The Director of Criminal Property and Forfeiture v Date:, 2020 MBCA 96

Citation: The Director of Criminal Property and Forfeiture v Date: 20201006 Gurniak et al, 2020 MBCA 96 Docket: AI19-30-09313 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Mr. Justice Christopher J. Mainella Madam Justice Jennifer A. Pfuetzner BETWEEN : THE Director of Criminal property and forfeiture ) ) L. D. Y. Cupples for the Appellant ) (via videoconference) (Plaintiff) Appellant ) ) A.

Silver - and - ) for the Respondents ) (via videoconference) darren shawn GURniak, justin shawn poitras, lea daniel murrell and agostino richichi ))) ) Appeal heard: June 3, 2020 (Defendants) Respondents ) Judgment delivered: ) October 6, 2020 COVID-19 NOTICE: As a result of the COVID-19 pandemic and pursuant to r 37.2 of the Manitoba, Court of Appeal Rules , Man Reg 555/88R , this appeal was heard remotely by videoconferencing. On appeal from 2019 MBQB 80 steel JA [ 1 ] This appeal arises from an action for the civil forfeiture of criminal property.

However, the substance of this appeal is a consideration of when a stay should be granted in a civil proceeding when there are concurrent criminal proceedings. FACTS [ 2 ] The Director of Criminal Property and Forfeiture (the Director) commenced

an act ion pursuant to The Criminal Property Forfeiture Act , CCSM c C306 (th e CPFA ) for forfeiture of cash totalling $213,670 found in a vehicle by the RCMP during a traffic stop in 2017.

During the traffic stop, the police located a small number of marihuana joints, five cell phones and: a) $107,545 contained in a “Swiss” brand suitcase found in the vehicle; b) $100,040 contained in an American Tourister suitcase found in the vehicle; c) $825 seized from a wallet found in the vehicle; d) $5,000 seized from a jacket found in the vehicle; and e) $260 seized from the defendant, Lea Daniel Murrell (Murrell), upon his arrest. [ 3 ] The defendant, Darren Shawn Gurniak (Gurniak), was the driver of the vehicle. The defendants, Justin Shawn Poitras

(Poitras) and Murrell were passengers. [ 4 ] Poitras, Murrell and Gurniak were charged with possession of marihuana contrary to section 4(1) of the Controlled Drugs and Substances Act (the CDSA ), and possession of property, namely, Canadian currency of a value exceeding $5,000 knowing that all of the proceeds of the property were obtained by the commission in Canada of an offence punishable by indictment contrary to section 354(1) (

a) of the Criminal Code (the Code ). [ 5 ] The Director alleges that the property seized, in its entirety, was the proceeds of unlawful activity as defined by the CPFA . In the alternative, the Director alleges that the property is an instrument of unlawful activity which was used for, or was intended to be used for, unlawful activity. [ 6 ] In 2017, the defendant, Agostino Richichi (Richichi), made an application under

section 462.34(4) of the Code claiming that $125,000 of the monies seized by the police was his and sought an order that those monies be released to him. The Director submitted that the real purpose of all the money was to buy drugs. However, Richichi says that he gave $125,000 of the seized money to Poitras for the purpose of buying machinery to assist in a business that Richichi was starting. [ 7 ] The Director issued a statement of claim against Gurniak, Poitras, Murrell and Richichi. Poitras, Murrell and Richichi filed statements of defence, which consisted of blanket denials of the allegations.

Specifically, they denied that the property was the proceeds of unlawful activity or was otherwise subject to the CPFA . Gurniak has been noted in default and interlocutory judgment has been noted against him. [ 8 ] In 2018, Richichi brought a motion for

summary judgment in this action for the return of the $125,000, parallel to his motion pending under the Code . All three defendants were ordered to attend for examinations for discovery prior to January 15, 2019, after which, a date was to be set to hear the

summary judgment motion. [ 9 ] Richichi was examined for discovery, but he refused to answer questions regarding certain text messages exchanged between himself, Murrell and Poitras, which were recovered by the RCMP. The Director brought a motion to compel Richichi to answer these questions. [ 10 ] Before they were examined for discovery, Murrell and Poitras responded with a motion for a stay of proceedings, arguing that the civil proceeding should await the outcome of the criminal proceedings. MOTION JUDGE [ 11 ] In 2019, the motion judge granted the stay, finding exceptional or extraordinary circumstances.

