Alberta (Justice and Solicitor General) v Davison, 2013 ABQB 553

Court of Queen ’ s Bench of Alberta Citation: Alberta (Justice and Solicitor General) v Davison, 2013 ABQB 553 Date: 20130923 Docket: 1303 00937 Registry: Edmonton Between: Minister of Justice and Solicitor General for Alberta Applicants - and - Skip William Davison, Marilyn Ferb Davison Hritzuk, and the Attorney General of Canada Respondents _ ________________________________________ ______________ Reasons for Judgment of the Honourable Madam Justice D.C.

Read _________________________________________ ______________ [ 1 ] The Minister of Justice and Solicitor General (“Minister”) seeks an order of forfeiture for a 2008 Ford F350 truck and a 2007 Felling FT-14dt trailer, both of which were the subject of an ex parte Restraint Order granted in this action on January 21, 2013, pursuant to the Victims Restitution and Compensation Payment Act , S.A. 2001, c. V-3.5. The registered owner of the truck is Skip William Davison, the accused in criminal proceedings. The registered owner of the trailer is Mr. Davison’s mother Marilyn Fern Davison

Hritzuk. Factual Background: [ 2 ] Ms. Hritzuk opposed the application, alleging that she is the legal and beneficial owner of the trailer and the beneficial owner of the truck. Skip Davison did not appear and took no position on the application. [ 3 ] The affidavit filed in support of this application is that of a police officer who after reviewing the notes and reports of another officer swore that Skip Davison had been observed driving the truck with the trailer attached and using them to transport stolen property. Mr.

Davison was subsequently arrested and charged with possession of stolen property of a value of greater than $5000.00. The stolen property was recovered from a farm owned and occupied by Ms. Hritzuk and her husband and on which Mr. Davison also often lived. [ 4 ] Ms. Hritzuk’s affidavit asserted an ownership interest in both the truck and the trailer. She was examined on this affidavit. [ 5 ] The substance of her evidence with respect to the trailer was as follows. She purchased the trailer on July 6, 2009 for a purchase price of $8775.68 and registered it in her name.

A copy of the bill of sale and the registration were attached to her affidavit. She kept the trailer on the farm property. While she has used it herself a few times, the main reason she bought it was so that her son Mr. Davison could use it for his business of selling and hauling firewood. He used it frequently. There is a locking hitch for the trailer which was installed on the F350 truck. [ 6 ] The substance of her evidence in respect to the truck was as follows.

She purchased the truck in July 2011 to replace a previous truck she had purchased which had mechanical problems and was traded in as part purchase price on the F350 truck. Both trucks were purchased with Ms. Hritzuk’s funds but both the bill of sale and the registration show her son Mr. Davison as the owner. She said that this was done because Mr. Davison’s driving record was such that she did not want the responsibility of insuring it in her own name and because she wished to aid him in his firewood business. The truck was also stored when not in use at her farm property.

She provided copies of various bank documents to substantiate that she paid the purchase prices of both the trade in truck and the F350 truck. [ 7 ] Her evidence was that she permitted Mr. Davison to live in a trailer on the farm property after his last release from prison and did not charge him rent. He lived there most of the time but sometimes stayed with a girlfriend. Ms. Hritzuk also supplied Mr. Davison with funds for food and clothing and other living expenses.

Her testimony was that she provided this aid to her son, including permitting him to use the truck and the trailer so that he could engage in lawful employment, grow his firewood business and, she hoped, remain out of jail. She knew that the firewood business was not making much money and so continued to aid her son but did expect that he would repay her for the cost of the truck at some unspecified time in the future when he had the funds. [ 8 ] She swore that she had no idea that Mr. Davison was using the truck and trailer for illegal activity. She did not dispute that the truck and trailer had been used by Mr.

Davison for illegal activity, but said she and her husband were away for approximately a month in Australia during the time period observed in the surveillance of the farm and of the truck and trailer. Issues: [ 9 ] There are three issues; a. Does Ms. Hritzuk have an equitable interest in the Felling trailer? b. Does she have an equitable interest in the F350 truck? c. If the answer to either of the above questions is yes, did she know or should she reasonably have known that Mr. Davison was using or was likely to use either the trailer or the truck as instruments of illegal activity?

