Brief Summary
In Nguyen, three respondents and several others were accused of various offences relating to an alleged conspiracy to produce cannabis. While the Respondents obtained a stay of proceedings based on Crown delay, others in the conspiracy plead guilty and were sentenced.
The Crown sought forfeiture of cash and real property seized during the investigation on the basis that, while the respondents had not been convicted of a crime, the property was nonetheless “tainted by crime”.
The Supreme Court of Canada found that:
- the stay of proceedings is not, for the purposes of the forfeiture matter, tantamount to an acquittal and has no decisive effect on forfeiture proceedings;
- section 490(9) of the Criminal Code remains available for disposition of property even where charges were laid and proceedings have concluded;
- in such forfeiture applications, the Crown bears the burden of showing beyond a reasonable doubt that the respondents’ possession of the property (1) is not lawful and (2) there is no known lawful possessor to whom the property can be returned.
Background
In June 2013, Montreal police obtained search warrants for evidence of drug production, money laundering, and possession of property obtained by crime. Police seized over 1000 cannabis plants and over $50,000 cash. Restraint orders were put in place for the residences where the cannabis plants were seized.
In April 2014, police obtained warrants to search properties in Vancouver and Burnaby in connection to the “family cannabis production”. Restraint orders were put on $170,000 in bank balances, $30,000 cash, as well as the properties.
In November 2016, one of the co-accused plead guilty to one count of producing cannabis and was sentenced to 12 months’ imprisonment. The sentencing court ordered forfeiture of his property under section 16(2) of the Controlled Drugs and Substances Act (the “CDSA”).
In December 2017, the Court of Quebec stayed the proceedings against the remaining co-accused, including the Respondents, due to unreasonable delay.
After the stay, the respondents applied for the return of property[1]. The Crown responded with its own applications[2] to forfeit the property. Ultimately, the issue of whether the provincial court had jurisdiction to hear the application for forfeiture in light of the stay of proceedings went up through all levels of court in Quebec. The Court of Appeal held that the stay foreclosed any possibility of liability for forfeiture.
At the Supreme Court of Canada, the Crown sought recognition that the Court of Quebec has jurisdiction to decide upon the forfeiture application and sought that the matter be remitted for hearing on that issue.
Criminal Forfeiture
The purpose of criminal forfeiture is to “avoid returning criminally tainted property to unclean hands, as this would offend the public interest, place the administration of justice into disrepute and undermine the goal of ensuring that crime does not pay”. At the same time, criminal forfeiture considers fairness to the individual, including the property and privacy interests of innocent third parties. Property can be “tainted by criminality”, or “corrupted” through its criminal connections in various ways, like illegal acquisition.
The Court, in a unanimous decision, found that there was no jurisdiction under the forfeiture provisions that required a temporal link between the trial or sentencing provisions and forfeiture, but that a residual basis for forfeiture was available under section 490(9) of the Criminal Code.
“Residual” Forfeiture Applications Available under Section 490(9)
Section 490 is a “complete code” for the retention and disposition of seized property. Section 490(9) forfeiture applies only to property that is seized for the purposes of section 490 and where there is no lawful owner of the property.
The Court noted that while there may be other mechanisms where property could be returned or forfeited such as a Charter application, civil forfeiture, or a common law property claim, there will be property that is not subject to any of those regimes. Notably, the Court confirmed that section 490 remains available for disposition of property even where charges were instituted and have concluded. This includes property subject to restraint orders, and property seized under the Criminal Code or CDSA warrants.
The Court clarified a three-part test (at para 153) for an application for forfeiture under section 490(9), where the Crown must satisfy the Court that:
- the periods of detention have expired and proceedings have not been instituted or the periods of detention have not expired but continued detention is not required;
- possession of the property by the person from whom it was seized or restrained is unlawful, or that it was not in the possession of any person; and
- no other known person lawfully owns or is entitled to possession of the property.
The Court also provided the following guidance for criminal forfeiture applications under section 490(9):
- many cases will turn on whether the Crown can prove that a person’s possession of the property is unlawful, beyond a reasonable doubt (para 154);
- the Crown may call evidence such as a prior conviction, or adduce evidence to prove unlawful possession like a criminal trial (para 155); and
- the evidentiary record for forfeiture proceedings is district from any related criminal liability proceedings; evidence excluded from the criminal trial may not necessarily be excluded from the forfeiture proceeding (para 156).
What Comes Next?
Since its introduction, section 490 has continued to find increased significance in Canadian law, not only in respect of further detention but also disposition of property. In R v. Nguyen, the Supreme Court of Canada affirmed that even where a stay of proceedings is entered for an accused, forfeiture of alleged offence-related property is available under section 490. The burden for Crown on such an application is necessarily high, and the prospect of a “trial” after a trial is weighty.
Section 490(9) also remains an important mechanism for disposing of items seized that are of intrinsically lower value than what was at issue in Nguyen. How this decision may impact the disposal of such items, including uncontested applications, or whether there will be an increased wave of property-focused forfeiture litigation under section 490(9) after criminal proceedings have concluded in light of Nguyen, is yet to be seen.
[1] under s.490(7) and 490(9) of the Criminal Code (the “Code”).
[2] under ss. 462.37, 462.43 and 490(4) [Code]., s. 16 [CDSA], as well as ss. 7, 11(b), 11(d) and 24 of the Charter.
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