He found that (at para 32) : . . . [T]he quantity or quality of facts that might drive a case to be termed ‘exceptional or extraordinary’ need not be so extreme where a civil action commenced by the Director has been issued while criminal proceedings involving the defendants have been commenced and are pending. . . . [ 12 ] In this case, the motion judge found several circumstances existed which, considered in totality, rendered it exceptional. Those circumstances were: 1. The Director is not in the same position as another civil litigant.

He suffers no personal loss and no prejudice, and a delay in obtaining a remedy would not affect him in the same way. Moreover, the delay would not be long since the criminal trial was set six months from the time the motion was argued (see Decision at paras 27-28, 40). 2. The Director is in relative proximity to the police who have commenced criminal proceedings against one or more of the defendants. “[T]hey all in a somewhat co-ordinated way are performing different parts of the same general task . . . .

To describe the Director as any other civil litigant is, in my respectful view, inconsistent with the true state of affairs” (at para 28). 3. The Director could take actions in the civil case that could jeopardise the accused’s right to stay silent during the criminal process (see para 30). Whether the accused will be protected in a criminal trial has an element of uncertainty surrounding it until the trial judge in the criminal trial renders his decision on the issue. In addition, the motion judge found that, with respect to derivative evidence, having regard to the whole of the factual matrix,

section 13 of the Canadian Charter of Rights and Freedoms (the Charter ),

section 6 of The Manitoba Evidence Act , CCSM c E150 (the Evidence Act (Manitoba)), and the derivative use immunity doctrine were insufficient to protect the defendants’ right to a fair trial (see paras 34-36). 4. This case has the complicating factor that Richichi has brought a motion for

summary judgment (see para 39). [ 13 ] The Director appeals the stay, arguing that the motion judge misapplied the test for a stay. [ 14 ] At the time the stay was granted, the preliminary hearing had been completed and the matter was scheduled for trial. In September 2019, the criminal charges against Poitras and Murrell were stayed, rendering this appeal moot; however, the parties argue that the appeal should be heard nonetheless. POSITION OF THE PARTIES [ 15 ] The Director submits that the motion judge erred in finding that exceptional or extraordinary circumstances were present which justified staying the civil proceedings.

[ 16 ] First, it is submitted that the motion judge disregarded the principle of stare decisis by failing to follow a precedent established by his own court on the same issue without meaningful distinctions. [ 17 ] This ground of appeal has no merit and I will not deal with it further except to say that I do not read the reasons of the motion judge as relying on the obiter dicta of Greenberg J in the case of Director of Criminal Property v Lieu , 2017 MBQB 24 , to form part of the ratio of his decision.

He specifically stated that he accepts the existence of the general rule and confirmed that “I do not suggest that the test to be applied on a stay motion needs to be changed” (at para 32; see also para 25). I should also add that Greenberg J stated the test correctly in the Lieu case and applied it correctly.

It was only in an obiter comment that she wondered why the Director did not wait for the conclusion of the criminal proceedings before pursuing civil forfeiture. [ 18 ] In any case, while it is certainly preferable for judges of the same level of court to follow decisions rendered by a judge of that court for reasons of comity and predictability, where they believe it to be wrong or are able to distinguish it, they may decline to follow it (see R v Neves , 2005 MBCA 112 at paras 76-83 ; and Tan v Canada (Attorney General) , 2018 FCA 186 at paras 24-32 ). [ 19 ] The Director also argues that it was an error for the motion judge to ground his decision on purely hypothetical concerns for which no evidence was tendered by Poitras or Murrell.

Even if there were legitimate concerns with respect to incriminating derivative evidence, the motion judge disregarded available alternatives to address any of the hypothetical harms. [ 20 ] The defendants submit that the motion judge did not err. They argue that derivative use immunity, as contemplated by the caselaw, is insufficient to adequately address the potential prejudice to their fair trial rights.

They distinguish between hypothetical issues and issues which may, based on the evidence before the Court, be likely to occur should the matter proceed in the regular course, but have not yet occurred. [ 21 ] Moreover, this case was different because of Richichi’s

summary judgment motion. It was possible that the defendants would be compelled to provide evidence in response to that motion. In fact, if Richichi’s evidence in any way prejudiced the defendants’ position, they would be required, under the Manitoba, Court of Queen’s Bench Rules , Man Reg 553/88 (the QB Rules ), to respond by way of affidavit evidence. Given that the

summary judgment motion had been filed, it was appropriate for the judge to consider the “downstream effects” of such a motion. Such a risk was a relevant factor in determining whether the specific circumstances of this matter were “exceptional or extraordinary”. [ 22 ] In the alternative, if the motion judge did err in the test he applied, then the defendants argue that there should be a revised test for a stay to ensure that matters are resolved in a just, expeditious and the least expensive manner.

