Director of Civil Forfeiture Plaintiff And: The Owners v. all Others Interested in the Property in particular, Claire Elizabeth McInnes and Jason David McInnes, 2017 BCSC 762

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Director of Civil Forfeiture v. McInnes, 2017 BCSC 762 Date: 20170317 Docket: 16-4162 Registry: Victoria Civil Forfeiture Action in Rem Against The Lands and Structures situated at 142 Larch Hills Road, Grindrod, B.C., and having a Legal Description of PID 002-851-661 the Fractional West 1/2 of the Northeast 1/4 of

Section 1 Township 20 Range 9 West of the 6th Meridian Kamloops Division Yale District as shown on plan of said Township dated at Ottawa 10/12/1917 (the "Property") and its fruits or proceeds Between: Director of Civil Forfeiture Plaintiff And: The Owners and all Others Interested in the Property in particular, Claire Elizabeth McInnes and Jason David McInnes Defendants Before: The Honourable Mr. Justice Johnston Oral Reasons for Judgment (In Chambers) Counsel for Plaintiff: L. Eames Counsel for Defendants: S. Tessmer Place and Date of Hearing: Victoria, B.C.

March 17, 2017 Place and Date of Judgment: Victoria, B.C. March 17, 2017 [ 1 ] THE COURT: There is always a considerable risk for a judge listening for the better part of the day to a great deal of evidence and argument launching immediately into oral reasons. Recognizing that risk, I think that the parties need an answer today. [ 2 ] The background facts, at least the ones I consider to be significant that I extract from the evidence and argument are these. The defendants, the respondents to the application, Mr. and Mrs. McInnes, own a property somewhere outside of Salmon Arm. It is a rural property.

It is on, I think, it was Larch Road or Larch Street. [ 3 ] MR. TESSMER: Larch Hills Road. [ 4 ] THE COURT: Larch Hills. Thank you. [ 5 ] They do not live on that property. There is a house there, but I gather that at the material time nobody was living in the house. There is a shop, an outbuilding, apparently some considerable size, upon the property. [ 6 ] Police became suspicious of the activities on that property and indeed may have been suspicious for some time of the McInneses. I do not know, that is not particularly relevant.

But in 2012 they executed a search warrant at that property that led to the discovery of certain material that may or may not have been legal. Nobody decided that because no charges were pursued as a result of the 2012 search. [ 7 ] In 2015 the police went back to the property twice, both times executing search warrants. The first time they found less than they thought they would find. They went into the shop and they found a large number of growing marihuana plants, some dried marihuana, and a number of other items.

The difficulties presented to the police and the location of what would otherwise have fairly clearly supported a charge against someone of possession for the purpose of trafficking in marihuana was that, known to the police at the time, there were four licences that permitted four different individuals to produce marihuana under the medical marihuana regulations. Those licences were specific to that shop and permitted the growing of, I will say, a surprisingly large number of marihuana plants.

As I understand it, the licences permitted the four, that is Sheriff, Knight, Sawatzky, and Bates, to grow some 1801 marihuana plants. The licences permitted those four individuals to have in the form of dried marihuana I gather some 67 kilograms of dried marihuana. Again, it is not for me to question the wisdom of the medical marihuana authorizing people, Health Canada, but the fact is that there was in that

building a large quantity of marihuana that was within or under the quantity of marihuana authorized by the federal government to be in that building and to be produced by the four individuals I have mentioned. [ 8 ] The police went back, got another search warrant that allowed them to seize what they had located under the first search warrant, and they went back and seized the material. [ 9 ] The Director has obtained an interim preservation order from a judge of this court.

That interim preservation order has been renewed by another judge of this court, and that second interim preservation order expires today; hence, the need for this decision at four o'clock on a Friday afternoon.

The Director wants a further interim preservation order in the form presented by the Director, in essence that the registered owners be prohibited from dealing with an interest in the property, encumbering the property with financial charges, all of those things that might be if not prevented then strongly discouraged by a certificate of pending litigation that the Director has already lodged against title to this property. [ 10 ] What the Director wants by way of additional restrictions, that is additional to the discouragement presented by a certificate of pending litigation, is the Director wants this court to order that the owners do certain things to maintain and preserve the property pending the decision of the Director's claims in this action.

That includes insuring the property and, as I have said, maintaining it, keeping it in reasonable condition so that whoever ends up with this property at the end of this litigation will not have an asset that has wasted too much from having been ignored. [ 11 ] The application is brought under s. 8 of the Civil Forfeiture Act . Section 8(5) provides: Unless it is clearly not in the interests of justice, the court must make an interim preservation order applied for under this

section if the court is satisfied that one or both of the following constitute a serious question to be tried: (

a) whether the whole or the portion of the interest in property that is the basis of the application ... is proceeds of unlawful activity; or: (

b) whether the property that is the basis of the application … is an instrument of unlawful activity. [ 12 ] The primary argument is that the property was an instrument of unlawful activity.

The unlawful activity, the Director says, is the production of marihuana by the licensees or by someone operating under the authority of the licences granted and that in essence, the Director says, the licences are a sham and simply a ruse under which somebody is producing marihuana for sale, distribution, trafficking under the Controlled Drugs and Substances Act . [ 13 ] What is a serious question to be tried was considered by Mr. Justice Davies in the Angel Acres case, one of the many decisions in the Angel Acres case, 2009 BCSC 322 .

