Yulik Rafilovich Appellant v. Her Majesty The Queen, 2019 SCC 51

SUPREME COURT OF CANADA Citation: R. v. Rafilovich, 2019 SCC 51, [2019] 3 S.C.R. 838 Appeal Heard: January 25, 2019 Judgment Rendered: November 8, 2019 Docket: 37791 Between: Yulik Rafilovich Appellant and Her Majesty The Queen Respondent - and - Attorney General of Ontario, Canadian Civil Liberties Association, Criminal Lawyers’ Association of Ontario and British Columbia Civil Liberties Association Interveners Coram : Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ.

Reasons for Judgment: (paras. 1 to 87) Martin J. (Abella, Karakatsanis, Gascon, Brown and Rowe JJ. concurring) Reasons Dissenting in Part: (paras. 88 to 176) Moldaver J. (Wagner C.J. and Côté J. concurring) r. v. rafilovich

Yulik Rafilovich Appellant v. Her Majesty The Queen Respondent and Attorney General of Ontario, Canadian Civil Liberties Association, Criminal Lawyers’ Association of Ontario and British Columbia Civil Liberties Association Interveners Indexed as: R. v. Rafilovich 2019 SCC 51 File No.: 37791. 2019: January 25; 2019: November 8.

Present: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ. on appeal from the court of appeal for ontario Criminal law — Proceeds of crime — Fine instead of forfeiture — Return of seized property for legal expenses — Property believed to be proceeds of crime seized from accused — Judge ordering that property be returned to accused for payment of reasonable legal expenses for his defence — Accused convicted — Sentencing judge deeming returned property to be proceeds of crime subject to forfeiture — Property used for legal expenses and no longer available for forfeiture — Whether fine instead of forfeiture may be imposed in relation to funds that have been judicially returned for payment of legal expenses for accused’s defence — Criminal Code, R.S.C. 1985, c.

C-46, ss. 462.34(4) (c)(ii), 462.37(3) . R was arrested for possession of cocaine for the purpose of trafficking. The police seized about $42,000 in cash, found when searching his car and apartments, as potential proceeds of crime under

Part XII.2 of the Criminal Code . Before trial, R applied under s. 462.34(4) (c)(ii) of the Criminal Code for the return of the seized funds to pay for reasonable legal expenses associated with his case. The application was allowed and the funds returned to pay for reasonable legal fees, with conditions. R pled guilty to several offences at trial.

The sentencing judge imposed a term of imprisonment and forfeiture of R’s interest in an apartment, but declined to impose a fine instead of forfeiture equal to the amount of the returned funds spent by R on his legal fees as requested by the Crown under s. 462.37(3) of the Criminal Code . The Crown appealed. The Court of Appeal varied the sentencing order, adding a fine instead of forfeiture of $41,976.39, equal to the amount of the returned funds, and 12 months’ imprisonment should R not pay his fine .

Held (Wagner C.J. and Moldaver and Côté JJ. dissenting in part): The appeal should be allowed and the Court of Appeal’s order set aside. Per Abella, Karakatsanis, Gascon, Brown, Rowe and Martin JJ.: Generally speaking, sentencing judges should not impose a fine instead of forfeiture in relation to funds that have been judicially returned for the payment of reasonable legal expenses associated with an accused’s criminal defence. The statutory discretion to impose a fine instead of forfeiture under s. 462.37(3) of the Criminal Code must be exercised in accordance with the purposes of the proceeds of crime regime.

This regime as a whole seeks to ensure that crime does not pay or benefit the offender; however, by enacting the legal expenses return provision at s. 462.34(4) (c)(ii) of the Criminal Code , Parliament not only foresaw the possibility that seized funds may be needed to mount a defence, but explicitly allowed individuals to spend returned funds for this purpose. The return provision pursues two secondary purposes: providing access to counsel and giving meaningful weight to the presumption of innocence. These secondary objectives ensure fairness to the accused in criminal prosecutions.

Clawing back reasonable legal expenses as a fine instead of forfeiture would, in most cases, undermine these purposes. If it turns out that the offender did not have a real financial need or the funds were not used to alleviate that need, it would be appropriate to impose a fine instead of forfeiture, as this would align with Parliament’s intent. This might occur where there is wrongdoing in the return of funds application or in the administration of the return order or if the accused experiences an unexpected change in circumstances after the funds have been returned.

In the context of this case, ordering a fine undermines Parliament’s intent in enacting the return provision. There is no evidence that R misrepresented his financial position, misused returned funds, or experienced any change in circumstances. Therefore, the sentencing judge’s exercise of discretion was appropriate and should not be interfered with. As the Criminal Code does not expressly indicate whether judicially returned funds ought to be subject to a fine instead of forfeiture, the resolution of this issue requires recourse to the rules of statutory

interpretation. This analysis is guided by the words that Parliament has chosen to use, the way it intended to achieve its objectives, and the scheme it has put in place. Where the dispute involves multiple legislative objectives and the inter- relationship between two or more statutory provisions, the scheme of the Act and the objectives underlying each of the relevant provisions are particularly significant. Parliament had several objectives in mind when it enacted the proceeds of crime regime. Parliament’s primary goal was to ensure that crime does not pay and that it does not benefit the offender.

Forfeiture is intended to deprive offenders of the proceeds of their crime. Seizure allows the state to take control of property believed to be proceeds of crime before trial and sentencing, to ensure it remains available for possible forfeiture. The fine instead of forfeiture provision ensures that, if accused persons are able to keep proceeds of crime throughout criminal proceedings, they must in the end pay a fine equivalent to the value of the property that is not available to be forfeited.

The legal expenses return provision shows that Parliament intended that the secondary objectives underpinning it — providing access to counsel and giving meaningful weight to the presumption of innocence — must be balanced against the primary objective of ensuring that crime does not pay.

The wording and the elaborate and detailed nature of the return provision indicates that Parliament clearly and deliberately sought to address an accused’s need for legal counsel, in the limited and narrow circumstances where the accused has no other assets or means and no other person appears to be the lawful owner of or lawfully entitled to possession of the property. The secondary objectives reflect an underlying intention to promote fairness in criminal prosecutions that runs through the proceeds of crime scheme. They constrain the pursuit of the primary objective.

The return provision was intended to respect the principle of fairness in criminal prosecutions, including concepts of fair notice and reliance. It can be expected that accused people will rely on a court order authorized by a specific statutory scheme and those accused persons cannot reasonably know that doing so will lead to additional punishment. Also, accused persons who understand that judicially returned funds will be clawed back later may not apply for the return of funds and represent themselves instead.

When an accused person cannot access legal counsel, the presumption of innocence suffers because it is difficult for lay persons to effectively navigate the complexity of criminal cases. Imposing retroactive penalties on accused persons who rely on the presumption of innocence undermines the presumption and the protections it affords. The judicial return of funds to pay for a lawyer is not the type of benefit that Parliament sought to take away by way of a fine. It is a tightly controlled benefit Parliament expressly intended for a narrow category of accused persons in need.

In the instant case, the return provision allowed R, who had no other assets or means to pay for his defence, an opportunity to access seized funds under close judicial scrutiny and tight conditions. It is undeniable that there is less money available to be forfeited to the Crown but a fundamental purpose of the criminal justice system is to provide a fair process to achieve

just results, not to extract maximum retribution at any cost. Seized property returned pursuant to a judicial order is not thematically analogous to the reasonslisted in s. 462.37(3) of the Criminal Code for ordering a fine instead of forfeiture. All of the circumstances listed reflect Parliament’s concern that anaccused person might hide, dissipate or distribute property that may later be determined to be proceeds of crime. The accused’s lawyer is not some unknownperson receiving funds by way of an uncontrolled, private transaction.

They have been specifically authorized by a judge to be paid in aid of the accused’sdefence. Further, Parliament has set out its desired statutory requirements for the judicial return of seized funds. Nothing indicates any intention to requirethe accused to demonstrate, in order to avoid the imposition of a fine instead of forfeiture, that the nature of the proceedings are such that it is essential tohave counsel.

Accordingly, not imposing a fine instead of forfeiture in relation to funds that have been judicially returned for the payment of reasonablelegal expenses associated with an accused’s criminal defence will generally be most faithful to Parliament’s intent.

Per Wagner C.J. and Moldaver and Côté JJ. (dissenting in part): Imposing a fine in lieu of forfeiture where an offender has used proceeds ofcrime to pay for his or her own defence achieves the forfeiture regime’s primary objective of ensuring crime does not pay; and it does not undermine theutility of the legal expenses restoration provision, which facilitates access to counsel in a manner that is both fair and consistent with the presumption ofinnocence.