The appropriate test should be: “Where there are parallel criminal and civil proceedings which arise from substantially the same facts and issues, a stay of [the civil] proceedings should be granted where the outcome of the criminal proceedings may be dispositive of the civil proceedings”. ANALYSIS Standard of Review [ 23 ] The parties are agreed as to the standard of review.

The granting of a stay is a discretionary decision that should not be interfered with unless the motion judge has erred in law, misapprehended the facts, or the decision is so clearly wrong as to amount to an injustice (see EG et al v Child and Family All Nations Coordinated Response Network , 2012 MBCA 65 at para 48 ).

Should the Appeal be Heard Even if it is Moot? [ 24 ] I agree with the parties that this appeal should be heard even though it is moot. [ 25 ] There are three criteria that a court may consider in a cumulative fashion in order to determine whether it should hear an appeal even though the matter is moot (see Woods et al v Canada (Attorney General) , 2005 MBCA 24 at para 23 ; and The Director of Child and Family Services v JG and KB , 2017 MBCA 27 at para 9 ):

i) Is there an adversarial context to ensure that the issues are properly argued? ii) Is there a concern about judicial economy if limited judicial resources are used to decide the case? iii) Will the court overstep its role by deciding the case? [ 26 ] Both parties agree that this is an important issue to be decided by the Court and the defendants have filed a factum on the merits of the appeal as if the issue still existed. They appeared and argued at the oral hearing.

The case raises an important issue in terms of how civil forfeiture legislation operates when there is a parallel case pending in criminal court, which occurs in most of these situations. The CPFA is relatively new legislation and has never been considered by the Court in this context. A decision will be useful to future litigants in civil forfeiture cases. As well, the question of a delay in the civil forfeiture proceedings is left to the courts in

section 17.11(1) of the CPFA , so it is a question appropriate for a court to decide. Relevant Legislative Provisions [ 27 ] For the purposes of this appeal, the key legislative provisions are set out below:

The CPFA Purpose 2 The purpose of this Act is to provide civil remedies that will prevent (

a) people who engage in unlawful activities and others from keeping property that was acquired as a result of unlawful activities; and (

b) property from being used to engage in certain unlawful activities. Order delaying proceedings 17.11(1) On motion, the court may order that any step in a proceeding under this Act be delayed in order to permit a prosecution of an offence to be completed, if it is satisfied that (

a) the order is necessary to protect the victim of the unlawful activity in question; and (

b) the order is in the interests of justice. Terms or conditions 17.11(2) The court may impose any terms or conditions on an order made under this

section that it considers appropriate. Manitoba , The Court of Queen’s Bench Act, CCSM c C280 (the QB Act ) Stay of proceedings 38 The court, on its own initiative or on motion by a person, whether or not a party, may stay a proceeding on such terms as are considered just. [ 28 ] The purpose of the CPFA is to provide civil remedies that prevent people from profiting from criminal activities. In short, it attempts to ensure that “crime doesn’t pay” and helps compensate its victims. Its basic objective is to allow for the seizure and disposition of property that has been implicated in criminal activity.

They are in rem proceedings, being a claim against property rather than a person.

The Director may commence proceedings seeking forfeiture of certain named property if he/she is satisfied that the property is proceeds of unlawful activity or an instrument of unlawful activity. [1] [ 29 ] As the Supreme Court of Canada explains in Chatterjee v Ontario (Attorney General) , 2009 SCC 19 , a case which addressed the constitutionality of Ontario’s civil forfeiture legislation , civil forfeiture legislation is an exercise of valid provincial legislative authority with a different purpose and objective ( at para 40): The Constitution permits a province to enact measures to deter criminality and to deal with its financial consequences so long as those measures are taken in relation to a head of provincial competence and do not compromise the proper functioning of the Criminal Code including the sentencing provisions. . . . [ 30 ] The CPFA was first introduced in the Legislature in 2003.

It was amended in 2008, the key change being to move from a police-based model to a director-based model; that is, a forfeiture model based outside of police departments. [ 31 ] While this is the first time this Court has dealt with civil forfeiture legislation, other appellate courts have commented on similar legislation in their provinces. For instance, in British Columbia (Director of Civil Forfeiture) v Onn , 2009 BCCA 402 , Garson JA characterised the purpose of that province’s legislation in the following manner (at para 14):

The purpose of the Act is threefold: (

a) to take the profit out of unlawful activity; (

b) to prevent the use of property to unlawfully acquire wealth or cause bodily injury; and (

c) to compensate victims of crime and fund crime prevention and remediation. See also Alberta (Justice and Attorney General) v Pazder, 2010 ABCA 183 at para 9; and Mihalyko (Re), 2012 SKCA 44 at para 17. [32] The above cases accurately reflect the objectives of the CPFA as well. Thus, its objective is not to punish individuals,as the motion judge stated (at para 28), but to use the forfeited property to compensate victims of crime and discourage unlawful activity.

