Canada (Attorney General) v Dew, 2016 MBCA 95

Citation: Canada (Attorney General) v Dew, 2016 MBCA 95 Date: 20160930 Docket: AR15-30-08418 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Barbara M. Hamilton Mr. Justice Marc M. Monnin Madam Justice Janice L. leMaistre BETWEEN : HER MAJESTY THE QUEEN ) S. J. Thliveris ) for the Appellant (Respondent) Respondent ) ) J. A. Hyman and - and - ) J. J.

Zurbriggen ) for the Respondent ) ERNEST JOHN DEW ) Appeal heard: ) March 2, 2016 (Applicant) Appellant ) ) Judgment delivered: ) September 30, 2016 On appeal from 2015 MBQB 40 , 318 ManR (2d) 4 MONNIN JA [ 1 ] This appeal is brought pursuant to section 20(5) of the Controlled Drugs and Substances Act , SC 1996, c 19 (the Act ), from a decision by a judge of the Court of Queen’s Bench denying the appellant relief from forfeiture of net mortgage sale proceeds of his home. As a result, the order of forfeiture of the proceeds made under

section 16 of the Act stood. [ 2 ] An understanding of the factual background is necessary to appreciate the matters at issue on this appeal. [ 3 ] The appellant and his wife, Vera Dew, lived together on a property in St. Andrews, Manitoba (the home). In January of 2006, in a multi-count indictment, both were charged with the trafficking of cocaine. Mrs. Dew was only charged with one count (count 8) which involved an allegation of the trafficking of cocaine from the home (known as deal #4). The appellant was charged under that count as well. That same month, the appellant and Mrs.

Dew transferred the home from joint ownership to the appellant, who remortgaged it to consolidate bank debts. [ 4 ] After their arrests, the home became subject to a restraint order under

section 14 of the Act . Subsequently, a further order amended the restraint order to attach the net mortgage sale proceeds pertaining to the home. [ 5 ] Mrs. Dew pleaded guilty while the appellant denied that he was involved in deal #4. At the sentencing hearing for Mrs. Dew, the Attorney General of Canada (the AG) proceeded under

section 16 of the Act , seeking forfeiture of the net mortgage sale proceeds. Mrs. Dew agreed that the home and, therefore, the net mortgage sale proceeds were offence-related property under the Act and consented to the forfeiture order as part of her sentencing process. The appellant took the position that he was the registered owner and his interests should be respected.

As a result, no steps were taken to forfeit the net mortgage sale proceeds until the matters relating to his charges were resolved. [ 6 ] In April 2011, at the appellant’s trial, the trial judge acquitted the appellant of count 8, but convicted him of trafficking in cocaine with respect to other transactions as well as for possession of proceeds of crime. He received a 12-year sentence. There was evidence before the Court that, from 2000 to 2006, the appellant was the president of the Hell’s Angels criminal organization in the City of Winnipeg.

With respect to count 8, the trial judge wrote ( R v Dew (EJ) , 2011 MBQB 89 , 264 ManR (2d) 134 at paras 45 ,

48): However, while I am completely satisfied on the basis of the intercepted communications that the police agent and Vera Dew set up the drug transaction on September 6, 2005, I am not satisfied on the basis of the police agent’s evidence concerning the [appellant]’s involvement in this transaction. Respecting Deal #4, I find that the [appellant]’s purported involvement was not sufficiently corroborated by the intercepted communications.

Having considered all of the evidence, I am not satisfied beyond a reasonable doubt that the only reasonable inference that can be drawn is that the [appellant] is guilty of trafficking cocaine, whether as principal or as a party to Deal #4. The [appellant] is therefore acquitted of the charge in Count 8. [ 7 ] In January 2012, the Crown filed an application for forfeiture of the net mortgage sale proceeds under

section 16 of the Act . The appellant then applied for relief of forfeiture pursuant to sections 19(3) and 19.1(3) of the Act , which read as follows: Order of restoration of property 19(3) Where a court is satisfied that any person, other than (

a) a person who was charged with a designated substance offence, or (

b) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (

a) under circumstances that give rise to a reasonable inference that the title or right was transferred for the purpose of avoiding the forfeiture of the property, is the lawful owner or is lawfully entitled to possession of any property or any part of any property that would otherwise be forfeited pursuant to an order made under subsection 16(1) or 17(2) and that the person appears innocent of any complicity in an offence referred to in paragraph (

a) or of any collusion in relation to such an offence, the court may order that the property or part be returned to that person.