There is nothing inconsistent about allowing accused persons, who are presumed innocent, to access seized funds to pay for legal counsel butrequiring offenders, who are proven guilty, to pay them back in the event that they are determined to be proceeds of crime. However, there is an importantexception to this general rule: where a sentencing judge is satisfied that representation by counsel was essential to the offender’s constitutional right to a fairtrial, the judge should exercise his or her limited discretion not to impose a fine in lieu of forfeiture. This

interpretation gives proper effect to Parliament’sobjective of ensuring an effective forfeiture regime while still vindicating the constitutionally protected right to counsel, and more particularly, theconstitutional right to state-funded counsel in limited circumstances.

Part XII.2 of the Criminal Code, which governs the seizure, restraint, and forfeiture of proceeds of crime, seeks to ensure that crime does notpay. To further this objective, it permits the state to seize and detain property believed on reasonable grounds to be proceeds of crime, thereby preserving itand facilitating the enforcement of any future forfeiture order.

At the same time, Parliament recognized that the seizure and detention of property that isreasonably believed, though not yet proven, to be proceeds of crime may have a significant financial impact on accused persons, including by limiting theirability to access counsel.

To address this concern, s. 462.34 of the Criminal Code permits accused persons to apply for a restoration order authorizing therelease of seized property to pay for various expenses — one being reasonable legal expenses — where they have no other means available and no otherperson appears to be the lawful owner of or lawfully entitled to possession of the seized property.

In creating this provision, Parliament struck a balancebetween ensuring an effective forfeiture regime and permitting otherwise impecunious accused persons to access funds for certain legitimate purposes.However, a court must, when sentencing an offender for an indictable offence, order the forfeiture of property determined to be proceeds of crime.Alternatively, where a court is satisfied that a forfeiture order should be made in respect of any “property of an offender”, but the property cannot be madesubject to such an order, the court “may” order a fine in lieu under s. 462.37(3) of the Criminal Code.

Offenders who have used proceeds of crime to pay for their own defence derive a benefit from their crime and should generally be required torepay that benefit through a fine in lieu of forfeiture. This follows from a straightforward application of the primary objective of the proceeds of crimeregime — namely, ensuring that crime does not pay. The proper

interpretation of s. 462.37(3) of the Criminal Code reveals that where seized funds arereleased to an offender and then transferred to a lawyer, both prerequisites to imposing a fine in lieu are met. First, these funds are captured in the broaddefinition of “property of an offender”, which includes property originally in the possession or under the control of any person. Second, a transfer of releasedfunds to a lawyer cannot be made subject to a forfeiture order.

Section 462.37(3) sets out a non-exhaustive list of example circumstances where this criterionis met, one of which is where property has been “transferred to a third party”. Parliament could have limited this class of transfers but did not. In the absenceof any limiting language, the grammatical and ordinary sense of “transfer” — to move a thing from one place to another — must prevail. A judiciallyauthorized transfer of released funds to a lawyer is therefore a “transfer to a third party”.

This also fits comfortably within the consistent theme runningthrough the examples listed in s. 462.37(3), which is simply that the property cannot be made subject to a forfeiture order. There is an exception to the general rule that a fine in lieu should be imposed where an offender has used proceeds of crime to pay for his or herown defence. Where a sentencing judge is satisfied, applying the test set out in R. v. Rowbotham (1988), (ON CA), 41 C.C.C. (3d) 1 (Ont.C.A.), that representation by counsel was essential to the offender’s constitutional right to a fair trial under ss. 7 and 11(

d) of the Canadian Charter of Rightsand Freedoms, the judge should exercise his or her limited discretion not to impose a fine in lieu in respect of the released funds. The language ofs. 462.37(3) is permissive and confers a limited discretion not to impose a fine. This limited discretion must be exercised in a manner consistent with thespirit of

Part XII.2 as a whole.

Part XII.2 seeks to balance the need to ensure an effective forfeiture regime and the constitutionally protected right to counsel.To properly understand this balance, however, it is first necessary to examine what the constitutionally protected right to counsel does — and does not —entail. Neither s. 10(

b) nor any other Charter right postulates a general right to legal assistance. The right to state-funded legal counsel in criminalproceedings grounded in ss. 7 and 11(

d) of the Charter is limited to circumstances where legal aid has been denied, the accused lacks other means, andrepresentation by counsel is essential to the accused’s constitutional right to a fair trial. Thus, where an offender can show that he or she was constitutionallyentitled to state-funded legal counsel, it would be inconsistent to order the offender to pay back his or her legal expenses through a fine in lieu. Thisapproach gives proper effect to Parliament’s objective of ensuring an effective forfeiture regime while still vindicating the constitutionally protected right tocounsel.

To go further would not only upset the careful balance struck by Parliament, it would effectively grant a constitutional entitlement where noneexists. Contrary to the majority’s approach, the primary objective of the proceeds of crime regime need not be sacrificed to achieve the restorationprovision’s “secondary purposes” of providing access to counsel, giving meaningful weight to the presumption of innocence, and giving effect to theunderlying intention to ensure fairness in criminal prosecutions.

Once the respective roles of the restoration provision and the fine in lieu provision areproperly understood, it becomes clear that all of the statutory scheme’s objectives can be achieved. The restoration provision facilitates access to counsel in amanner that is both fair and consistent with the presumption of innocence. But where a restoration order is followed by a conviction, an “accused” becomesan “offender”, and a fine in lieu should be ordered because the primary objective of ensuring that crime does not pay takes centre stage.

While Parliamentintended to give accused persons the benefit of having access to seized funds to pay for reasonable legal expenses, it did not intend to give offenders thebenefit of never having to pay them back. Had that been Parliament’s intent, it could easily have enacted such a provision. In this instance, the funds transferred to R’s lawyer qualified as R’s property and were determined to be proceeds of crime. They could not bemade subject to a forfeiture order. Consequently, the authority to order a fine in lieu was engaged.

In exercising her limited discretion not to invoke thisauthority, the sentencing judge did not consider whether representation by counsel was essential to R’s constitutional right to a fair trial and the record isinsufficient to decide this issue. The Court of Appeal’s order should therefore be set aside and the case remitted to the sentencing judge for determination. Cases Cited By Martin J. Distinguished: R. v. Rowbotham (1988), (ON CA), 41 C.C.C. (3d) 1; considered: R. v. Lavigne, 2006 SCC 10, [2006] 1S.C.R. 392; referred to: R. v. Appleby, 2009 NLCA 6, 282 Nfld. & P.E.I.R. 134; R. v.

Wilson (1993), (ON CA), 15 O.R. (3d) 645; R. v.Smith, 2008 SKCA 20, 307 Sask. R. 45; R. v. MacLean (1996), (NB CA), 184 N.B.R. (2d) 26; R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R.530; Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27; ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board),2006 SCC 4, [2006] 1 S.C.R. 140; Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R. 271; R. v. Davidson, 2016 ONSC 7440;R. v. Alves, 2015 ONSC 4489; R. v. Borean, 2007 NBQB 335, 321 N.B.R. (2d) 309; R. v. Gagnon (1993), (AB KB), 80 C.C.C. (3d) 508;R. v.

Chaulk, (SCC), [1990] 3 S.C.R. 1303; R. v. Oakes, (SCC), [1986] 1 S.C.R. 103; R. v. Whyte, (SCC),[1988] 2 S.C.R. 3; R. v. Hodgson, (SCC), [1998] 2 S.C.R. 449; Greenshields v. The Queen, (SCC), [1958] S.C.R. 216; R.

v. G.D.B., 2000 SCC 22, [2000] 1 S.C.R. 520; R. v. Jordan, 2016 SCC 27, [2016] 1 S.C.R. 631; R. v. Antic, 2017 SCC 27, [2017] 1 S.C.R. 509; R. v.Mabior, 2012 SCC 47, [2012] 2 S.C.R. 584; R. v. Levkovic, 2013 SCC 25, [2013] 2 S.C.R. 204; R. v. Taylor, 2014 SCC 50, [2014] 2 S.C.R. 495; R. v.Keating (1997), 1997 NSCA 135 , 159 N.S.R. (2d) 357; R. v. Hobeika, 2014 ONSC 5453; R. v. Kizir, 2014 ONSC 1676, 304 C.R.R. (2d) 287; R. v.Ro, [2006] O.J. No. 3347 (QL). By Moldaver J. (dissenting in part) R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392; Quebec (Attorney General) v.

