that s. 3(1) does not operate in exactly the same way as does relief from forfeiture in the realm of private law. Relief from forfeiture in the contractual context pits competing private rights against each other. Those rights are generally quantifiable in economic terms. A forfeiture claim under the CRA engages important public concerns. The interests of justice in s. 3(1) encompass both public and private interests.

I agree with counsel for the AG that forfeiture orders under the CRA are intended to further the purposes of the Act as set out in s. 1. It follows that in deciding whether to grant relief from forfeiture under s. 3(1), the court must consider the effect of granting relief on the achievement of those purposes. The power to relieve from forfeiture cannot be allowed to subvert the purposes of the CRA.

I do not, however, agree that the “interests of justice” in s. 3(1) are limited to the purposes of the CRA identified in s. 1. Those purposes are part of, but cannot be equated with, the “interests of justice”. That phrase is a broad one and includes maintaining public confidence in the civil justice process. That confidence is promoted by orders that are, broadly speaking, in accord with the community's sense of fairness. A forfeiture order made in circumstances where any reasonable person would regard the order as excessive, while perhaps serving the purposes of the CRA in the narrow sense, would do a real disservice to the administration of justice and thereby undermine rather than promote the “interests of justice”.

A court asked to grant relief from forfeiture under s. 3 must consider all factors that are relevant to the “interests of justice”. It is not possible to catalogue all of the factors that could properly be taken into account in evaluating the interests of justice in any given case. Those factors certainly include the closeness of the connection between the property and the illegal activity: see, for example, Ontario (Attorney General) v. 170 Glenville Road, King (In Rem), [2010] O.J. No. 2865 at para. 72 (S.C.).  [At paras. 94-7; emphasis added.]

[38]         I respectfully agree with these observations.  Thus it seems to me that the approach of the trial judge in attempting to decide the question of relief from forfeiture primarily with reference to the purposes of the Act – in particular, compensation – was misguided.  As mentioned earlier, the question for the court under s. 6 is not whether the Director is able to demonstrate that forfeiture would serve any or all of the statutory purposes.  Rather, it is whether the offender is able to show that forfeiture would in all the circumstances be “clearly not in the interests of justice”, or would be manifestly harsh and inequitable.

[39]         Obviously, the purposes of the legislation will be relevant to the interests of justice.  As the Court stated in Saskatchewan (Seizure of Criminal Property Act, 2009, Director) v. Mihalyko, 2012 SKCA 44 at para. 34, the “interplay between the purposes of the legislation and the exercise of the interests of justice discretion” must be considered.  But so must several other factors.  In Rai, the Court provided a “non-exhaustive list”:

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.  [At para. 111.]

To this list one might add the offender’s personal or family circumstances and the effect of forfeiture on them, the relationship between the property sought to be forfeited and the unlawful conduct in question, and the reputation of the administration of justice.

[40]         Rai rightly suggests that the principles of proportionality and fairness will be the “dominant considerations” in most cases.  As Silverman J. observed, these principles often involve:

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.  [At para. 113.]

[41]         All of these factors may be considered by the court in the exercise of its discretion.  There are no absolute or “blanket” rules in this context.  I therefore agree with the Director that the trial judge may have fallen into error in stating at para. 37 that “there must be evidence to demonstrate that the use of the Truck caused harm or damage that is sufficiently measureable to require compensation”; and at para. 51 that it would be capricious to hold Mr. Wolff “as liable”, or possibly “more liable” than a person without a vehicle or whose vehicle is less valuable.

[42]         On the other hand, it must be said the Director in this case was also asserting some “blanket” propositions that were simply unreasonable.  Here I have in mind the submission that unless the total value of Mr. Wolff’s truck exceeded the total social costs of the marijuana industry in British Columbia, forfeiture would not offend the interests of justice (see para. 41); and the argument Mr. Wolff should be “treated as though he were jointly and severally liable” for all such costs (see para. 48).  The trial judge rightly held that these propositions lay outside the bounds of proportionality and fairness.  Indeed, any attempt to draw a causal connection between an individual offender’s unlawful activity and the “diffuse harms” to society of drug trafficking seems to me bound to fail.

[43]         The fifth listed ground of appeal relates to the Court’s statement that:

One of the Director’s specific submissions is that only $960,983.00 was collected in forfeiture and fines for federally prosecuted offences in 2005 and, as a result, the province would not be overcompensated by full forfeiture of the Truck.

This submission fails because the evidence demonstrated, as common sense suggests, that not all of those involved in the marijuana industry are detected. It would not be in the interests of justice to hold Mr. Wolff responsible, not only for other people involved in the marijuana industry but those who are undetected as well.