Non-forfeiture of real property 19.1(3) Subject to an order made under subsection 19(3) , if a court is satisfied that the impact of an order of forfeiture made under subsection 16(1) or 17(2) in respect of real property would be disproportionate to the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the criminal record, if any, of the person charged with or convicted of the offence, as the case may be, it may decide not to order the forfeiture of the property or part of the property and may revoke any restraint order made in respect of that property or part. [ 8 ] The application judge found that the forfeiture order was mandatory under

section 16 of the Act . After reviewing the law and applying it to the evidence, she also found that the appellant failed to satisfy the Court, on a balance of probabilities, that he was innocent of complicity or collusion in deal #4 to entitle him to relief from forfeiture. She also found that the impact of the forfeiture order was not disproportionate and she refused to exercise her residual discretion to provide relief from forfeiture in the circumstances. As a result, his application was denied. [ 9 ] There is no appeal from a decision under

section 19, as there is under

section 20 of the Act . The parties attended before the application judge with an application by the appellant under

section 20 , which reads: Application 20(1) Where any offence-related property is forfeited to Her Majesty pursuant to an order made under subsection 16(1) or 17(2), any person who claims an interest in the property, other than (

a) in the case of property forfeited pursuant to an order made under subsection 16(1), a person who was convicted of the designated substance offence in relation to which the property was forfeited,

(

b) in the case of property forfeited pursuant to an order made under subsection 17(2), a person who was charged with the designatedsubstance offence in relation to which the property was forfeited, or (

c) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (

a) or (

b) undercircumstances that give rise to a reasonable inference that the title or right was transferred from that person for the purpose of avoidingthe forfeiture of the property, may, within thirty days after the forfeiture, apply by notice in writing to a judge for an order under subsection (4). Order declaring interest not affected by forfeiture 20(4) Where, on the hearing of an application made under subsection (1), the judge is satisfied that the applicant (

a) is not a person referred to in paragraph (1)(a), (

b) or (

c) and appears innocent of any complicity in any designated substance offencethat resulted in the forfeiture of the property or of any collusion in relation to such an offence, and (

b) exercised all reasonable care to be satisfied that the property was not likely to have been used in connection with the commission ofan unlawful act by the person who was permitted by the applicant to obtain possession of the property or from whom the applicantobtained possession or, where the applicant is a mortgagee or lienholder, by the mortgagor or lien-giver, the judge may make an order declaring that the interest of the applicant is not affected by the forfeiture and declaring the nature and theextent or value of the interest.

Appeal from order made under subsection (4) 20(5) An applicant or the Attorney General may appeal to the court of appeal from an order made under subsection (4), and theprovisions of

Part XXI of the Criminal Code with respect to procedure on appeals apply, with such modifications as the circumstancesrequire, in respect of appeals under this subsection. Return of property 20(6) The Minister shall, on application made to the Minister by any person in respect of whom a judge has made an order undersubsection (4), and where the periods with respect to the taking of appeals from that order have expired and any appeal from that ordertaken under subsection (5) has been determined, direct that (

a) the property, or the part of it to which the interest of the applicant relates, be returned to the applicant; or (

b) an amount equal to the value of the interest of the applicant, as declared in the order, be paid to the applicant. [10] The parties jointly requested that the application judge dismiss the

section 20 application, thus allowing the appellant toexercise his appeal rights under section 20(4). Therefore, a consent dismissal of his

section 20 application is the order on appeal beforeus, with a request that we deal with it as if it had been determined on the same basis as the

section 19 application. There is precedent forthis approach. [11] In R v Vu (TH) et al, 2011 BCCA 298, 307 BCAC 269, Donald JA (writing for the Court) cited Boulet c Québec(Procureur général), (Qc CA), stating (at paras 12-13): It will be seen that under s. 20(4) the absence of complicity and collusion are pre-conditions to the exercise of the relief power and thatthe language is parallel to s. 19(3). So it appears that a s. 20 application cannot succeed in the face of a s. 19(3) finding adverse to the

interest holder. Yet, because of the way the legislation is written, the only recourse for someone in [the appellant’s] position is to bring a futile s. 20 application in order to have the s. 19(3) ruling reviewed on appeal. This is a waste of court time and expense but unavoidable given that this Court’s jurisdiction is limited by statute. [ 12 ] In the subsequent case of R v Zeng (FQ) , 2013 BCCA 361 , 341 BCAC 285 , Bennett JA confirmed that (at para 7): This is an unfortunate oversight in the legislation that requires appellants, counsel and the courts to jump through pointless procedural hoops.

Until there is a change in the legislation, there appears to be no other route to permit a non-convicted person who has a valid interest in property to appeal an order of forfeiture under the [ Act ].