Laroche, 2002 SCC 72, [2002] 3 S.C.R. 708; R. v. Rowbotham(1988), (ON CA), 41 C.C.C. (3d) 1; Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559; United States v.Monsanto, 491 U.S. 600 (1989); R. v. Dieckmann, 2017 ONCA 575, 355 C.C.C. (3d) 216; R. v. Angelis, 2016 ONCA 675, 133 O.R. (3d) 575; R. v.Khatchatourov, 2014 ONCA 464, 313 C.C.C. (3d) 94; R. v. Bourque (2005), (ON CA), 193 C.C.C. (3d) 485; R. v. Wu, 2003 SCC 73,[2003] 3 S.C.R. 530; R. v. Appleby, 2009 NLCA 6, 282 Nfld. & P.E.I.R. 134; R. v. Dwyer, 2013 ONCA 34, 296 C.C.C. (3d) 193; R. v.

Wilson (1993), (ON CA), 15 O.R. (3d) 645; R. v. MacLean (1996), (NB CA), 184 N.B.R. (2d) 26; R. v. Smith, 2008 SKCA 20, 307 Sask.R. 45; R. v. Sinclair, 2010 SCC 35, [2010] 2 S.C.R. 310; R. v. Manninen, (SCC), [1987] 1 S.C.R. 1233; British Columbia (AttorneyGeneral) v. Christie, 2007 SCC 21, [2007] 1 S.C.R. 873; R. v. Willier, 2010 SCC 37, [2010] 2 S.C.R. 429; R. v. Smith, 2004 SCC 14, [2004] 1 S.C.R. 385;R. v. McIntosh, (SCC), [1995] 1 S.C.R. 686; R. v. MacDougall, (SCC), [1982] 2 S.C.R. 605; R. v. Nova ScotiaPharmaceutical Society, (SCC), [1992] 2 S.C.R. 606; R. v. G.D.B., 2000 SCC 22, [2000] 1 S.C.R. 520.

Statutes and Regulations Cited Act for enabling Persons indicted of Felony to make their Defence by Counsel or Attorney (U.K.), 1836, 6 & 7 Will. 4, c. 114, s. 1. Canadian Charter of Rights and Freedoms, ss. 7, 10(b), 11(d), 24(1). Controlled Drugs and Substances Act, S.C. 1996, c. 19, s. 2. Criminal Code, R.S.C. 1985, c. C-46, ss. 2, 354(1),

Part XII.2 [ad. c. 42 (4th Supp.), s. 2], 462.3(1), 462.32, 462.33, 462.34, 462.37(1), (2), (3), (4), 730. Authors Cited Canada. House of Commons. Debates, vol. 14, 2nd Sess., 33rd Parl., July 7, 1988, pp. 17258-59. Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-61:

An Act to amend the Criminal Code, theFood and Drugs Act and the Narcotic Act, No. 1, 2nd Sess., 33rd Parl., November 5, 1987, p. 1:8. Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-61:

An Act to amend the Criminal Code, theFood and Drugs Act and the Narcotic Act, No. 5, 2nd Sess., 33rd Parl., May 10, 1988, pp. 5:5 and 5:9. Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-61:

An Act to amend the Criminal Code, theFood and Drugs Act and the Narcotic Act, No. 1, 2nd Sess., 33rd Parl., June 1, 1988, pp. 9:22-9:24. Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-61:

An Act to amend the Criminal Code, theFood and Drugs Act and the Narcotic Act, No. 1, 2nd Sess., 33rd Parl., June 2, 1988, pp. 10:17-10:18. Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983. German, Peter M. Proceeds of Crime and Money Laundering, vol. 1, 2nd ed. Toronto: Thomson Reuters, 2018 (loose-leaf updated April 2019, release 1). Hubbard, Robert W. et al. Money Laundering and Proceeds of Crime, Toronto: Irwin Law, 2004. Langbein, John H. The Origins of Adversary Criminal Trial, Oxford: Oxford University Press, 2003. MacFarlane, Bruce A., Robert J. Frater and Croft Michaelson.

Drug Offences in Canada, 4th ed. Toronto: Thomson Reuters, 2019 (loose-leaf updated April2019, release 2). Rose, Gregory J. “Non-Part XII.2 Warrants and Proceeds of Crime” (1996), 38 Crim. L.Q. 206. Sullivan, Ruth. Sullivan on the Construction of Statutes, 6th ed. Markham, Ont.: LexisNexis, 2014. APPEAL from a judgment of the Ontario Court of Appeal (Weiler, Hourigan and Pardu JJ.A.) 2017 ONCA 634, 137 O.R. (3d) 81, 353 C.C.C.(3d) 293, [2017] O.J. No. 4064 (QL), 2017 CarswellOnt 11968 (WL Can.), varying a sentencing decision of Croll J., 2013 ONSC 7293, [2013] O.J.No. 5421 (QL), 2013 CarswellOnt 16580 (WL Can.).

Appeal allowed, Wagner C.J. and Moldaver and Côté JJ. dissenting in part. Gregory Lafontaine and Carly Eastwood, for the appellant. Bradley Reitz and Sarah Egan, for the respondent. Brett Cohen and Melissa Adams, for the intervener the Attorney General of Ontario. Michael W. Lacy and Bryan Badali, for the intervener the Canadian Civil Liberties Association. Alan D. Gold and Deepa Negandhi, for the intervener the Criminal Lawyers’ Association of Ontario. Gregory DelBigio, Q.C., and Alison M. Latimer, for the intervener the British Columbia Civil Liberties Association.

The judgment of Abella, Karakatsanis, Gascon, Brown, Rowe and Martin JJ. was delivered by Martin J. — I. Introduction [1] Do the proceeds of crime provisions of the Criminal Code, R.S.C. 1985, c. C-46 (“Code”), require courts to give with one hand, only totake away with the other? The appellant, Yulik Rafilovich, applied for and was returned funds that the state had initially seized from him as potentialproceeds of crime, because he needed the funds to pay for his legal defence to charges related to drug trafficking. After he pled guilty, the Crown asked thesentencing judge to impose a fine on Mr.

Rafilovich under the forfeiture provisions of the Code, on the basis that by using his returned funds for hisdefence, he had thereby benefitted from the proceeds of crime. In my view, Parliament did not intend these provisions to operate in such an inconsistent

manner. [2] In 1988, Parliament enacted a comprehensive and distinct legal regime to address proceeds of crime, which now forms

Part XII.2 ofthe Code.

The overall goal of this complex and multi-factored regime was to ensure that “crime does not pay”, and to deter offenders by depriving them oftheir ill-gotten gains. [3] Under this regime, the state may seize property from accused persons where the property is believed, on reasonable and probable grounds, to be proceeds of crime.[1] The seized property is then held for possible forfeiture to the Crown at a future sentencing hearing (ss. 462.32(1), 462.33(1), 462.33(2) and 462.33(3)).[2] This initial seizure means that accused persons, who are presumed innocent and have not been found guilty of anycrime, may nevertheless have their property taken away and held by the state prior to and throughout trial.

If their property had not been seized, theseaccused persons would have had unfettered access to their property to finance their defence. But, when some or all of their assets have been seized, manyaccused persons will not be able to afford to hire lawyers to answer the charges against them.

Parliament was alive to the serious problems created by such asituation and recognized the need to alleviate them. [4] In response, Parliament created a specific procedure within the Code’s proceeds of crime regime that allows accused persons to seek the return of some or all of the seized property for certain designated purposes if the accused has “no other assets or means available” (s. 462.34(4)).[3] Parliament’s list of approved purposes expressly includes reasonable legal expenses (s. 462.34(4)(c)(ii)).

Under this procedure, which occurs early in acriminal proceeding, an accused applies to a judge to ask for the return of seized property to pay for a lawyer (s. 462.34(1)). Thereafter, two separatehearings are held, evidence is tendered, and the judge determines: (1) whether the accused actually needs any of the seized property to pay for reasonablelegal fees (ss. 462.34(4) and 462.34(5)); (2) what amount may be returned; and (3) the appropriate terms related to the return of the funds (s. 462.34(4)).The return of any seized funds is, therefore, done under the authority of a judicial order.

Returned funds are normally held in trust by legal counsel, to beused only for the defence of the accused, and such funds are no longer considered to be seized property held by the state. [5] The criminal process will then proceed. If the accused person is convicted or pleads guilty, there will be a sentencing hearing toimpose a fit and proportionate criminal penalty. The sentencing judge will also determine what, if any, of the offender’s property (including propertypreviously seized) has been proven to be proceeds of crime.

As a general rule, property proven to be proceeds of crime must be forfeited to the Crown (s.462.37(1)). [6] Parliament has also addressed the situation in which property proven to be proceeds of crime at sentencing is not available forforfeiture to the Crown, such as situations where the money has been spent or given to a third person.