Legislation: [ 10 ] The Act permits the Minister to apply to restrain and subsequently dispose of property acquired by illegal means or property found to be “an instrument of illegal activity”. A property disposal hearing in respect to property alleged to be an instrument of illegal activity is governed by sections 19.93 to 19.98 of the Act.

At the hearing the Court must first determine whether the property is an “instrument of illegal activity” as that term is used in the Act and, if so, then what interests respondents may have in the property. [ 11 ] The relevant portions of the Act are reproduced below: 19.93(1) At a property disposal hearing (

a) the onus is on the Minister to establish that the restrained property is an instrument of illegal activity; (

b) the onus is on a respondent,.. [irrelevant portion deleted] to establish, with respect to the restrained property, (

i) the origin and the nature and extent of that respondent’s interest in the property, (ii) that the respondent

(

A) has not been or would not have been involved in or associated with carrying out an illegal act using, or associated with, the restrained property, and (

B) did not know and would not reasonably be expected to know that the restrained property was or was likely to be used in carrying out an illegal act.. … 19.94 If at the conclusion of a property disposal hearing the Court determines, based on a balance of probabilities, that the restrained property (

a) was not used and is not likely to be used to carry out an illegal act, the Court (

i) is to revoke the restraint order and direct that the restrained property be returned to the person against whom the restraint order was made or to any other person that the Court considers appropriate or as otherwise directed by the Court, and (ii) may provide compensation for actual loss, if any, resulting directly from the restraint of the property, or (

b) was used or is likely to be used in carrying out an illegal act, the Court may grant a property disposal order… Discussion and Decision: [ 12 ] The Respondent concedes that both the trailer and the truck are instruments of illegal activity as this term is used in the Act. [ 13 ]

Section 19.93(1)(

b) puts the onus on Ms. Hritzuk on a balance of probabilities, to establish the nature and the extent of her interest in the restrained property. [ 14 ] I will deal firstly with the trailer. Ms. Hritzuk’s uncontradicted evidence was that she purchased the trailer using her own funds and registered it in her name. It was located on her property and was used from time to time by her. Both the bill of sale she provided and the registration of the trailer provide clear evidence of her legal ownership of the trailer. [ 15 ] The Minister asserts she has not met the s. 19.93(1)(

b) onus because, on the evidence, the trailer was purchased for Skip Davison’s use and he had dominion and control over it. No authority is provided for this proposition. [ 16 ] I disagree. Ms. Hritzuk has provided ample evidence that she purchased the trailer with her own funds and registered it in her name. She kept it stored on her farm property and used it from time to time herself. While she allowed her son to use it almost exclusively, this does not contradict the indicia of ownership she has provided.

If it was otherwise, anyone who loaned an object to another for any extended period of time, could risk losing the beneficial interest in it to the user. I conclude that Ms. Hritzuk has met the onus of showing on a balance of probabilities that she is the legal and beneficial owner of the trailer. [ 17 ] Nor should she have known that the trailer would be used as an instrument of illegal activity. [ 18 ]

Section 19.8 of the Act creates a negative reverse onus which has been commented upon by this Court in various decisions, including R. v. Chau , 2010 ABQB 758 , aff’d 2011 ABCA 376 . In that case, Justice Macleod concluded that a reasonable assertion of an absence of knowledge made under oath is sufficient, absent convincing evidence to the contrary, to meet the onus. (see paras 35-36). [ 19 ] Ms. Hritzuk denies under oath that she had any knowledge of her son’s illegal activities using the trailer. She testified that she thought he was using the trailer to haul firewood, the purpose for which she let him use it.

Undoubtedly, she knew of her son’s considerable criminal record as is pointed out on behalf of the Minister. Indeed, she admits this in the questioning on her affidavit. Evidence of knowledge of such past behaviour is not sufficient however, to fix Ms. Hritzuk with knowledge that Mr. Davison was again engaging in criminal activity. Indeed, her evidence was that by allowing him the use of the trailer and the truck, she hoped to aid him to put his past criminal activity behind him.