The Decision Below [ 13 ] Relying upon the decision in R v Zhou (WB) , 2008 MBQB 19 , 223 ManR (2d) 304 , the application judge addressed five questions, namely: 1) Was the property offence related? 2) Was the offence committed in relation to that property? 3) Did the third party (the appellant) qualify for the return of the property by reason of being the lawful owner or otherwise lawfully entitled to possession of the property? 4) Did the appellant appear innocent of any complicity in the designated substance offence (deal #4)? 5) Did the appellant appear innocent of any collusion in relation to the designated substance offence (deal #4)? [ 14 ] Prior to addressing those questions, she noted that the AG took the position that, as the appellant was a person charged with a designated substance offence by virtue of his inclusion on count 8 of the indictment, he was not entitled to claim the relief from forfeiture remedy under section 19(3) .

She dismissed that position on the view that it was inconsistent with the presumption of innocence provided by

section 11(

d) of the Canadian Charter of Rights and Freedoms , as he would be denied relief based only upon being charged with the offence and not as a result of a conviction.

While this conclusion is not at issue in this appeal, it may warrant consideration where the issue is raised in other proceedings, it having been subject to some negative commentary (see Bruce A MacFarlane, Robert J Frater & Croft Michaelson, Drug Offences in Canada , 4th ed (Toronto: Canada Law Book, 2015), (loose-leaf revision 2016-3), ch 15 at 15:160.20.) [ 15 ] As to the first two questions, the application judge determined that the property, the home and, therefore, the net mortgage sale proceeds were offence-related as defined in

section 2 of the Act , and that the offence was committed in relation to that property. There is no issue raised with respect to those determinations. [ 16 ] As to the third question, namely, whether the appellant was the lawful owner, the issue was whether the appellant had become the sole owner of the home in order to avoid forfeiture.

The application judge concluded that the evidence suggesting that the transfer of title to him was done to avoid forfeiture was not sufficient to reach that conclusion. [ 17 ] As to the determinations of the fourth and fifth questions, the application judge recognized that they were the more difficult questions to answer.

Relying upon the findings of the trial judge, who had concluded that the appellant was part of an unlawful common design to traffic in cocaine, and, provided incidental assistance to procure the purchase of cocaine, she concluded that the appellant could not satisfy the requirement that he show he was innocent of complicity and collusion. In her view (at para 67): [The appellant’s] participation was insufficient to attract criminal responsibility. However, he bears the onus, on a balance of probabilities, to satisfy the court that he is innocent of complicity and collusion.

This, he has failed to do. [ 18 ] She noted a number of factors which satisfied her of the appellant’s complicity and collusion in relation to deal #4, namely: - he vouched for the police agent to enable transactions. - he was an integral part of an unlawful common design to traffic in cocaine which involved an associate who was also involved in deal #4; - he provided assistance to the police agent with respect to deal #4; - he had credibility issues and vouched for the police agent to facilitate his ability to deal in drugs;

- his complicity and collusion were in relation to what transpired in deal #4; - he was willfully blind if direct knowledge did not exist. [ 19 ] She chose not to exercise her residual discretion in favour of the appellant considering a number of factors which she listed in her decision at para 73. Issues [ 20 ] The issues raised by the appellant’s grounds of appeal are:

a) Did the application judge err in ruling that the appellant could not show that he was innocent of complicity or collusion?

b) Did the application judge err in holding that the full forfeiture of the proceeds of sale was not disproportionate to the offence?

c) Did the application judge err by failing to exercise her residual discretion in favour of the appellant? Relevant Legislation [ 21 ] The relevant portions of the Act for purposes of this appeal are set out in the attached appendix. They are sections 2 , 16 , 19, 19.1 and 20 .

Section 19 and

Section 20 of the Act [ 22 ] The leading case on the relief from forfeiture provisions of the Act is R v Craig , 2009 SCC 23 , [2009] 1 SCR 762 . Although that case dealt with an application for forfeiture under section 16(1) and the applicability of the factors in

section 19.1, the comments on the purpose of the forfeiture scheme and related considerations are apt. Abella J stated (for the majority), as follows (at paras 40-41, 48, 55-58): The sentencing inquiry focuses on the individualized circumstances of the offender; the main focus of forfeiture orders, on the other hand, is on the property itself and its role in past and future crime. The forfeiture scheme is focused in part on taking offence-related property out of circulation and on confronting organized crime, whether or not the property is owned by the offender.