In such a case, the sentencing judge may order a “fine instead of forfeiture” equal to the amount proven to be proceeds of crime (s. 462.37(3)).[4] The offender’s failure to pay the fine may result in imprisonment(s. 462.37(4)). [7] This case concerns the legal relationship between a judicial order returning funds to pay for reasonable legal fees and the sentencingjudge’s discretion to order a fine instead of forfeiture.

This Court is, for the first time, being asked to address when, if ever, a sentencing judge should usethe statutory discretion to order a fine instead of forfeiture in respect of property that was used, with prior judicial authorization, to pay for the reasonablecosts of an accused’s legal defence. Parliament has provided no express response to this question. The courts below have reached opposing conclusions andthe limited jurisprudence across the country on these two provisions is similarly divided (R. v. Appleby, 2009 NLCA 6, 282 Nfld. & P.E.I.R. 134; R. v.Wilson (1993), (ON CA), 15 O.R. (3d) 645 (C.A.); R. v.

Smith, 2008 SKCA 20, 307 Sask. R. 45; R. v. MacLean (1996), (NB CA), 184 N.B.R. (2d) 26 (C.A.)). [8] In my view, the application of the principles of statutory

interpretation leads to the conclusion that, generally speaking, sentencingjudges should not impose a fine instead of forfeiture in relation to funds that have been judicially returned for the payment of reasonable legal feesassociated with an accused’s criminal defence. This approach is most faithful to Parliament’s intent. [9] The statutory discretion afforded to sentencing judges to impose a fine must be exercised in accordance with the purposes of theprovisions in the proceeds of crime regime (R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, at para. 28).

Those purposes can be found by examining theCode to discern Parliament’s intent about how the legal expenses return provision and the fine instead of forfeiture provision should operate together. Byenacting the return provision, Parliament not only foresaw the possibility that seized funds may be needed to mount a defence, but explicitly allowedindividuals to spend returned funds for this purpose.

While it is true that the proceeds of crime regime as a whole seeks to ensure that crime does not pay orbenefit the offender, the legal expenses return provision pursues secondary purposes, namely: (1) providing access to counsel and (2) giving meaningfulweight to the presumption of innocence. Underlying both of these objectives is a desire to ensure fairness to the accused in criminal prosecutions.

Clawingback reasonable legal fees as a fine instead of forfeiture would, in most cases, undermine these equally valid purposes. [10] At the same time, where it turns out that the offender did not have a real financial need or the funds were not used to alleviate that need,it would be appropriate for a judge to impose a fine instead of forfeiture, as this would align with Parliament’s intent. For example, this might occur wherethere is wrongdoing in the return of funds application, such as the misrepresentation of the accused’s financial position.

It might also occur where there iswrongdoing in the administration of the return order, such as funds not being applied in the manner contemplated, expenditures for purposes outside thescope of the return order, or fees in excess of judicially authorized limits. Further, it might occur where the accused experiences an unexpected change incircumstances after the funds have been returned but before sentencing, such that recourse to returned funds is no longer necessary after the accused becameaware of the changed circumstances.

These are examples of the kinds of situations that undermine the basis of the return order such that Parliament wouldhave intended to recover the returned monies by way of a fine. [11] In the context of this case, because ordering a fine would undermine Parliament’s intent in enacting the legal expenses return provision, Iwould allow the appeal and set aside the Court of Appeal’s order, which imposed a fine and imprisonment in default of payment. II. Facts and Judicial History [12] The appellant, Mr. Rafilovich, was arrested for possession of cocaine for the purpose of trafficking twice in fourteen months.

The policesearched Mr. Rafilovich’s car and two apartments, and seized, among other things, a fake Social Insurance Number identification card, about $47,000 worthof cocaine, and about $42,000 in cash. The cash was seized by the Crown as potential proceeds of crime. [13] In 2009, before his trial, Mr. Rafilovich’s counsel brought an application under s. 462.34 of the Code for the return of some of theseized funds to pay for reasonable legal fees associated with the case. Justice MacDonald of the Ontario Superior Court of Justice granted the applicationpursuant to s. 462.34(4)(c)(ii). He was satisfied that Mr.

Rafilovich met the financial need requirement in s. 462.34(4) of the Code (A.R., vol. II, at p. 1). Heordered that the returned funds be held by Mr. Rafilovich’s counsel in an interest-bearing trust account and imposed the following conditions: the returnedfunds were to be used only for the payment of legal fees and, before any fees could be paid, Mr. Rafilovich’s counsel had to provide “an itemized accountjustifying such fees to Mr. Rafilovich and he [had to] sign that account acknowledging his agreement as to the reasonableness of the fees and his consent topayment” (A.R., vol. II, at p. 2).

Justice MacDonald also determined the hourly rate and maximum court hours that could be billed up to the conclusion ofthe preliminary inquiry. [14] At trial, Mr. Rafilovich pled guilty to: possession of a counterfeit mark (a Social Insurance Number card); two counts of possession of

cocaine for the purpose of trafficking; and two counts of possession of property exceeding $5,000, knowing that it was obtained or derived directly orindirectly as a result of the commission in Canada of an offence punishable by indictment. The sentencing judge sentenced Mr. Rafilovich to 36 months incustody, which was reduced by 13 months for pretrial custody and by another 9 months to account for the terms of his interim release. In addition to thissentence, Mr.

Rafilovich was required to forfeit to the Crown his 50 percent interest in an apartment that was “offence-related property” as defined in s. 2 ofthe Controlled Drugs and Substances Act, S.C. 1996, c. 19 (“CDSA”). Mr. Rafilovich’s term of imprisonment and the forfeiture of the interest in theapartment are not at issue in this appeal. While the interest in the apartment was forfeited under the CDSA, the parties agree that the forfeiture provisionsapplicable to the funds at issue in this case are those found in the Code.

For the purposes of this appeal I accept, without deciding, that the governingprovisions are those in the Code, not the CDSA. [15] At the sentencing hearing, the Crown also sought a fine instead of forfeiture under s. 462.37(3), equal to the amount seized and thenreturned to Mr. Rafilovich to pay for his legal counsel. The sentencing judge declined to impose the discretionary fine for four reasons. First, as theapplication judge found, Mr. Rafilovich did not have any funds to pay for legal representation and did not qualify for legal aid.

Therefore, “[i]t wasnecessary for the seized funds to be released” (2013 ONSC 7293, at p. 20 ). Second, Mr. Rafilovich did not obtain a benefit from the returned fundsexcept to have legal representation. This was not a situation where an offender profited from criminal conduct. Third, Mr. Rafilovich did not squander ordivert any of his other assets. Fourth, the non-payment of the fine would lead to the imposition of a further sentence of imprisonment of 12 to 18 months —an outcome that offenders who have access to funds or legal aid would not have to face. [16] The Crown appealed.

The Court of Appeal for Ontario unanimously held that the sentencing judge’s exercise of discretion in this casewas inappropriate. While it recognized that sentencing judges have a statutory discretion to not impose a fine, the exercise of this discretion, according toLavigne, cannot hinder the achievement of the objectives that the proceeds of crime regime seeks to achieve. One of these objectives is that offenderscannot profit from their criminal conduct, and the Court of Appeal considered Mr. Rafilovich to be profiting from his criminal conduct by having access toseized funds to pay for his legal fees.

It viewed the fact that the Code allows judges to return seized funds for payment of reasonable legal fees ascompatible with the imposition of a fine instead of forfeiture at a later stage in the criminal proceedings. [17] The Court of Appeal also held that the sentencing judge erred in considering the possibility of imprisonment for non-payment of a fine.It considered that, according to this Court’s decision in R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530, an offender cannot be imprisoned for failing to pay afine if the offender has a reasonable excuse. Since inability to pay constitutes a reasonable excuse, Mr.

Rafilovich would not face any risk of additionalimprisonment if he were ultimately unable to pay the fine. [18] On the basis of the above analysis, the Court of Appeal imposed a fine instead of forfeiture of $41,976.39, equal to the amount of theseized and returned funds. It further ordered that, in the event that Mr. Rafilovich did not pay the fine and did not have a reasonable excuse, he would besentenced to an additional 12 months of imprisonment over and above the 14 months that remained in his prison sentence. Mr. Rafilovich now appeals tothis Court by leave. III.