While such a hope may be misplaced and coloured by her affection for her son, no evidence was tendered of anything that should have caused her to be suspicious. Ms. Hritzuk and her husband were both away from the farm property on an extended holiday in Australia when the surveillance was undertaken of Mr. Davison’s activities. There is evidence that some of the recovered stolen property was found on the land owned by Ms. Hritzuk and further that some of the property was reported stolen well before Ms. Hritzuk left on her holiday.

However, as the Minister fairly admits, there is no evidence that the stolen property was located on Ms. Hritzuk’s property when she was actually in residence. Ms. Hritzuk has met her onus of showing she did not know and should not have known the trailer was used as an instrument of illegal activity. [ 20 ] The restraint order on the trailer is revoked and it is to be returned to Ms. Hritzuk. [ 21 ] Ms. Hritzuk also claims a beneficial and equitable interest in the F350 truck. [ 22 ] The evidence she provided amply supports that her funds were used to purchase this truck.

The F350 truck was partially paid for by trade in of the previous truck, also purchased by Ms. Hritzuk. The supporting document she provided also supports her evidence that she paid for this traded in vehicle as well. Further she provided documentary evidence to support her contention that she paid the difference in purchase price for the F350 truck. A portion was paid in cash. Some was paid for by a cheque written on Ms. Hritzuk’s

account and the remainder by a bank draft. She testified she issued a bank draft to Mr. Davison who deposited it into his account and then obtained a bank draft he used to pay for the truck. The Minister does not dispute that only Ms. Hritzuk’s funds were used to pay for the truck. [ 23 ] However, unlike the trailer, the truck is registered in Mr. Davison’s name and Mr Davison’s name and signature appear on the bill of sale. Ms. Hritzuk also permitted Mr. Davision to insure it. Further he had the only set of keys for the vehicle and was the exclusive user. Ms. Hritzuk’s evidence was that she did not drive it.

There is no doubt, however, that she was an active participant in this purchase. For example, Ms. Hritzuk’s signature appears as a witness to her son’s signature on the bill of sale. [ 24 ] She explains her reasons for having her son named as purchaser and registered owner of the vehicle in examination on her affidavit: Q Okay. Now the Ford truck, though, is registered in Skip’s name. Is that correct? A Yes. Q Was it ever registered in your name? A No. Q Why not? A It’s plain and simple. He does not have a good driving record.

He’s had accidents, he’s had tickets, and I don’t want the repercussions of that on my insurance. [ 25 ] At page 22 of the transcript she offers an explanation why she purchased the truck for her son’s use and insured it: Q Why did you purchase the truck for Skip? A With his firewood business, I had bought the trailer so that he could haul wood. And he had an old Chevy ¾ ton that I also purchased, and it wasn’t big enough to haul a trailer. The trailer, when it’s full of wood, was too heavy. Q Okay. A So I had to, basically, purchase something better.

I would do, basically, whatever I could to keep him employed in a decent job so that he could make an income to support himself. So I bought these things, hoping that he could get ahead and stay ahead. Q He had been operating this wood cutting business for some time? A Yes. Q Was he not making money? A Some, but it’s not huge money. Q Why didn’t he buy a truck for himself? A He has a record. You can’t get loans, you don’t get full-time work. So unless you create your own, he couldn’t – there’s not a bank in the country that would give him a dime. So mom helps. Q And you also paid for insurance on this truck?

A Yes. Q Why did you pay for the insurance? A As I stated before, he has a bad driving record. And his insurance is very high, and he didn’t have the money to pay it. Q But the insurance was in his name? A Yes. [ 26 ] She gives evidence, as well that this was not a simple gift and she expected to be repaid: Q Did you expect him to pay you back for the insurance costs? A Hopefully. Q When was he to do that? A When he got ahead.

Q At what point would he have gotten ahead? What were you waiting for? A For him to get ahead. For – just to do better, sell more. Q Did he ever pay you what he could? A No, because there’s no extra. He made enough money to keep fuel in the truck, you know, pay for chain saw gas, oil. You know, just – but you need more customers, and you need more work. Q So there was no extra money for him to pay for rent? A No. Q No extra money for him to pay for clothes? A No. Q Or food? A No. Q He could only cover the cost of his business? A Yes. Q But you expected he would repay you one day for the truck? A Absolutely.