Granting a Stay—Jurisdiction [33] Should a stay of proceedings be granted where civil and criminal matters dealing with the same parties are proceedingconcurrently? In the case of civil forfeiture, this will be the situation more often than not. [34] There are two potential sources of jurisdiction. The CPFA deals with the possibility of a stay in

section 17.11(1). Thatsection permits a court to “order that any step in a proceeding under this Act be delayed in order to permit a prosecution of an offence tobe completed,” where “the order is necessary to protect the victim of the unlawful activity in question” and “the order is in the interestsof justice.” [35]

Section 38 of the QB Act is a more general provision, which permits a court to “stay a proceeding on such terms as areconsidered just.”

Section 17.11(1) of the CPFA requires a motion to be brought, whereas

section 38 can be engaged by a motion (by anyperson; not necessarily a party) or on the Court’s own initiative. [36]

Section 17.11(1) of the CPFA is simply a more specific stay provision than

section 38 of the QB Act. Even thoughsection 17.11(1) uses the term “delayed” instead of “stayed”, the French versions of both

section 17.11(1) and

section 38 use the verb“suspendre”. The heading for

section 17.11(1) in French is “Ordonnance visant la suspension d’une instance”; the heading forsection 38 is “Suspension de l’instance”. [37] However, the focus of

section 17.11(1) is on the interests of the victim. In this case, there is no victim involved as awitness; thus,

section 17.11(1) is not invoked but that does not prevent the application of

section 38 of the QB Act. Granting a Stay—The Test for a Stay [38] The leading case on this point remains the Supreme Court of Canada’s decision in RJR—MacDonald Inc v Canada(Attorney General), (SCC), [1994] 1 SCR 311. The Court decided that the three-stage test identified by the House ofLords in American Cyanamid Co v Ethicon Ltd, [1975] AC 396, and adopted in Manitoba (Attorney General) v Metropolitan Stores Ltd, (SCC), [1987] 1 SCR 110, should be applied to applications for interlocutory injunctions, as well as for stays in bothprivate law and Charter cases.

In RJR—MacDonald, Sopinka and Cory JJ identified the test for courts to apply and succinctly describedits three stages where they wrote (at p 334): Metropolitan Stores adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutoryinjunction. First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused.

Finally, anassessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending adecision on the merits. It may be helpful to consider each aspect of the test and then apply it to the facts presented in these cases. See also EG at paras 24-27. [39] When an individual faces a civil proceeding concurrent to a related criminal charge, the concern that arises is whethercontinuation of the civil proceeding may infringe the individual’s right to a fair trial in the criminal matter.

In such cases, the ordinarythree-part test referred to above is not used. [40] Instead, the relevant test for a court, in exercising its discretion, is whether there are exceptional or extraordinarycircumstances which show that the right of the applicant on the criminal charge cannot adequately be addressed by the rules governingthe civil proceeding or a remedy available to an accused in the criminal process (see Lieu). There is no presumption in favour of a staysolely from the fact that concurrent criminal charges are pending. Indeed, the presumption is exactly the opposite.

The law assumes thatconcurrent proceedings can be conducted fairly unless shown otherwise. [41] The threshold to justify the granting of a stay of a civil proceeding in favour of a criminal proceeding is a high one and

the burden is on the defendants to meet that test (see Schreiber v Canada (Attorney General) (2001), (ON CA), 160CCC (3d) 131 at para 4). [42] Contrary to the argument advanced by the defendants, none of the leading Canadian cases involving concurrent civiland criminal proceedings refer to a requirement for irreparable harm. Instead, they rely on the test involving exceptional or extraordinarycircumstances (see, for example, Schreiber). [43] Some examples of cases where courts have held that extraordinary or exceptional circumstances exist are: (

a) where theaccused (alleged arsonists) were the only witnesses to the events in question (see Shell Canada Products Ltd v N(J), 1994 CarswellMan51 (QB); (

b) where an insurance company requested a stay of civil proceedings until the arson prosecution against the insureds wascomplete (see Pats et al v The Personal Insurance Company of Canada, 2001 MBQB 17); (

c) where the defendant was facing concurrentU.S. criminal prosecution and an Ontario professional discipline proceeding (see Gillis v Eagleson, 1995 CarswellOnt 147 (Ct J (GenDiv)); (