Issue [19] The issue before this Court is: how should a sentencing judge, who has discretion whether to impose a fine instead of forfeiture under s.462.37(3) for property proven to be proceeds of crime, treat property that has been judicially returned for the payment of reasonable legal expenses under s.462.34(4)(c)(ii)? Stated otherwise, what is the intended relationship between the return provision and the fine instead of forfeiture provision in the context ofreasonable legal fees? IV.

Analysis [20] As the Code does not expressly indicate whether judicially returned funds ought to be subject to a fine instead of forfeiture, the resolutionof this issue requires recourse to well-established rules of statutory

interpretation. This analysis, which is concerned with legislative intent, is guided by thewords that Parliament has chosen to use, the way it intended to achieve its objectives, and the scheme it has put in place (Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27, at para. 21). Under the modern approach to statutory

interpretation, the meaning of words and phrases areinterpreted in their context and within the scheme of the Act in which they are found (ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board),2006 SCC 4, [2006] 1 S.C.R. 140, at para. 48). Parliament also is presumed to intend for its provisions to be read harmoniously, and to be interpreted andapplied so they fit together in a way that respects Parliament’s multiple objectives and gives purpose and meaning to each provision.

In the present case,where the dispute involves multiple legislative objectives and the inter-relationship between two or more statutory provisions, the scheme of the Act and theobjectives underlying each of the relevant provisions are particularly significant. [21] To engage in that analysis, I will therefore proceed as follows. First, I summarize the overall framework in which this narrow issue arisesand highlight the two provisions at the heart of the controversy.

Second, I review the multiple objectives of the proceeds of crime regime, the return process,and the fine instead of forfeiture provision, and discuss how courts should interpret schemes with multiple purposes. Third, I consider whether interpretingthe return provision as something akin to a loan to the accused person would honour and uphold those objectives. Fourth, I examine whether returnedproperty constitutes the kind of benefit targeted by the regime. Fifth, I consider whether judicially returned funds are analogous to the examples listed in thefine instead of forfeiture provision.

Sixth, I suggest when the discretion to impose a fine instead of forfeiture should be exercised. Finally, I respond to thesuggestion that this Court should impose the criteria for providing state-funded counsel set out in R. v. Rowbotham (1988), (ON CA), 41C.C.C. (3d) 1 (Ont. C.A.), on judges’ discretion to order a fine instead of forfeiture for reasonable legal expenses, over and above Parliament’s requirementsfor the return of funds for reasonable legal expenses. A.

The Statutory Scheme, the Return Process and the Fine Instead of Forfeiture Provision [22] Under the scheme of the proceeds of crime regime in the Code, the issue before this Court only arises in limited circumstances when fivepre-conditions are met. [23] First, the accused is charged with a “designated offence”, as defined under s. 462.3(1). [24] Second, property is seized. Parliament has allowed the state to take property from an accused on the basis of reasonable and probablegrounds that the property may eventually be proven to be proceeds of crime (ss. 462.32(1) and 462.33(1)).

This seizure occurs at a time when the accused ispresumed innocent and, in law, remains the legal owner of the seized property unless and until the property is forfeited at sentencing. The seizure ofproperty from persons still presumed to be innocent was quite extraordinary at the time the proceeds of crime regime was enacted in 1988 (G. J. Rose, “Non-Part XII.2 Warrants and Proceeds of Crime” (1996), 38 Crim.

L.Q. 206, at pp. 210-11). [25] Third, the accused makes an application for the return of the seized property to pay for reasonable legal fees under s. 462.34(4) to (6).For our purposes, the relevant portions of the

section read:

(4) On an application made to a judge under paragraph (1)(

a) in respect of any property and after hearing the applicant and the Attorney General and anyother person to whom notice was given pursuant to paragraph (2)(b), the judge may order that the property or a part thereof be returned to the applicant or,in the case of a restraint order made under subsection 462.33(3), revoke the order, vary the order to exclude the property or any interest in the property orpart thereof from the application of the order or make the order subject to such reasonable conditions as the judge thinks fit,

. . . (

c) for the purpose of . . . (ii) meeting the reasonable business and legal expenses of a person referred to in subparagraph (i) . . . . . . if the judge is satisfied that the applicant has no other assets or means available for the purposes set out in this paragraph and that no other person appears to be the lawful owner of or lawfully entitled to possession of the property. [ 26 ] In these return provisions, Parliament has allowed for tight judicial control over if, when, and how seized property may be returned to pay for reasonable legal expenses.

Seized property can only be returned “if the judge is satisfied that the applicant has no other assets or means available” to pay for legal expenses ( s. 462.34(4) (c)(ii)). These return provisions and process, as well as Parliament’s purpose in enacting them, will be explored in further detail in a subsequent section. [ 27 ] Fourth, the Crown proves that certain property meets the statutory definition of proceeds of crime under ss. 462.37(1) or 462.37(2).

Only property determined to be “proceeds of crime” at the end of the process, whether at sentencing or a forfeiture hearing, is subject to forfeiture or a fine instead of forfeiture. [ 28 ] Fifth, some or all of the property proven to be proceeds of crime at sentencing is no longer available for forfeiture to the Crown. In such cases, the sentencing judge may order a “fine instead of forfeiture” according to s. 462.37(3) and (4).

The imposition of a fine is a discretionary decision and s. 462.37(3) sets out a non-exhaustive list of circumstances when a fine may be imposed instead of forfeiture, including where property “has been transferred to a third party” ( s. 462.37(3) (b)). Subsection 462.37(3) reads:

(3) If a court is satisfied that an order of forfeiture under subsection (1) or (2.01) should be made in respect of any property of an offender but that the property or any part of or interest in the property cannot be made subject to an order, the court may, instead of ordering the property or any part of or interest in the property to be forfeited, order the offender to pay a fine in an amount equal to the value of the property or the part of or interest in the property. In particular, a court may order the offender to pay a fine if the property or any part of or interest in the property (

a) cannot, on the exercise of due diligence, be located; (

b) has been transferred to a third party; (

c) is located outside Canada; (

d) has been substantially diminished in value or rendered worthless; or (

e) has been commingled with other property that cannot be divided without difficulty. When imposed, the fine must be equal to the amount proven to be proceeds of crime. An offender who fails to pay the fine is liable to an additional term of imprisonment (s. 462.37(4)). B. The Multiple Purposes of the Proceeds of Crime Regime

(1) General Principles [ 29 ] I accept that Parliament had several objectives in mind when it enacted this comprehensive proceeds of crime regime: what Professor Sullivan refers to as “the desired mix of goals” ( Sullivan on the Construction of Statutes (6th ed. 2014), at p. 409). [ 30 ] When interpreting a complex scheme such as this one, it is necessary to avoid fixating on one objective to the exclusion of others. As Professor Sullivan explains, secondary purposes must be given an active role in the statutory

interpretation analysis: While legislation may be enacted to promote a primary policy or principle, the primary goals of legislation are almost never pursued single-mindedly or whole-heartedly; various secondary principles and policies are inevitably included in a way that qualifies or modifies the pursuit of the primary goals. Observing the principles of fairness or natural justice, for example, may preclude adopting the most efficient and cost-effective means of pursuing a policy like national security . . . . Secondary purposes are not often mentioned in the

preamble to legislation or in formal purpose statements. It is through analysis of the legislative scheme, and more particularly through analysis of the relation of each provision to the others in the Act, that these secondary purposes are revealed. [Footnotes omitted; p. 271.] Likewise, in Sun Indalex Finance, LLC v. United Steelworkers , 2013 SCC 6 , [2013] 1 S.C.R. 271, Cromwell J. cautioned that primary legislative purposes, however important, “are not pursued at all costs and are clearly intended to be balanced with other important interests within the context of a carefully calibrated scheme” (para. 174).

In other words, the overarching purpose of a legislative scheme informs, but need not be the decisive factor in the

interpretation of a particular provision within that scheme. [31] Keeping these principles in mind, it is necessary to: address both the decision of this Court in Lavigne and how it does not provide theanswer to the issue in this case; assess how the return process was intended to work given that a sentencing judge subsequently has a discretion to impose afine instead of forfeiture; and canvass the particular purposes animating the return provisions.

(2) The Lavigne decision [32] This Court addressed the general objectives of the proceeds of crime regime and the fine instead of forfeiture provision in Lavigne. Thelegal issue in Lavigne was whether sentencing judges could take an offender’s ability to pay into account when determining whether to impose a fine insteadof forfeiture, and the amount of the fine. Mr. Lavigne admitted he had received $150,000 from his criminal enterprise, but argued that he did not benefitfrom the money because it was spent “on his friends and family” (para. 3). This Court held that Parliament had not intended for Mr.