Q Did you understand before you bought him the truck that he didn’t have extra money to pay with? A Yes. Q Did you ever work out a payment plan? A I just told him that when he got ahead and got on his feet decently, that, you know – it was either he get ahead enough that he could purchase his own vehicle and give me this one back so that I could sell it or pay for the one he was driving. Q Now, when I look at Paragraph 9 of your Affidavit, it says that you would be repaid for a portion of the purchase price of the truck. What portion is that? A What it was worth. Vehicles do depreciate.

Q So you were only expecting repayment for whatever the value of the truck was at the time that he decided he had money to pay you back? A Yes. Q Why not the full value of what you spent? A I don’t know. Q You didn’t expect repayment for the depreciated portion of the truck? A I would do what I could to help my kids, and if he drove it for two years, I don’t know what it would depreciate in value. I don’t know. I can’t – I can’t answer that. I – I don’t know. Q Okay.

But is it fair to say that if he drove it for two years and it were worth a few thousand less, you would be looking for the repayment of just what the value of the truck as it was two years later? A Yes. Q Did you ever take any form of security for the truck? A From my own son? No. Q Any you didn’t register security interest in the truck – A No. [ 27 ] Because she paid the purchase price, Ms.

Hritzuk says that although her son is the legal owner, since he has repaid her nothing of the purchase price, he holds the truck for her on a resulting trust. [ 28 ] A resulting trust can arise in various circumstances but one basis is when legal title to a property is in one party’s name but because he gave no value for the property, he is under an obligation to return it to the person who did give value for it. In such a case the intention of the purchaser is implied to be that the transferee is to hold the property on trust for the purchaser: D.W.M Waters, M.R.

Gillen and L.D. Smith, eds, Waters’ Law of Trusts in Canada, (3d ed 2005) at 362. [29] In Pecore v. Pecore 2007 SCC 17 , [2007] 1 S.C.R. 795, the Supreme Court of Canada commented upon resultingtrusts and the evidentiary onus which may result. Pecore affirms that a gratuitous transfer of property results in a presumption ofresulting trust which places an onus on the transferee to show that a gift was intended (at para 24).

However, if the transferor is a parentand the transferee is a dependent child, the presumption of a resulting trust will not arise and instead a different presumption operates, thepresumption of advancement: see Waters' Law of Trusts, at p. 378. The presumption of advancement provides that a gift to the dependentchild will be presumed; it falls on the party challenging the transfer to rebut this presumption of a gift. (at para 27). However, theSupreme Court made a distinction between transfers to dependent children and those to independent children.

They concluded thatwhere there is a transfer from a parent to an independent child, as for instance where an ageing parent puts a bank account into jointownership, the presumption of advancement should be given little weight (at paras 35-6). The presumption in respect to adult childrenwas stated at para 36 to be “..a rebuttable presumption that the adult child is holding the property in trust for the ageing parent tofacilitate the free and efficient management of that parent’s affairs”.

Effectively, therefore, Pecore stands for the proposition that thepresumption of advancement does not operate to presume a gift as between an adult child and a parent. Instead, the operativepresumption is of a resulting trust. [30] At paragraphs 43 and 44, the Court in Pecore also dealt with the standard of proof required to rebut the presumption ofresulting trust, concluding that the standard is the civil balance of probabilities.

The Court also suggested the following means ofresolving a dispute: 44 As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support theirposition. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in anattempt to ascertain, on a balance of probabilities, the transferor's actual intention.

Thus, as discussed by Sopinka et al. in The Law ofEvidence in Canada, at p. 116, the presumption will only determine the result where there is insufficient evidence to rebut it on abalance of probabilities. [31] In this case, Ms. Hritzuk has proven on a balance of probabilities that her funds were used to purchase the truck. Mr. Davisonis an adult child and while the evidence is that Mr. Davison remains heavily financially dependent on his mother, Pecore makes it clearthat the presumption of advancement is limited in operation to transfers between parents and minor children (see para 40).