d) where the plaintiff’s lawyer in a civil action was on the Crown’s witness list for a related criminal trial (see Bour v Manraj,1995 CarswellOnt 510 (Gen Div)); (

e) where the civil and criminal matters involved historical sexual abuse allegations that weretriggered by a recently recovered memory (see Caruso v Kneale, 1999 CarswellOnt 2097 (Sup Ct J)); and (

f) where the civil action is thereciprocal of the criminal prosecution (see Falloncrest Financial Corp v Ontario, (ON CA), 1995 CarswellOnt 910(CA); and Samuels v Attorney General (Canada), 2016 ONSC 7937). [44] There have not been many cases which have dealt with this issue in the context of a civil forfeiture proceeding. BritishColumbia (Director of Civil Forfeiture) v Day, 2019 BCCA 160 was a chambers decision denying leave to appeal. In that case, thegovernment was seeking civil forfeiture of certain funds and properties. The property owners sought a stay of their documentarydisclosure obligations.

The case management judge rejected their suggestion that something more akin to a criminal disclosure processshould apply in civil forfeiture matters. Fisher JA confirmed that “there is no dispute that a civil forfeiture proceeding is a civil, not acriminal, matter and the Supreme Court Civil Rules [BC Reg 168/2009] govern the procedures of such proceedings” (at para 26). Theproperty owners alleged that Charter issues might arise in the future and this speculation was insufficient to merit delayed disclosure.

Thus, the application for leave to appeal was denied. [45] The case of Alberta (Minister of Justice) v McNair, 2014 ABQB 27, refers to a number of precedents regarding stays insituations involving concurrent criminal and civil proceedings.

In the course of her analysis, Anderson J referred to the Ontario Court ofAppeal’s decision in Treat America Limited v Leonidas, 2012 ONCA 748, leave to appeal to SCC refused, 35160 (23 May 2013), wherethe Court held (at para 44): . . . [W]hile a person may, for example, use s. 7 of the Charter to apply for a stay of civil proceedings pending a criminal trial or for aconstitutional exemption, the availability of these remedies is strictly circumscribed due to the existence of use immunity. . . . [A] stay isonly justified in “extraordinary or exceptional circumstances” . . .

The mere fact that criminal proceedings are pending at the same time as civil proceedings is not sufficient ground for a stay of the latter .. .

Even the potential disclosure through the civil proceedings of the nature of the accused’s defence or of self-incriminating evidence isnot necessarily exceptional. [46] Anderson J’s review of the law led her to the following conclusion (at paras 20-21): While the pending criminal charges may be inter-related to a major degree with the issues to be dealt with in the property disposalhearing, in this application, the Applicant has not put evidence before this Court of any prejudice or any exceptional or extraordinarycircumstances to justify the stay.

If I am to assume that the defendant’s concern is the potential disclosure, through the civilproceedings, of the nature of his defence in the criminal proceedings, this has not been put before me. In any event, as set out in TreatAmerica, this is not necessarily exceptional. Having asserted simply that the civil proceeding cannot proceed until the criminal matter has been resolved on the basis of theApplicant’s right to silence, disregards

section 13 of the Charter and incorrectly assumes that the stay should be granted as a matter ofright (Haywood Securities [Haywood Securities Inc v Inter-Tech Resource Group Inc, (1985), (BC CA), 24 DLR (4th)724 (BCCA)]). Derivative Use Immunity [47] The principal concern of the motion judge was that derivative evidence might be obtained in the civil case which couldbe used by the Crown handling the criminal matter. Arising out of the motion for

summary judgment and the civil action, the defendantsmay have to file affidavits and give evidence. They argue, and the judge agreed, that there was a possibility that evidence could arisewhich would incriminate them in the concurrent criminal proceedings.

So, for example, if, based on information acquired throughreviewing a transcript in the civil proceeding, the prosecuting Crown attorney was able to convert that information into stand-aloneadmissible evidence, while the transcript itself would be inadmissible, the derivative evidence might be. [48] Consequently, the defendants argue that they are in a position where, if they are compelled to give evidence in thesecivil proceedings, they do so with no assurances that the judge in the subsequent criminal matter will exclude the evidence. It will also

be insufficient if the compelled testimony reveals an accused defence strategy or brings to light crimes of which the state was previously unaware. [ 49 ] They submit that the element of uncertainty surrounding the admissibility of the tendered derivative evidence until the trial judge in the criminal proceeding renders his decision on the issue should be a factor to be considered by the Court in assessing the stay.