Individuals who have allowed their property to be used for criminal purposes, even if their conduct does not rise to the level of criminal liability with respect to the particular offence, may, as a result, also be subject to forfeiture orders, as reflected in s. 19(3) , which provides a recovery mechanism for third-party owners of offence-related property to be forfeited. Under that section, a court must be satisfied that individuals are innocent of any complicity or collusion in the offence before they can recover their property.

This is consistent with the historic roots of forfeiture as punishment for negligently allowing one’s property to be used for wrongful purposes, a consequence connected to, but not identical to, punishment for the offence. The forfeiture factors found in s. 19.1(3), therefore, should similarly be seen to constitute a complete code for deciding whether, and to what extent, a forfeiture order should be made. This exercise of discretion does not engage the full panoply of principles used to determine whether a sentence is fit when the statute sets out its own guiding factors.

The expansive principle of proportionality used in sentencing, therefore, has been excluded both expressly and by necessary implication, in favour of the more specific factors outlined in s. 19.1(3) . The proportionality test under s. 19.1(3) therefore allows a court to tailor the amount of property to be forfeited in a way that takes into account the relative weight of the listed factors. Partial forfeiture gives the court greater scope for applying the proportionality test so that the only options available to the sentencing judge are not a stark choice between full or no forfeiture.

This establishes a spectrum of potential forfeiture orders that can be adjusted to reflect the relative gravity of the case, pursuant to the purposes of the forfeiture scheme. What, then, should a judge consider under s. 19.1(3) ? The nature and gravity of the offence could include the character and quantity of the substance involved, the level of sophistication of the crime and the extent to which the commercial production or distribution of drugs was involved.

The second factor, the circumstances surrounding the commission of the offence, might include consideration of the offender’s role in the commission of the offence, the nature of the property and the manner in which it was used in the offence, risks to the security or safety of the community, whether the property was used in a manner that detrimentally affected its legitimate use and enjoyment, whether the property was fortified or otherwise adapted to accommodate the grow operation, the extent of the offender’s involvement in organized crime and whether the property itself was held by a criminal organization.

The criminal record of the offender is self-explanatory.

It will be of particular relevance if the prior offences were drug related. [ 23 ] More recently in R v Fercan Developments Inc et al , 2016 ONCA 269 , 347 OAC 262 , the Ontario Court of Appeal, on an appeal related to a costs award against the Crown in connection with unsuccessful forfeiture proceedings, discussed the nature and purpose of the forfeiture regime as follows (at paras 13, 15-17, 81): Sections 16-22 of the [ Act ] create a regime for the forfeiture of “offence-related properties” and provide safeguards for innocent third- parties not implicated in the underlying offences.

This ability to forfeit offence-related properties advances three objectives. First, it punishes offenders by taking away property used in the commission of designated-substance offences. Second, it deters future offences by imposing costs on anyone who either uses or permits their property to be used in the commission of designated-substance offences. Third, it ensures that the forfeited property is no longer available for the commission of offences.

This forfeiture regime may apply to property owned by individuals who have never been convicted of or even charged with a designated- substance offence: Craig , at para. 41 . However, s. 16 is subject to ss. 18-19.1. These provisions give effect to the common sense proposition that property owners who acted reasonably, were unaware of and not involved in any criminal activity, and did not profit from any illegal acts should not be subject to punishment or loss.

Section 19(3), which was the focus of the underlying forfeiture application, permits a judge to return offence-related property to any person who is lawfully entitled to it and who appears innocent of any complicity or collusion in respect of the underlying designated- substance offence. As noted, the [ Act ] forfeiture regime provides a number of protections for bystanders. These protections are meant to ensure fair treatment of innocent third parties: R. v. Connolly, 2007 NLCA 5 , 262 Nfld. & P.E.I.R. 281 , at para. 62 ; 8477 Darlington Crescent [2011 ONCA 363 , 279 OAC 268 ], at para. 100.

As noted in 1431633 Ontario Inc. v. Canada (Attorney General) , 2010 ONSC 266 , 250 C.C.C. (3d) 354 , at para. 30 , Parliament did not intend to achieve its objectives under the [ Act ] at the expense of innocent third parties. This fact was recognized in Maple Trust Co. v.

Canada (Attorney General) , 2007 BCCA 304 , 221 C.C.C. (3d) 505 , at para. 26 , where the court referred to the [ Act ]’s “objective of attaching the interests of those implicated in [the Act ] offences while protecting the rights and interests of innocent third parties.” [ 24 ] As stated by Theresa M Brucker, The Practical Guide to the Controlled Drugs and Substances Act , 4th ed (Toronto: Thomson Carswell, 2008) at 210: The overall intent of the scheme was to ensure that offence-related property was not returned to the accused, but that the interests of innocent third parties with valid interests in the property were protected. [ 25 ] The jurisprudence and commentary demonstrates that section 19(1) deals with relief from forfeiture prior to the order being made.