Lavigne’s inability topay a fine to be a factor considered by the sentencing judge when deciding whether to impose a fine instead of forfeiture. To allow him to claimimpecuniosity, and to reduce the amount of that fine by what he chose to spend on gifts and other purchases for his friends and family, would effectivelyallow Mr.

Lavigne to benefit from his crimes in a manner that would defeat the purposes underlying the proceeds of crime regime. [33] In Lavigne, this Court found that sentencing judges should exercise their discretion to order a fine instead of forfeiture in a way that doesnot undermine the objectives of the proceeds of crime regime. This Court held that Parliament’s primary, or overall, goal in the proceeds of crime regimewas to ensure that profit-generating offences do not “benefit the offender”, and “to ensure that crime does not pay” (para. 10).

The forfeiture provision wasintended “to deprive the offender and the criminal organization of the proceeds of their crime and to deter them from committing crimes in the future”(Lavigne, at para. 16; also see para. 23). In order to accomplish this, it was necessary to prevent accused persons from avoiding forfeiture by hiding ordissipating property. Thus, the seizure provisions allow the state to take control of property believed to be proceeds of crime before trial and sentencing, toensure it remains available for possible forfeiture.

Likewise, the fine instead of forfeiture provision ensures that, if accused persons were able to keepproceeds of crime from the state throughout the criminal proceedings, they must in the end pay a fine equivalent to the value of the property that is notavailable to be forfeited. As observed in Lavigne, this ensures “that the proceeds of a crime do not indirectly benefit those who committed it” (para. 18). [34] However, Lavigne did not involve the return provision at all.

Thus, for our purposes, Lavigne addressed some of Parliament’s objectives,and did not consider the separate purposes underpinning the return provision. This appeal, in contrast, turns on the return provision and its interaction withthe other parts of the proceeds of crime regime; especially its relationship with the fine instead of forfeiture provision.

It is therefore necessary in this casefor the Court to determine how a judge’s discretion should be exercised in order to balance the objectives underlying the proceeds of crime regime as awhole and the specific additional objectives of the legal expenses return provision. The return provision shows that Parliament intended that other secondaryobjectives would have to be balanced against the primary objective of ensuring that “crime does not pay”.

As a result, the purposes behind the express anddistinct return provision are now of crucial significance as they will inform how the return provision can be read harmoniously with the fine instead offorfeiture provision.

(3) The Return Process for Reasonable Legal Expenses [35] Through the return provision, Parliament created a distinct and special process that allows an accused to reclaim seized property forspecific purposes listed in s. 462.34(4), which include reasonable legal expenses.

Parliament prescribed a particular application procedure, which involvestwo hearings before a judge; required applicants to show that they had no other assets or means; prohibited the return of the funds where a third partyappeared to be the lawful owner or lawfully entitled to possession of the property; allowed a judge to decide what amount should be returned; ensured thatany return is effected by judicial order that can specify amounts, number of counsel, etc.; and provided for a subsequent review of these amounts to ensurethey were in fact reasonable. [36] Often, a proposed budget is submitted to the court in camera (as in R. v.

Davidson, 2016 ONSC 7440, at para. 21 ), but wherethis is not done, the judge may fix the allowable hours and incidental fees (R. v. Alves, 2015 ONSC 4489, at paras. 46-51 ). Further, s. 462.34(5)requires the judge to “take into account the legal aid tariff of the province” and, under s. 462.34(5.2), the legal fees may be taxed (that is, reviewed oraudited). The judge’s inquiry into the financial situation of the accused “must be more than cursory” and “[a] significant and in-depth review of the facts isrequired” (R. v. Borean, 2007 NBQB 335, 321 N.B.R. (2d) 309, at para. 8).

The seized funds will then be returned in accordance with the terms of thejudicial order. [37] The wording of the relevant provisions and the elaborate and detailed nature of the return provision indicate that Parliament clearly anddeliberately sought to address an accused’s need for legal counsel, but only in limited and narrow circumstances: (1) where the accused has “no other assetsor means” and, therefore, access to the funds is truly necessary; and (2) where “no other person appears to be the lawful owner of or lawfully entitled topossession of the property” (s. 462.34(4)).

The return provision is thus intended to provide a safety net for those accused persons who are in financial need.

(4) The Purposes of the Return Provision [38] A review of the Parliamentary debates during the enactment of the proceeds of crime regime reveals two objectives that underpin thelegal expenses return provision under s. 462.34(4)(c)(ii): (1) providing access to counsel; and (2) giving meaningful weight to the presumption of innocence.These objectives reflect an underlying intention to promote fairness in criminal prosecutions that runs through the proceeds of crime scheme established byParliament. [39] In testimony before the legislative committee studying the bill that introduced the proceeds of crime regime in the Code, the Minister ofJustice indicated that: [T]hese measures guarantee the rights of innocent third parties and ensure safeguards for the accused person. . . .

There is nothing in the bill to change theguarantees of the presumption of innocence or the requirement that guilt be established beyond a reasonable doubt at the time of trial. (House of Commons, Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-61:

An Act to amend the Criminal Code, the Food andDrugs Act and the Narcotic Act, No. 1, 2nd Sess., 33rd Parl., November 5, 1987, at p. 1:8) In later testimony, the Minister underscored the goal of fairness: [T]his proposal is intended to be a tough and effective tool against enterprise crime. I would, however, remind everyone of my continued intention to create afair procedure in relation to accused persons as well as to innocent third parties who become involved with crime proceeds. (House of Commons, Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-61:

An Act to amend the Criminal Code, the Food andDrugs Act and the Narcotic Act, No. 5, 2nd Sess., 33rd Parl., May 10, 1988, at p. 5:5)

[40] The Minister went on to explain the legal expenses return provision: I believe that this provision does strike a reasonable balance between the right to counsel of choice and the interest of state and forfeiture of the illicitproceeds of crime. . . .

The provision of allowing an application for reasonable legal fees is in fact a notable improvement to the present law, and one which Ithink we have to acknowledge will ensure the constitutional right to retain and instruct counsel. (House of Commons, Minutes, May 10, 1988, at p. 5:9) [41] At third reading, the Minister of Justice explained how these objectives underpinned the return and fine instead of forfeiture provisions: A process of immediate judicial review of these powers [of seizure and restraint], upon application by the persons concerned, has been provided for andincludes an opportunity for an accused person to claim the payments of reasonable living, business, and legal expenses out of the seized or restrainedproperty.

I must point out that these types of safeguards are unprecedented in Canadian law. In addition, the rights of third parties are recognized throughout the entireprocess of seizure, restraint, and forfeiture.

The legislation has balanced an effective forfeiture mechanism with the constitutionally protected right to counselin a manner that is characteristic of the Government’s approach to criminal matters and avoids the criticisms that have been levied at similar Americanlegislation in this area. (House of Commons, Debates, vol. 14, 2nd Sess., 33rd Parl., July 7, 1988, at p. 17258) [42] The “criticisms . . . levied at similar American legislation” referred to provisions that retroactively vested proceeds of crime in the statewith no exception for legal fees. As Justice Veit observed in R. v.

Gagnon (1993), (AB KB), 80 C.C.C. (3d) 508 (Alta. Q.B.), at p. 512: It is noteworthy that Parliament, presumably knowing of the American model using blanket seizures and the American case-law, modified the Americanapproach by allowing moneys to be spent by an accused person for such expenses as reasonable living expenses, reasonable business expenses, lawyers’fees and recognizances. [43] The Minister’s statements indicate that ensuring an accused’s ability to access legal counsel is a main objective of the legal expensesreturn provision.

While seizing funds helps protect the state’s contingent interest in the property, Parliament has signalled that this contingent interest shouldtake a back seat where it imperils an accused’s ability to access counsel. [44] Parliament’s chosen safeguard builds upon the fact that the ability of accused persons to hire a lawyer to defend themselves in criminalproceedings has been a part of English law since 1836 (An Act for enabling Persons indicted of Felony to make their Defence by Counsel or Attorney (U.K.),1836, 6 & 7 Will. 4, c. 114, s. 1), although it existed in a more limited form for treason and some other serious crimes much earlier (J.

H. Langbein, TheOrigins of Adversary Criminal Trial (2003), at pp. 101-2). It is undoubtedly a fundamental tenet of the criminal justice system. [45] The Minister’s statements indicate that Parliament was also concerned with the presumption of innocence, “the cornerstone of ourcriminal justice system” (R. v. Chaulk, (SCC), [1990] 3 S.C.R. 1303, at p. 1368). The return provision reflects the fact that, in Canada,property can be seized based only on a reasonable belief it may be proceeds of crime, and it presumptively belongs to a person who is presumed to beinnocent (B. A. MacFarlane, R. J. Frater and C.