This is the same argument raised in the Lieu case where, again, the defendant argued that the forfeiture proceedings should be stayed because requiring him to answer the claim and comply with disclosure obligations would jeopardise his right to a fair criminal trial. [ 50 ] There is a difference between the doctrines of use immunity and derivative use immunity. Use immunity refers to the direct admission of evidence obtained from a compelled statement. The defendants concede that

section 13 of the Charter and sections 5(1) and 5(2) of the Canada Evidence Act (the Evidence Act (Canada)), prohibit the direct admission of evidence obtained from a compelled statement in subsequent matters. These provisions state as follows: The Charter provides: Self-crimination 13. A witness who testifies in any proceedings has the right not to have any incriminating evidence so given used to incriminate that witness in any other proceedings, except in a prosecution for perjury or for the giving of contradictory evidence.

The Evidence Act (Canada) provides as follows: Incriminating questions 5(1) No witness shall be excused from answering any question on the ground that the answer to the question may tend to criminate him, or may tend to establish his liability to a civil proceeding at the instance of the Crown or of any person.

Answer not admissible against witness 5(2) Where with respect to any question a witness objects to answer on the ground that his answer may tend to criminate him, or may tend to establish his liability to a civil proceeding at the instance of the Crown or of any person, and if but for this Act, or the Act of any provincial legislature, the witness would therefore have been excused from answering the question, then although the witness is by reason of this Act or the provincial Act compelled to answer, the answer so given shall not be used or admissible in evidence against him in any criminal trial or other criminal proceeding against him thereafter taking place, other than a prosecution for perjury in the giving of that evidence or for the giving of contradictory evidence. [ 51 ] Similarly, in Manitoba, it is clear that an individual who defends an action can be examined under oath and is required to answer questions notwithstanding that the answers may incriminate, but those answers cannot be used against that person in a subsequent civil or crimi nal proceeding.

The Evidence Act (Manitoba) provides as foll ows: Incriminating questions 6(1) No witness shall be excused from answering any question, or producing any document, upon the ground that the answer thereto or the production thereof may tend to criminate him, or may tend to establish his liability to a legal proceeding at the instance of the Crown or of any person. Evidence not to be used 6(2) If, with respect to any question or the production of any document, a witness objects to answer or to produce upon any of the grounds mentioned in subsection (1), and if but for this

section or any Act of the Parliament of Canada, the witness would have been excused from answering that question or from producing that document, then although the witness is, by reason of this

section or any Act of the Parliament of Canada, compelled to answer or to produce, the answer so given or the document so produced shall not be used or receivable in evidence in any legal proceeding against him thereafter taking place. “Witness” defined

6(3) In this

section the expression “witness”, in addition to the ordinary meaning thereof, includes every person who, in the course of alegal proceeding is examined viva voce on discovery or who is cross-examined upon an affidavit made by him, or who answers anyinterrogatories or makes an affidavit as to documents.

In the civil forfeiture context, the inadmissibility of compelled evidence was confirmed by the Ontario Superior Court of Justice inAttorney General of Ontario v $41,700 in Canadian Currency and $224 in US Currency (in rem), 2011 ONSC 2058 at para 32. [52] More problematic than the use immunity doctrine is the derivative use immunity doctrine. The derivative use immunitydoctrine refers to incriminating evidence which is obtained independently as a result of compelled evidence and which could be used toprove the guilt of the accused in subsequent criminal proceedings.

The general intention of the principle of derivative use immunity is toprotect witnesses against the possibility of their evidence or testimony being used indirectly as a means of gathering incriminatingderivative evidence. [53] The Supreme Court of Canada has defined derivative evidence on several occasions.

In Thomson Newspapers Ltd vCanada (Director of Investigation and Research, Restrictive Trade Practices Commission), (SCC), [1990] 1 SCR 425,Wilson J commented that “[t]here is a direct causal relationship between the compelled testimony and the derivative evidence. . . .[C]ausality is the sine qua non of derivative evidence” (at p 484).

L’Heureux-Dubé J understood “derivative evidence . . . to include allfacts, events or objects whose existence is discovered as a result of a statement made to the authorities” (at p 574). [54] In the seminal case of R v S (RJ), (SCC), [1995] 1 SCR 451, Iacobucci J described derivativeevidence as follows (at p 492): . . . Derivative evidence, that is, evidence which may come to light as a result of a compelled disclosure, was implicitly protected [atcommon-law] because a witness could claim the privilege not only in relation to facts which were directly incriminatory, but also inrelation to so-called “clue facts”.