Section 20 provides post-forfeiture relief dealing with the interests of innocent third parties who are lawfully entitled to possession of all or part of the property. [ 26 ] In R v Nguyen (TV) et al , 2011 BCCA 471 , 313 BCAC 114 , Hall JA (writing for the Court) described the differences between sections 19 and 20 in the following manner (at paras 17-18): What I might term a s. 20 issue will most usually involve the interest of a charge holder in the property that is the subject matter of a forfeiture proceeding, such as a mortgagee or a lienholder.

The appellant submits that the statutory language contained in the [ Act ] is itself indicative of the intendment of Parliament to provide that an order of forfeiture be made concerning “the property” as opposed to an “interest” in the property. Counsel points to the contrasting terminology in ss. 19 and 19.1, and s. 20 . In the two former sections, the terminology “property” is employed whereas the latter section, s. 20 , refers to an “interest” and makes provision for “declaring the nature and extent of value of the interest”. It seems to me that there is force in this submission.

Standard of Review [27] The appellant argues that since the order under appeal is a mandatory decision it is of low deference and that the issuesput forward suggest errors in principle which should be reviewed on a correctness standard. [28] I do not agree. Rather, I am of the view that a decision under

section 20 is a discretionary decision. Therefore, theappellant must demonstrate that the application judge misdirected herself as to the law or the decision was so clearly wrong as to amountto an injustice. Otherwise, the decision is entitled to deference. Analysis Issue Number One: Complicity and Collusion [29] For an applicant to have a judge exercise a discretion in his favour under

section 20, the judge must be satisfied that theapplicant “appears innocent of any complicity . . . or of any collusion” in relation to the designated substance offence (Nguyen at para 2). [30] The appellant’s main thrust on this appeal is that the application judge was, for the purposes of the application beforeher, bound by the findings of the trial judge with respect to count 8.

In other words, he says that the acquittal “conclusively anddefinitively found that [the appellant] was not involved in count 8 of the Indictment in any way” including by inference that he was aparty. [31] Therefore, he says that, under the principles of res judicata and/or issue estoppel, the application judge was preventedfrom conducting a redetermination on a balance of probabilities of an allegation that the appellant colluded or was complicit with respectto count 8. [32] I disagree.

The gist of the trial judge’s decision with respect to count 8 is stated in his decision (at paras 45, 47-48): Respecting [count 8], I find that the [appellant]’s purported involvement was not sufficiently corroborated by the interceptedcommunications. At most the [appellant] provided incidental assistance to the police agent with respect to [count 8] (see, for example, R. v. Gordon,(C.J.) (2002), 2002 ABPC 139 , 324 A.R. 94; 2002 ABPC 139).

Having considered all of the evidence, I am not satisfied beyond a reasonable doubt that the only reasonable inference that can be drawnis that the [appellant] is guilty of trafficking cocaine, whether as principal or as a party to [count 8].

The [appellant] is thereforeacquitted of the charge in Count 8. [33] However, the application judge focussed on the trial judge’s conclusion that he was satisfied beyond a reasonable doubtthat an unlawful common design existed and that the independent evidence admissible against the appellant established on a balance ofprobabilities that he was involved in that unlawful common design to traffic in cocaine. This common design pertained to all of thecounts, including count 8. [34] The findings of the trial judge did not deal with allegations of complicity or collusion.

The issue of whether complicityand collusion, under the auspices of sections 19 and 20, were shown on a balance of probabilities, was not an issue before the trialjudge.

Relying on Zhou (at para 30) the application judge noted the difference between complicity and collusion, namely, that (at para43): Complicity is the involvement with others with knowledge of an unlawful activity or objective and an intention to participate in securingthe objective (more than passive acquiescence), while collusion is an agreement with an aim of misleading one or more persons. [35] The factors which the application judge relied upon to satisfy herself as to the appellant’s complicity and collusion inrelation to count 8 are set out in para 70 of her decision and include:

a) that the appellant vouched for the police agent to enable transactions including count 8;

b) that he was an integral part of an unlawful common design to traffic in cocaine with individuals who were also involved in count 8;and

c) that he provided incidental assistance to the police agent with respect to count 8 and had vouched for the police agent to facilitate hisability to deal in drugs.