Michaelson, Drug Offences in Canada (4th ed. (loose-leaf)), § 14:180.40.120). Indeed, the accused maynever be convicted, or the property may never be proven to be proceeds of crime. Thus, when accused persons spend returned funds on reasonable legalfees, they are spending their own money on their legal defence. Parliament was clearly concerned with the harshness of a scheme that seized the property ofpersons still presumed to be innocent, and took steps to protect their interests. [46] Finally, the Minister’s statements reflect an underlying concern for fairness to the accused in criminal prosecutions.

The principle offairness in criminal trials is foundational to our justice system (R. v. Oakes, (SCC), [1986] 1 S.C.R. 103, at p. 121; R. v. Whyte, (SCC), [1988] 2 S.C.R. 3, at p. 15; R. v. Hodgson, (SCC), [1998] 2 S.C.R. 449, at para. 18). The Minister emphasized the importanceof the “fair procedure” that was being created via the “safeguar[d]” of access to counsel. Further, the Minister stated that “[t]his Bill is a balanced and fairpiece of legislation which does not contain some of the excesses seen in previous legislation. . . .

We want to make sure, when we are attacking the proceedsof crime, that we do so in a fair way” (Debates, at p. 17259). [47] As Justice Doherty put it, the return provision “recognizes that the state should not be allowed to beggar a person who will often need toretain the assistance of counsel in order to defend himself or herself against state action directed at depriving that person of their property and liberty”(Wilson, at p. 659).

The return provision was intended to respect the principle of fairness in criminal prosecutions: an individual should not be left unable tohire legal representation because the state seized the funds with which they could have paid counsel. [48] Parliament’s intention was to create a “fair procedure” to allow for accused people to apply for the judicially authorized return of seizedfunds for specific purposes. This principle of fairness, including concepts of fair notice and reliance, should therefore inform the

interpretation of the returnprovision, especially recognizing its designated role in the larger proceeds of crime regime. [49] This review illustrates that, while Parliament was clearly motivated by the desire to remove the financial incentive from certain crimes, italso wanted to ensure that accused persons would have access to legal representation and that the presumption of innocence would be protected, in order tomaintain a procedure that is fair to the accused. These purposes constrain the pursuit of the primary objective. Judicial

interpretation should foster, notfrustrate, the balance of rights and interests in this part of the Code. In my view, the correct

interpretation does not ignore or minimize the secondarypurposes in order to achieve the primary goal of ensuring crime does not pay. Rather, all parts of Parliament’s scheme and its multiple objectives must beread together, “construed as a whole, each portion throwing light, if need be, on the rest” (Greenshields v.

The Queen, (SCC), [1958] S.C.R.216, at p. 225). [50] Although the appellant and two interveners, the British Columbia Civil Liberties Association and Criminal Lawyers’ Association ofOntario, made arguments in constitutional terms, it is unnecessary to delineate the parameters of a constitutional right of accused persons to spend their ownmoney on legal counsel in order to decide this appeal. This Court has stated that access to effective legal representation is anchored in the presumption ofinnocence, the principle of fair criminal prosecutions, and the principles of fundamental justice (R. v.

G.D.B., 2000 SCC 22, [2000] 1 S.C.R. 520, atparas. 24-25). It suffices to say that Parliament crafted its proceeds of crime regime to establish fair safeguards for the accused, notably the opportunity topay legal expenses out of seized or restrained property when necessary. [51] With these purposes in mind, I turn now to the fine instead of forfeiture provision itself.

C. Imposing a Fine Instead of Forfeiture on Judicially Returned Funds Would Undermine the Purposes of the Return Provision [ 52 ] The appellant, Mr. Rafilovich, argues that the fine instead of forfeiture provision does not apply to funds returned under a court order by a judge for the payment of reasonable legal fees. The respondent Crown says that unless the judge imposes a fine instead of forfeiture for amounts returned for legal fees, the accused benefits in a manner that undermines the goals of forfeiture.

The Crown advanced the theory that the return provision was meant to provide only interim relief to an accused person, to be recouped later as a fine instead of forfeiture. On this reasoning, the return of seized funds is a temporary advance of funds, to be recovered as a fine at a subsequent sentencing hearing. At the hearing the respondent Crown characterized a return order as “something akin to a loan, the source of the loan being the tainted funds” (transcript, at p. 78). [ 53 ] Overall, I agree with Mr. Rafilovich.

The judge’s exercise of discretion to impose a fine instead of forfeiture should be “consistent with the spirit” and “compatible with the objectives” of the scheme as a whole ( Lavigne , at paras. 28 and 52 ). The objectives of the legal expenses return provision are to ensure access to counsel and uphold the presumption of innocence and such must be balanced with the primary objective of the proceeds of crime regime, which is to ensure that crime does not pay.

Applying these objectives to this exercise of judicial discretion results in the conclusion that, generally, judges should not impose a fine for amounts returned under judicial authorization for the payment of reasonable legal fees. [ 54 ] Conversely, the Crown’s

interpretation undermines the objectives of the return provision for reasonable legal expenses — providing access to counsel and giving meaningful weight to the presumption of innocence — and fails to promote Parliament’s intention of establishing a “fair procedure”. In so doing, it fails to properly balance the rights and interests in this part of the Code and should not, therefore, be adopted.

For this reason, and to respect the multiplicity of Parliament’s objectives, generally speaking, sentencing judges should not impose a fine instead of forfeiture in relation to funds that have been judicially returned for the payment of reasonable legal fees associated with an accused’s criminal defence. [ 55 ] Access to legal counsel is a main objective of the legal expenses return provision. If the return order is viewed as a loan, and a fine instead of forfeiture is imposed on judicially returned funds as a matter of course, then the accused’s ability to access legal counsel is largely illusory.

Fearing a fine or additional imprisonment, accused persons may choose not to apply for the return of funds at all and to represent themselves instead. Thus, instead of facilitating an accused person’s access to legal counsel, the provision would do precisely the opposite: it would dissuade accused persons from accessing legal representation. The return provision was intended to ensure that individuals whose funds have been seized by the state will not be left unable to hire legal counsel.

However, accused persons who understand that the judicially returned funds will be clawed back later, through the imposition of a fine, and possibly imprisonment, will likely choose to represent themselves. As a result, individuals whose funds have been seized by the state will often be without the benefit of legal counsel. [ 56 ] When an accused person cannot access legal counsel, the presumption of innocence suffers. This is because, in facilitating the accused’s right to make full answer and defence, defence counsel helps to ensure that the case remains the Crown’s to prove.

It is difficult for lay persons accused of criminal offences to effectively navigate “the increased complexity of criminal cases” that this Court has described as affecting “most cases” in our criminal justice system ( R. v. Jordan , 2016 SCC 27 , [2016] 1 S.C.R. 631, at paras. 53 and 83 ). [ 57 ] Nor is the importance of the presumption of innocence “spent” once an accused person is found guilty (at para. 159).

The criminal justice system does not, and should not, retroactively dilute the presumption of innocence after an accused is found guilty, nor does it attach preconditions or penalties to reliance on the presumption. Imposing retroactive penalties on accused persons who rely on the presumption of innocence can have no effect but to undermine the presumption and the protections it affords to accused persons. For example, the presumption of innocence underlies the concept of bail ( R. v. Antic , 2017 SCC 27 , [2017] 1 S.C.R. 509, at para. 1 ).

The time spent free on bail is not added back at sentencing; to the contrary, restrictive bail conditions can be a mitigating factor at sentencing. [ 58 ] Just as there is no statutory mechanism to “recover” time spent free on bail in the judicial interim release regime because such a mechanism would be at cross-purposes with the regime’s entrenchment of the presumption of innocence, the fine instead of forfeiture provision cannot represent, as a matter of course, a retroactive dilution of the presumption of innocence in respect of property that has been judicially returned for the payment of reasonable legal expenses.

Although there is a statutory mechanism to recover spent proceeds of crime through the fine instead of forfeiture regime, this analogy to bail emphasizes that offenders generally are not punished for reliance on the presumption of innocence. By enacting the legal expenses return provision, Parliament sought to give meaningful weight to the fundamental principle of the presumption of innocence, in part by ensuring that accused persons could access counsel.

Interpreting the return provision as merely temporary, thereby dissuading accused persons from retaining and instructing counsel, undermines the very objective that Parliament sought to achieve. [ 59 ] Further, imposing a fine on judicially returned funds raises concerns of notice and reliance that are rooted in the principle of fairness to the accused in criminal prosecutions. It can be expected that accused people will rely on a court order authorized by a specific statutory scheme. Those accused persons cannot reasonably know that doing so will lead to additional punishment.