He concluded, starting at paragraph 180, that the current legislation which substituted a new test really amounted to a reduction in the test or a lowering of the threshold that the Director must meet for an interim preservation order. He said that at paragraph 184. He also cited and adopted, I think, at paragraph 181 the test from RJR MacDonald Inc. v.

Canada (Attorney General) and the oft-quoted test for serious question to be tried which is stated as, and it is an indication of how low the test is, "that the application is neither vexatious nor frivolous". [ 14 ] So on what basis do I conclude that there is a serious question to be tried, that is that the question raised is neither vexatious or serious. I have licences that permit the growing of quantities in excess of the quantities found by the police on their two searches.

I have equipment, paraphernalia that an expert, Sergeant I think it is McMillan, is of the opinion indicate at least to him that this production was for the purpose of trafficking. [ 15 ] I have said previously in the Warwick decision, 2016 BCSC 1471 , that this interim preservation application stage is not the point at which there should be a detailed examination of evidence.

It is not particularly the place where evidence should be weighed beyond a limited extent which is inevitable in any interlocutory application, that I should be cognizant of the fact that this is preliminary to a more detailed examination and development of evidence through the civil discovery processes, but I still must consider whether or not there is a serious question to be tried with respect to the questions of instrumentality, instrument of unlawful activity, or proceeds. [ 16 ] The presence of the sort of equipment Sergeant McMillan thought was significant he apparently was of two minds about.

In his written opinion he talks about equipment normally associated with the production of marihuana and he lists a number of items: timers, lights, fans, processing machines, growing schedules, surveillance equipment, all of the rest of that stuff. That does not help the Director, it seems to me, because there were licences to grow, and so one grows with equipment necessary to grow. [ 17 ] Sergeant McMillan talks about three items of equipment on page 13 of his opinion that he says are consistent with trafficking, and he includes there the vacuum sealer, a can of bear spray, and supplementary packaging.

Three of the four people licensed to grow have dealt with some, at least, of these items. One of the affiants, I think it was Mr. Sawatzky, said yes, there was bear spray there because it is out in the country and there are bears around.

One of the affiants says, "Well, I vacuum-sealed my marihuana because I live in Kelowna and I had to transport and I wanted to keep it fresh and I didn't want it to smell too bad." Having recited that, I start to get nervous that I am going too deeply into evidence that I have told myself in a previous decision I should stay out of. [ 18 ] I have a very real and I think well-founded concern that there is not a serious question to be tried raised on the evidence before me with respect to the instrument of unlawful activity aspect of this growing operation.

I am primarily concerned at the apparent juxtaposition, if not conflict, between the position taken by the Director who believes that there was something nefarious going on here and is fully confident in his ability to prove that to the civil standard and obtain forfeiture of this property. That is on the one hand. On the other hand, I have the federal government having issued licences that permit these four people to do what they did, with this exception. At least one of the licences I looked at restricts the licensee to growing in conjunction with no more than two others.

So the argument that all four people are growing together, and that is all fine so far as Health Canada is concerned, is not borne out by their licences because the licence says no more than three of you can do this together at any one time. Again, am I too deeply into the

evidence, and where does limited weighing stop and getting to weighing the terms of the licence start. [ 19 ] Given the existence of the licence, I conclude that an assertion by one aspect of the Crown that the growing of this marihuana, or the storing of the dried marihuana, on the property on which it was grown is consistent with that property being an instrument of unlawful activity falls somewhat below the frivolous or vexatious level set by Mr. Justice Davies in Angel Acres .

I say that because of the licences granted by the level of government permitted to grant these licences, recognizing that that is the level of government that makes possession for the purpose of trafficking in marihuana illegal in the first place. [ 20 ] I turn to the proceeds of unlawful activity, and again that argument is, as I understand counsel, developed in this way: those four licensees, if they were truly growing their own marihuana, must have been selling it, and if they were engaged in that illegal activity, that is where they got the money to pay the rent, and the rent money went towards the maintenance of this property; therefore, the property is in that way a proceed of unlawful activity. [ 21 ] The root of that argument is that these four people were engaged in an unlawful activity in the first place, and that again depends upon or requires me to conclude that there is a claim that rises above frivolous or vexatious with respect to the illegality of what these people were doing.

And again, I come up against the federal licences and, as far as I can see, those federal licences, while they are not a brick wall necessarily, are determinative, at least in my mind, of whether or not the Director's case that the property is proceeds of unlawful activity has risen above the very low threshold described by Mr.

Justice Davies. [ 22 ] I will say I am not terribly concerned that this property is going to vanish out from underneath the Director of Civil Forfeiture if I do not grant the continuation or the renewal of the order sought, because the Director has registered a certificate of pending litigation being an indication that the Director has satisfied the Director of Land Titles that he has a claim to an interest in the property, and it is unlikely in my view that anyone with any sense is going to purchase or encumber that property in the face of a certificate of pending litigation.

So if I have to balance the competing interests here, all I am doing by turning the Director down is refusing the Director a set of provisions that would have required the owners to preserve and maintain their own property in the event that the Director succeeds in his action. [ 23 ] It may be that the discovery processes go much further than the evidence goes now, and without saying that the Director may, it would surprise me that if the Director came across some evidence that did much better than he has now, that the Director may be back looking for a preservation order at some time in the future on the basis of stronger evidence and in particular stronger evidence of a serious question to be tried. [ 24 ] Thank you, counsel.

The application is dismissed. “R.T.C. Johnston, J.” The Honourable Mr. Justice Johnston