[ 36 ] While there was little evidence to tie those factors directly to count 8 and there is evidence that the appellant had no direct knowledge that the transaction was to take place on that day or at that location, the application judge was entitled, after weighing the evidence, to conclude that the appellant had not shown, on a balance of probabilities, a lack of complicity or collusion as required for relief from forfeiture under

section 19 , and in turn, under

section 20 . [ 37 ] This conclusion is determinative of this appeal, therefore, I will comment only briefly on the other two issues. Issue Number Two: Proportionality [ 38 ]

Section 19.1(3) required that the application judge consider whether the granting of an order of forfeiture of the real property, either in whole or in part, would be disproportionate to:

i) the nature and the gravity of offence; ii) the circumstances surrounding the commission of the offence; and iii) the criminal record, if any, of the person charged with or convicted of the offence. In Craig , the Supreme Court of Canada commented on these factors as set out earlier in these reasons. [ 39 ] The appellant’s position on this ground is that the trial judge improperly applied the proportionality test. However, this argument is not available to the appellant on this appeal. [ 40 ] This is an appeal under

section 20 of the Act . There is no mention of proportionality in

section 20 . Under section 20(4), what a judge must consider on an application is whether there was complicity or collusion, similar to the provisions of

section 19 , and whether an applicant exercised all reasonable care to be satisfied that the property was not likely to be involved in the commission of an offence. Therefore, under this appeal, the findings and conclusions of the application judge with respect to proportionality are irrelevant to the determination of whether the

section 20 appeal should be allowed. Issue Number Three: Residual Discretion [ 41 ] The appellant argues that the application judge erred in exercising her residual discretion as she refused relief from forfeiture based on the appellant’s past criminal convictions and/or association. She set out those considerations as follows (at para 73): The fact that [the appellant] has a substantial criminal record and criminal associations has a bearing on his right to have mortgage sale proceeds returned to him. [The appellant] was not convicted of a crime related to the property.

He was fully acquitted of all criminal charges in relation to the property.

However, the relevant factors as regards the exercise of a residual discretion must be afforded recognition in an evaluation of any exercise of granting forfeiture under this heading as well as consideration under a proportionality analysis: • [The appellant] was president of the Hells Angels for six years. • His home was a shrine to the Hells Angels. • He was found to be a Tier 1 drug dealer. • He engaged in an unlawful common design to traffic in cocaine. • He provided incidental assistance to a police agent to traffic drugs. • He engaged in trafficking a vile and serious drug. • He demonstrated a lack of “clean hands”. • An order of forfeiture would not have a disproportionate effect on [the appellant] particularly given the involvement of an organized crime element, [his] criminal record and the gravity of the drug involved: Craig at paras. 48, 21 .

A residual discretion to relief from forfeiture should not be exercised to such an individual in all of the circumstances. [ 42 ] In essence, the appellant’s argument on this ground is that by taking these factors into consideration, the application judge was punishing him for being a member of a criminal organization as well as for offences for which he had already been convicted and sentenced. [ 43 ] I cannot conclude that the application judge’s consideration of the factors recited above amount to a misdirection as to law.

Whether the appellant was a drug dealer and involved in a criminal organization are reasonable considerations to include in an assessment of residual discretion with respect to a house which was used for a drug transaction. This is in keeping with the Supreme Court of Canada’s reasoning in Craig , namely, that the Court’s discretion is to be exercised in the context of the forfeiture scheme and the statutory factors at issue. In my view, the factors considered by the application judge were well within the Court’s purview in exercising a discretion of this nature. [ 44 ]

Section 20 is intended to protect the interests of innocent third parties. This is not the situation of a completely innocent third party who had no knowledge of his wife being involved in criminal activity. The only issue is whether he knew that it occurred at his home on a specific day. I agree with the application judge that there is no injustice in the decision to deny him relief from forfeiture under the circumstances of this case. Conclusion [ 45 ] For the foregoing reasons, I would dismiss the appeal. JA I agree: JA I agree: JA APPENDIX The relevant portions of the Act for purposes of this appeal are as follows:

Definitions 2

(1) In this Act , adjudicator means a person appointed or employed under the Public Service Employment Act who performs the duties and functions of an adjudicator under this Act and the regulations; analogue means a substance that, in relation to a controlled substance, has a substantially similar chemical structure; analyst means a person who is designated as an analyst under

section 44; Attorney General means (

a) the Attorney General of Canada, and includes their lawful deputy, or (

b) with respect to proceedings commenced at the instance of the government of a province and conducted by or on behalf of that government, the Attorney General of that province, and includes their lawful deputy;

controlled substance means a substance included in

Schedule I, II, III, IV or V; designated substance offence means (

a) an offence under

Part I, except subsection 4(1), or (

b) a conspiracy or an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a); inspector means a person who is designated as an inspector under

section 30; judge means a judge as defined in

section 552 of the Criminal Code or a judge of a superior court of criminal jurisdiction; justice has the same meaning as in

section 2 of the Criminal Code ; Minister means the Minister of Health; offence-related property means, with the exception of a controlled substance, any property, within or outside Canada, (

a) by means of or in respect of which a designated substance offence is committed, (

b) that is used in any manner in connection with the commission of a designated substance offence, or (

c) that is intended for use for the purpose of committing a designated substance offence; possession means possession within the meaning of subsection 4(3) of the Criminal Code ; practitioner means a person who is registered and entitled under the laws of a province to practise in that province the profession of medicine, dentistry or veterinary medicine, and includes any other person or class of persons prescribed as a practitioner; precursor means a substance included in

Schedule VI; prescribed means prescribed by the regulations; produce means, in respect of a substance included in any of Schedules I to IV, to obtain the substance by any method or process including (

a) manufacturing, synthesizing or using any means of altering the chemical or physical properties of the substance, or (

b) cultivating, propagating or harvesting the substance or any living thing from which the substance may be extracted or otherwise

obtained, and includes offer to produce; provide means to give, transfer or otherwise make available in any manner, whether directly or indirectly and whether or not for consideration; sell includes offer for sale, expose for sale, have in possession for sale and distribute, whether or not the distribution is made for consideration; traffic means, in respect of a substance included in any of Schedules I to IV, (

a) to sell, administer, give, transfer, transport, send or deliver the substance, (

b) to sell an authorization to obtain the substance, or (

c) to offer to do anything mentioned in paragraph (

a) or (b), otherwise than under the authority of the regulations.

Interpretation 2(2) For the purposes of this Act , (

a) a reference to a controlled substance includes a reference to any substance that contains a controlled substance; and (

b) a reference to a controlled substance includes a reference to (

i) all synthetic and natural forms of the substance, and (ii) any thing that contains or has on it a controlled substance and that is used or intended or designed for use (

A) in producing the substance, or (

B) in introducing the substance into a human body.

Interpretation 2(3) For the purposes of this Act , where a substance is expressly named in any of Schedules I to VI, it shall be deemed not to be included in any other of those Schedules.

Order of forfeiture of property on conviction 16(1) Subject to sections 18 to 19.1, where a person is convicted of a designated substance offence and, on application of the Attorney General, the court is satisfied, on a balance of probabilities, that any property is offence-related property and that the offence was committed in relation to that property, the court shall (

a) in the case of a substance included in

Schedule VI, order that the substance be forfeited to Her Majesty in right of Canada and disposed of by the Minister as the Minister thinks fit; and (

b) in the case of any other offence-related property, (

i) where the prosecution of the offence was commenced at the instance of the government of a province and conducted by or on behalf of that government, order that the property be forfeited to Her Majesty in right of that province and disposed of by the Attorney General or Solicitor General of that province in accordance with the law, and (ii) in any other case, order that the property be forfeited to Her Majesty in right of Canada and disposed of by such member of the Queen’s Privy Council for Canada as may be designated for the purposes of this subparagraph in accordance with the law.

Property related to other offences 16(2) Subject to sections 18 to 19.1, where the evidence does not establish to the satisfaction of the court that the designated substance offence of which a person has been convicted was committed in relation to property in respect of which an order of forfeiture would otherwise be made under subsection (1) but the court is satisfied, beyond a reasonable doubt, that that property is offence-related property, the court may make an order of forfeiture under subsection (1) in relation to that property. Property outside Canada 16(2.1) An order may be issued under this

section in respect of property situated outside Canada, with any modifications that the circumstances require. Appeal 16(3) A person who has been convicted of a designated substance offence or the Attorney General may appeal to the court of appeal from an order or a failure to make an order under subsection (1) as if the appeal were an appeal against the sentence imposed on the person in respect of the offence.

Notice 19(1) Before making an order under subsection 16(1) or 17(2) in relation to any property, a court shall require notice in accordance with subsection (2) to be given to, and may hear, any person who, in the opinion of the court, appears to have a valid interest in the property. Manner of giving notice 19(2) A notice given under subsection (1) shall (

a) be given or served in such manner as the court directs or as may be specified in the rules of the court; (

b) be of such duration as the court considers reasonable or as may be specified in the rules of the court; and (

c) set out the designated substance offence charged and a description of the property.