Wigmore defined a “clue fact” as being a fact “which increases the probability that a subordinate factwill be discovered and thus that an ultimate fact, and the crime, will be proved” . . .. See also R v Grant, 2009 SCC 32; and R v Côté, 2011 SCC 46 at para 62. [55] Not all derivative evidence is necessarily incriminating. As for the meaning of “incriminating evidence”, Sopinka’stext states (see Sidney N Lederman, Alan W Bryant & K Fuerst, The Law of Evidence in Canada, 5th ed (Toronto: LexisNexis, 2018))(at p 563): (

c) Incriminating Use An issue that has received much attention in the caselaw is the meaning of the word “incriminate”. In Henry [R v Henry, 2005 SCC 76],the Court adopted the definition of “incriminating evidence” in its previous jurisprudence as meaning “something from which a trier offact may infer that an accused is guilty of the crime charged”. In R. v.

Nedelcu [2012 SCC 59 at para 9], the Supreme Court of Canadaamended this definition to “evidence given by the witness at the prior proceeding that the Crown could use at the subsequent proceeding,if it were permitted to do so, to prove guilt, i.e., to prove or assist in proving one or more of the essential elements of the offence forwhich the witness is being tried”. [56] Whereas

section 13 of the Charter provides that the testimony of a witness cannot be used against that person in asubsequent proceeding,

section 7 of the Charter has been interpreted to additionally preclude the use of any incriminating derivativeevidence in a subsequent criminal proceeding (see Sopinka’s text at p 573, citing R v Hebert, (SCC), [1990] 2 SCR151). It would be excluded in the interests of trial fairness. The relevant provisions of the Charter are: Life, liberty and security of person 7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with theprinciples of fundamental justice. Proceedings in criminal and penal matters 11. Any person charged with an offence has the right . . .

(

c) not to be compelled to be a witness in proceedings against that person in respect of the offence; . . . With regard to onus and proof, Sopinka’s text states (at pp 573-74): The Supreme Court of Canada, in the cases of R. v. S. (R.J.) and British Columbia (Securities Commission) v. Branch, [(SCC), [1995] 2 SCR 3], considered the question of the use to which evidence discovered as a result of a witness’ testimony can be put. If the evidence would not have been discovered but for the compelled testimony of the witness, such derivative evidence will beexcluded from the trial.

Initially, the accused has the evidentiary burden of adducing some evidence of a plausible connection betweenthe compelled testimony in the previous proceeding and the derivative evidence sought to be adduced by the Crown. Once the accusedhas discharged this evidential burden, the Crown, who is in the best position to know how the evidence was obtained, must establish on abalance of probabilities that the authorities would have discovered the impugned derivative evidence without the compelled testimony. In Phillips v.

Nova Scotia (Commission of Inquiry into the Westray Mine Tragedy), [ (SCC), [1995] 2 SCR 97], a case inwhich a criminal proceeding was pending at the same time that a public inquiry was being held into an explosion at an undergroundmine, the accused sought a stay of the inquiry until the criminal trial was completed. The Supreme Court stated: . . . [t]he burden of proving that the admission of this evidence would violate the residual protection against self-incrimination found in s.7 rests with the accused person claiming the violation.

However, as a practical matter, much of the evidentiary burden will be borne bythe Crown. This must follow since once the accused can point to a “plausible connection” between the compelled testimony and theevidence, then realistically only the Crown will have access to information as to how the evidence was obtained. [57] Thus, it is clear that both the issue of derivative use immunity is for the trial judge in the subsequent proceeding todetermine and the onus in the criminal proceeding would be on the defendants to establish a Charter breach on a balance ofprobabilities.

Concerns regarding derivative use immunity are properly considered when they actually arise (i.e., in the subsequentproceeding) (see Nedelcu at para 16).

In the civil forfeiture context, this means that, if the civil proceeding advances before the criminalprosecution and the Crown attempts to use derivative evidence in the criminal prosecution, it is at the criminal trial that argumentsregarding derivative use immunity can be advanced (see McNair at para 23). [58] Moreover, the law surrounding derivative use immunity requires the existence of actual derivative evidence and anattempt to use it in a subsequent proceeding. The theoretical possibility of incriminating derivative evidence is not sufficient.

Even thepotential disclosure through civil proceedings of the nature of the accused’s defence or of self-incriminating evidence is not necessarilyexceptional (see Leonidas at para 44). Therefore, when considering this issue within the context of a stay, a series of vague allegationsare not enough.

As stated in Elbaz v The Queen, 2017 TCC 177, citing Obadia, Re, 1997 CarswellQue 400 (CA) at paras 11, 16, thecourt stated (at para 20): . . . [G]eneral allegations are not sufficient and that it is incumbent on the party seeking a stay, even if the cases are connected by identicalfactual contexts, to state the grounds for the prejudice in the conduct of the criminal defence. . . .