Yet “[t]he rule of law requires that laws provide in advance what can and cannot be done” ( R. v. Mabior , 2012 SCC 47 , [2012] 2 S.C.R. 584, at para. 14 ; R. v. Levkovic , 2013 SCC 25 , [2013] 2 S.C.R. 204, at para. 3 ).

The general imposition of a fine instead of forfeiture on judicially returned funds would not respect principles of fair notice, further undermining Parliament’s intent to create a fair procedure that enables access to counsel and ensures the presumption of innocence. [ 60 ] My colleague minimizes these concerns by stating that while the “choice” to retain counsel in the face of having a fine imposed on the judicially returned funds “may not be an easy one, our criminal justice system does not promise an experience free of difficult choices” (para. 142).

With respect, there is a difference between a difficult choice and no real choice at all. The “choice” faced by an accused person in this instance is a Hobson’s choice — an apparently free choice in which there is effectively only one option. In this case, that option is to go without legal representation. This Court has cautioned against creating a Hobson’s choice like this in the criminal law context ( R. v.

Taylor , 2014 SCC 50 , [2014] 2 S.C.R. 495, at para. 40 ). [ 61 ] For all of the above reasons, interpreting the judicially authorized return of funds as a loan from the state to the accused of the accused’s own money — effectively turning it into a baited trap — would dissuade its use and ultimately frustrate Parliament’s objectives in enacting the legal expenses return provision. D. Is the Return of Funds for Reasonable Legal Expenses a Benefit? [ 62 ] The Crown also argues that Mr.

Rafilovich received a “benefit” — the payment of his legal fees — that he must be deprived of through the imposition of a fine instead of forfeiture in order to uphold the purpose of the proceeds of crime regime (R.F., at para. 49).

I disagree. [ 63 ] Although this Court in Lavigne found that the primary purpose of the proceeds of crime regime and the fine instead of forfeiture provision is to prevent offenders from directly or indirectly benefitting from crime (paras. 10 and 18), this purpose is not undermined by allowing for accused persons to use seized funds to pay for reasonable legal expenses. [ 64 ] In one limited sense, an accused person with access to funds for legal counsel has a benefit that other accused persons may not have.

In my view, however, the judicial return of funds to pay for a lawyer is not the type of benefit that Parliament sought to take away from offenders by way of a fine. Rather, it is a benefit that Parliament expressly intended them to have, which is evident from the very existence of the return provision.

As discussed above, the alternative, which would amount to a temporary loan of the seized funds, would tilt the balance sharply towards the state and marginalize Parliament’s important secondary purposes behind the protections and principles of the legal expenses return provision. [ 65 ] Instead of a temporary loan, Parliament balanced the multiple objectives by tightly controlling the extent of any benefit. The Code

requires applicants to show that they have no other means to pay a lawyer before a judge returns funds for that purpose. “Other means” has been interpretedbroadly to include support entitlements or other sources of financial assistance (R. v. Keating (1997), 1997 NSCA 135 , 159 N.S.R. (2d) 357 (C.A.),at para. 28), help from family members (R. v. Hobeika, 2014 ONSC 5453, at para. 24 ; R. v. Kizir, 2014 ONSC 1676, 304 C.R.R. (2d) 287, atparas. 16-18), as well as the accused’s access to credit, so long as that credit is capable of being serviced (R. v. Ro, [2006] O.J. No. 3347 (QL) (Sup. Ct.), atparas. 35-39).

Even if an accused has no other means, funds cannot be returned unless the judge is satisfied that “no other person appears to be the lawfulowner of or lawfully entitled to possession of the property”. As well, accused persons often cannot receive legal aid because the seized property is attributed to them and effectively disqualifies them from receiving assistance, even though they cannot actually access their seized property.[5] This occurred withMr. Rafilovich.

The legal expenses return provision, therefore, achieves a balance by providing a safety valve for a narrow category of accused persons inneed while still depriving offenders from accessing the proceeds of crime in most other cases. [66] This conclusion is consistent with Lavigne’s statements on how a sentencing judge should exercise discretion to impose a fine. InLavigne, imposing a fine instead of forfeiture advanced the purpose of the proceeds of crime regime; in Mr.

Rafilovich’s case, imposing a fine wouldundermine the purpose of the legal expenses return provision that Parliament included in that same regime. [67] In my view, the Court of Appeal over-emphasized the broad objective of the fine instead of forfeiture provision to prevent indirect benefitto the accused and gave inadequate attention to the important objectives in the detailed return process enacted by Parliament. The legal expenses returnprovision allowed Mr.

Rafilovich, who had no other assets or means to pay for his defence, an opportunity to access seized funds (which remained hisproperty) under close judicial scrutiny and tight conditions. This “benefit” is not the kind of benefit that the fine instead of forfeiture provision is aimed atpreventing. As Veit J. observed in Gagnon, I do not agree with the Crown’s contention that lawyers’ fees are like hairdressers’ fees: that they represent the exercise by an accused of discretion inrelation to disposable income.

Although Parliament’s intention is to strip a convict of the right to exercise that general kind of discretion, it characterizedlawyers’ fees as a special type of expenditure . . . . [p. 512] [68] It is undeniable that because Mr. Rafilovich used the returned funds to finance his legal defence, there is less money available to beforfeited to the Crown. But this by-product of accused persons exercising their rights is not unusual. A fundamental purpose of the criminal justice system isto provide a fair process to achieve just results, not to extract maximum retribution at any cost. E.

The Payment of Reasonable Legal Fees Is Not the Kind of Transfer to a Third Party Contemplated in

Section 462.37(3) [69] The purposes of the fine instead of forfeiture provision further support the

interpretation that judges are not to use their discretion togenerally impose fines on funds returned by court order for reasonable legal expenses.

Section 462.37(3) sets out two conditions before a fine may beimposed. First, there must be “property or any part of or interest in the property [that] cannot be made subject to an order”. If this precondition is met, theanalysis continues to the list of examples: . . . In particular, a court may order the offender to pay a fine if the property or any part of or interest in the property (

a) cannot, on the exercise of due diligence, be located; (

b) has been transferred to a third party; (

c) is located outside Canada; (

d) has been substantially diminished in value or rendered worthless; or (

e) has been commingled with other property that cannot be divided without difficulty. The phrase “in particular” implies a non-exhaustive list of circumstances in which a fine may be appropriate. [70] In Lavigne, Justice Deschamps acknowledged that the use of “in particular” in s. 462.37(3) suggests there “are other circumstances thatdo not appear on the list. However, those circumstances must be similar in nature to the ones that are expressly mentioned” (para. 24).

This determinationrequires us to consider the unifying features behind the examples that Parliament has provided as situations that would attract the imposition of a fine insteadof forfeiture. [71] In this case, the Crown’s argument focussed on the notion that the property judicially returned to the accused for legal expenses had“been transferred to a third party” — Mr. Rafilovich’s lawyer — and thus fell within s. 462.37(3)(b).

Even if the judicial return of funds to pay legal feesconstitutes a “transfe[r]” to a third party, judges retain a discretion to nevertheless decline to order the fine where it would be contrary to the objectives ofthe return provision. In my view, the judicially authorized payment of reasonable legal fees is not the kind of “transfer” that Parliament intended to capture inthis subsection. [72] The key distinguishing feature here is judicial authorization.

The returned funds are never held or transferred by the accused person: theyare sent directly from the state — with judicial permission — to a designated person for permitted purposes under strict judicial supervision. The accused’slawyer is not some unknown person receiving the funds by way of an entirely uncontrolled, private transaction, as was the case in Lavigne. Rather, theyhave been specifically authorized by a judge through a return order to be paid at a stipulated hourly rate for specified services in aid of the accused’sdefence.

As the Newfoundland and Labrador Court of Appeal held in Appleby, it is inappropriate “to treat the transfer of funds upon the order of a judge,specifically authorized to so order for a purpose and in the limited circumstances expressly authorized by the statute, as being activities of the samecharacter as” funds that are transferred privately to third parties with no judicial oversight (para. 53). [73] Nor is the judicially authorized use of property for reasonable legal fees thematically analogous to any of the other listed reasons forordering a fine instead of forfeiture.

All of the circumstances listed in s. 462.37(3) reflect Parliament’s concern that an accused person — not a judge —might hide, dissipate or distribute property that may later be determined to be proceeds of crime. Indeed, this was the prevailing

interpretation at the time theprovision was enacted. In his testimony before the legislative committee, the Minister of

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