For purposesof this application, therefore, his continuing financial dependency is irrelevant. Unless it is rebutted, therefore, the presumption ofresulting trust applies. [32] Evidence of an intention to gift will rebut the presumption. Therefore, I must now determine what Ms. Hritzuk’s actualintention was. Again, the Supreme Court provides guidance in Pecore as to what evidence to consider.

Evidence of intention that arisescontemporaneously with the transfer is most useful but evidence of intention which arises subsequent to the transfer will not beautomatically excluded provided it is relevant to the intention of the transferor at the time of the transfer (paras 56-59). [33] Contemporaneous evidence of what Ms. Hritzuk’s intentions were at the time of the transfer is scant. Ms. Hritzuk says atparagraph 8 of her affidavit that she put the truck into Mr. Davison’s name to avoid legal liability as an owner “for things such as traffictickets or accidents”. At paragraph 9, she swore that she and Mr.

Davison agreed that she would be repaid for a portion of the purchaseprice of the truck once he was able to accumulate sufficient funds to do so. In examination of this affidavit, she explained that theagreement was that he would repay her the value of the truck at the time of repayment. No terms of repayment were discussed and nosecurity was requested or obtained. [34] On behalf of the Minister, it is claimed that Ms. Hryitzuk’s claim that her son would repay her is self-serving, made as it is inan effort to defeat forfeiture of the truck.

The Minister relies upon the decision of the British Columbia Supreme Court in Strul v.Elkind, 2005 BCSC 790 to argue that the following factors should be taken into account and these indicate that Ms. Hritzuk’s intentionwas to gift the vehicle to her son: a. There were no contemporaneous documents demonstrating that the truck was considered to be hers; b. No time or manner of repayment was specified c. Ms. Hritzuk took no security in the vehicle d. Mr. Davison has not made even partial repayment e. Ms. Hritzuk has not made any demand for repayment f. There was never any realistic likelihood of repayment g. Ms.

Hritzuk has never exercised any control over the truck. She did not have a key and never drove it [35] I agree that all of these factors weigh in favour of a conclusion that Ms. Hritzuk’s intention was to gift her son with the truck. But to me the most important evidence comes from other facts: the routing of the funds used for the purchase of the vehicle and Ms.Hritzuk’s explanation of why this route was chosen. Rather than providing the funds directly to the vendor of the vehicle, Ms. Hritzukinstead transferred funds by way of bank draft to Mr. Davison’s bank account, which he then used to purchase the truck.

Ms. Hritzuk’sstated reason for this is found at page 20 of the transcript, beginning at line 26: Q Why didn’t you buy the truck directly? A His stepfather doesn’t approve of me giving the kids the money that I do. And I thought it would look better for the money to

come from Skip, so I gave Skip the money so that he could pay for the truck. [ 36 ] It is telling, in my view, that Ms. Hritzuk uses the words ‘giving’ and ‘gave’ when she talks about the transfer of funds to her son. This is clear evidence of her intention to gift the funds used to purchase the vehicle. Because Mr. Davison is her son, perhaps one should not expect the more usual evidence of a loan, such as a promissory note or security. However, here there is not even a scrap of paper to act as an aid memoire to Ms. Hritzuk that she had loaned these funds to her son.

As well, her evidence is that the expected her son to repay her only the depreciated value of the truck if he ever did repay her. Such an arrangement is more consistent with a repurchase than it is of delayed payment of a loan. [ 37 ] Having considered all of the foregoing, I conclude that the transaction has the earmarks of an intention to gift rather than an intention to loan. This is sufficient to rebut the presumption of resulting trust. [ 38 ] I direct that the F350 truck be disposed of by the Minister and the proceeds be paid to the Crown in accordance with s. 19.97 of the Act.

Heard on the 11 th day of September, 2013. Dated at the City of Edmonton, Alberta this 20 th day of September, 2013. D.C. Read J.C.Q.B.A. Appearances: Stephanie Bowes Alberta Justice for the Applicants Richard A. Beeken Richard Beeken Professional Corporation for the Respondents