Order of restoration of property 19(3) Where a court is satisfied that any person, other than (

a) a person who was charged with a designated substance offence, or (

b) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (

a) under circumstances that give rise to a reasonable inference that the title or right was transferred for the purpose of avoiding the forfeiture of the property, is the lawful owner or is lawfully entitled to possession of any property or any part of any property that would otherwise be forfeited pursuant to an order made under subsection 16(1) or 17(2) and that the person appears innocent of any complicity in an offence referred to in paragraph (

a) or of any collusion in relation to such an offence, the court may order that the property or part be returned to that person. Notice 19.1(1) Where all or part of offence-related property that would otherwise be forfeited under subsection 16(1) or 17(2) is a dwelling-house, before making an order of forfeiture, a court shall require notice in accordance with subsection (2) to be given to, and may hear, any person who resides in the dwelling-house and is a member of the immediate family of the person charged with or convicted of the indictable offence under this Act in relation to which the property would be forfeited. Manner of giving notice 19.1(2) A notice shall (

a) be given or served in the manner that the court directs or that may be specified in the rules of the court; (

b) be of any duration that the court considers reasonable or that may be specified in the rules of the court; and (

c) set out the offence charged and a description of the property.

Non-forfeiture of real property 19.1(3) Subject to an order made under subsection 19(3) , if a court is satisfied that the impact of an order of forfeiture made under subsection 16(1) or 17(2) in respect of real property would be disproportionate to the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the criminal record, if any, of the person charged with or convicted of the offence, as the case may be, it may decide not to order the forfeiture of the property or part of the property and may revoke any restraint order made in respect of that property or part.

Factors in relation to dwelling-house 19.1(4) Where all or part of the property that would otherwise be forfeited under subsection 16(1) or 17(2) is a dwelling-house, when making a decision under subsection (3), the court shall also consider (

a) the impact of an order of forfeiture on any member of the immediate family of the person charged with or convicted of the offence, if the dwelling-house was the member’s principal residence at the time the charge was laid and continues to be the member’s principal residence; and

(

b) whether the member referred to in paragraph (

a) appears innocent of any complicity in the offence or of any collusion in relation to the offence. Application 20

(1) Where any offence-related property is forfeited to Her Majesty pursuant to an order made under subsection 16(1) or 17(2), any person who claims an interest in the property, other than (

a) in the case of property forfeited pursuant to an order made under subsection 16(1), a person who was convicted of the designated substance offence in relation to which the property was forfeited, (

b) in the case of property forfeited pursuant to an order made under subsection 17(2), a person who was charged with the designated substance offence in relation to which the property was forfeited, or (

c) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (

a) or (

b) under circumstances that give rise to a reasonable inference that the title or right was transferred from that person for the purpose of avoiding the forfeiture of the property, may, within thirty days after the forfeiture, apply by notice in writing to a judge for an order under subsection (4). Fixing day for hearing 20(2) The judge to whom an application is made under subsection (1) shall fix a day not less than thirty days after the date of the filing of the application for the hearing of the application.

Notice 20(3) An applicant shall serve a notice of the application made under subsection (1) and of the hearing of it on the Attorney General at least fifteen days before the day fixed for the hearing. Order declaring interest not affected by forfeiture 20(4) Where, on the hearing of an application made under subsection (1), the judge is satisfied that the applicant (

a) is not a person referred to in paragraph (1)(a), (

b) or (

c) and appears innocent of any complicity in any designated substance offence that resulted in the forfeiture of the property or of any collusion in relation to such an offence, and (

b) exercised all reasonable care to be satisfied that the property was not likely to have been used in connection with the commission of an unlawful act by the person who was permitted by the applicant to obtain possession of the property or from whom the applicant obtained possession or, where the applicant is a mortgagee or lienholder, by the mortgagor or lien-giver, the judge may make an order declaring that the interest of the applicant is not affected by the forfeiture and declaring the nature and the extent or value of the interest. Appeal from order made under subsection

(4) 20(5) An applicant or the Attorney General may appeal to the court of appeal from an order made under subsection (4), and the provisions of

Part XXI of the Criminal Code with respect to procedure on appeals apply, with such modifications as the circumstances require, in respect of appeals under this subsection. Return of property 20(6) The Minister shall, on application made to the Minister by any person in respect of whom a judge has made an order under subsection (4), and where the periods with respect to the taking of appeals from that order have expired and any appeal from that order taken under subsection (5) has been determined, direct that (

a) the property, or the part of it to which the interest of the applicant relates, be returned to the applicant; or (

b) an amount equal to the value of the interest of the applicant, as declared in the order, be paid to the applicant.