Additionally, Mr. Wolff cannot be as liable, or possibly more liable, than an individual who is caught with a significantly larger amount of marijuana, but either does not own a vehicle, or owns a vehicle of significantly less value. To make such a finding would be capricious and unfair.  [At paras. 49-51.]

In my respectful view, the Director’s submission as described by the trial judge failed on the principle of proportionality, not because it would hold Mr. Wolff responsible for undetected marijuana traffickers or those who do not own vehicles.  I would not accede to this ground of appeal.

Crime Prevention

[44]         The final two grounds of appeal may be conveniently considered together.  They are that:

The trial judge erred in law in placing the onus on the Director in the interests of justice analysis to show the Truck would be used for illegal purposes in the future.

The trial judge erred in law in considering the possibility that Mr. Wolff would use different property for illegal purposes.

[45]         Both of these grounds relate to the objective of crime prevention.  In this regard, the trial judge’s reasoning was as follows:

The Director further submits that the preventative interest supports forfeiture where there is a substantial risk that the property will be used for further illegal activities, or where there is no lesser order that will effectively prevent further use for illegal activities.

The Director contends that the risk of re-occurrence, as opposed to the severity of the wrong, should drive the court’s analysis at this stage. For this proposition, he relies upon the equitable law of permanent injunctions which are invoked for a preventative purpose: British Columbia (Attorney General) v. Couillard (1984), 11 D.L.R. (4th) 567 (B.C.S.C.); Attorney General v. Harris, [1961] 1 Q.B. 74 (C.A.).

The Director says that Mr. Wolff never really took responsibility for knowingly transporting and that while his statement to the RCMP that he did not regard it as a big deal has the ring of truth, his subsequent refusal to acknowledge harm does not. For this reason, the Director argues that nothing short of forfeiture of the Truck will ensure that it is not used again for trafficking.

I do not agree that forfeiture would be preventative in this case. The trafficking occurred nearly four years ago. There is no evidence that Mr. Wolff has engaged in any further unlawful activity. Even if I order the Truck forfeited, there is nothing stopping Mr. Wolff from borrowing or renting a vehicle should he choose to engage in similar activities in the future.

Furthermore, I do not agree that prevention should be elevated above the dominant considerations of proportionality and fairness. If the Director’s true motive was to prevent prospective unlawful activity, then the Director would have moved in a timelier manner to initiate the proceedings ...  [At paras. 54-8; emphasis added.]

[46]         The trial judge did not make any reference to the onus of proof in this passage, but had stated at para. 19 of his reasons (see para.18 above) that it was for the Director to show the instrument of unlawful activity could be used in future to engage in crime – failing which, he said, the interests of justice would not be served by forfeiture.  With respect, the Act does not require that this be shown before the property in question qualifies as an instrument of unlawful activity.  Here, however, the fact Mr. Wolff was free to acquire or use another vehicle in future was effectively the subject of judicial notice and could hardly be disproven.  This possibility exists in almost every case.  Given that prevention is one of the objectives of the Act, it was perhaps a relevant factor, but one of minor significance.

[47]         I would not accede to these grounds of appeal.

Disposition

[48]         Earlier in these reasons, I suggested that the Director’s appeal seemed to be aimed as much at the trial judge’s reasons as at his order dismissing the Director’s claim.  Having identified some errors in the reasons, we could remit the matter back to the trial court to determine in accordance with the statutory regime as explained herein.  However, this court is in a position to determine the matter and in my view it would not be in accord with the interests of justice to subject either party to the time and expense of another trial, seven years after the offence.

[49]           Turning then to the interests of justice in this case, I note that Mr. Wolff was a first-time offender.  He was in the main a productive and law-abiding member of society.  The consequences of the criminal conviction were very serious for his career and indeed resulted in his having to leave his job as a fire captain.  Although he may have expected to be paid for transporting the marijuana, there is no evidence he was so paid; and his equity in the truck was much larger than the value of the marijuana he was carrying.  There was no evidence the truck had been used for drug trafficking previously, or that it has since been used for that purpose.  In light of the serious consequences Mr. Wolff had already suffered, the trial judge did not expect that he would re-offend.  In all the circumstances, I cannot say the court below was wrong in concluding that it would be manifestly contrary to the interests of justice to order the forfeiture of all or part of the value of the truck.

[50]         I would dismiss the appeal.

“The Honourable Madam Justice Newbury”

I AGREE:

“The Honourable Mr. Justice Hall”

I AGREE:

“The Honourable Madam Justice D. Smith”