A mere possibility that the defence will be revealed is not enough in itself and does not give the circumstances the required exceptionalcharacter. [59] That is why it is important to remember that, in the present case, at this point, the defendants’ arguments are purelyhypothetical. No evidence of specific prejudice has been tendered. The defendants are not arguing about the exclusion of evidence inrelation to actual derivative evidence.

Rather, they are arguing on the basis of a possibility that, if the present case progresses (i.e., if itis not stayed), then an evidentiary question about derivative evidence might arise in their criminal cases. [60] In coming to his conclusion that a risk to the defendants was likely, the motion judge held that the Director’s office, theRCMP and the federal prosecution branch have such a close relationship that there was a danger of unauthorised information transfer. The motion judge erred in making such an assumption without any evidence. The fact that the Director obtains information from the

RCMP or any other police agency is not unique to this case. The Director and his employees are not “police investigators”, nor are they “peace officers”. The only manner by which the Director can obtain information from policing agencies is outlined at sections 19.2 to 19.5 of the CPFA . Specifically, under

section 19.3, the Director is authorised to collect information from a public body and, under

section 19.5, the Director may enter into a reciprocal information exchange agreement. [ 61 ] The only evidence before the Court on this point was that of the assistant director, Mr. Philip Siatecki (Siatecki). He testified that he would not directly pass information on to the federal prosecution. The motion judge questioned Siatecki himself as to whether information is shared as between the Director’s office and the police or prosecutor.

He stated that the Director’s office has no intention of sharing with police or prosecutors the transcript or any information obtained at the examination for discovery—regardless of what the law might otherwise permit. The following are excerpts from Siatecki’s testimony taken on April 11, 2019: Q In terms of information that you pick up during the course of your civil proceeding, do you feel constrained at all in reporting that information back to the police if you felt that it would assist in their prosecution? A No . . . we’re very careful not to disclose too much information to the police . . .. . . .

Q And what’s your understanding? A . . . [S]o it’s important for us not to divulge that information which they can’t get on the criminal side, which we can on the civil side. [ 62 ] Yet, despite the evidence of Siatecki that no information is shared, the motion judge nonetheless concluded that the Director and the Crown were part of the same coordinated process which would increase the risk to the fair criminal trial rights of the defendants. There was no reason not to accept the testimony of Siatecki. [ 63 ] In addition, forfeiture guidelines were described in Lieu at para 5 : . . .

Forfeiture Guidelines [were] developed jointly by Manitoba Justice and the Public Prosecution Service of Canada which coordinate the interests of the provincial and federal Crown in property seized in a criminal investigation.

Those Guidelines provide that, as long as the integrity of the criminal investigation is maintained by following certain protocols, the province can pursue forfeiture of the property The Director confirmed that those guidelines were being followed. [ 64 ] The situation in this case is similar to that of the McNair case where the Court concluded (at para 22): The fact that the civil proceedings here are state-initiated, in and of itself, is not sufficient to justify a stay.

The Minister of Justice, Civil Branch, has submitted that it does not share information with the criminal branch, nor is apprised of, or aware of, the status of any criminal proceedings.

Further, there is no evidence before me that the Minster intends to use the evidence or has used any evidence, for anything other than for the purposes of the property disposal hearing, the outcome of which, as conceded by the Applicant, is not dependent upon the outcome of the criminal proceedings. [ 65 ] The overall difficulty with the defendants’ position is that it is entirely based on speculation and conjecture as to what may unfold.

The reference to potential risks and the suggestion that there is a risk of information transfer is not supported by any actual evidence (see British Columbia (Director of Civil Forfeiture) v PacNet Services Ltd , 2019 BCSC 70 at paras 45-47 ). [ 66 ] A review of the caselaw makes clear that appellate courts are not convinced that the potential for misuse of incriminating derivative evidence is an exceptional or extraordinary circumstance that would justify the granting of a stay.

As the Ontario Court of Appeal confirmed in Schreiber , “Even the potential disclosure through the civil proceedings of the nature of the accused’s defence or of self-incriminating evidence is not necessarily exceptional” (at para 4). [ 67 ] There are some lower court forfeiture cases that do appear to accept this level of speculation (see, for example, Alberta (Justice and Attorney General) v To , 2010 ABQB 648 ; Alberta (Justice and Attorney General) v Chau , 2010 ABQB 758 ; Alberta (Justice and Attorney General) v Echert , 2013 ABQB 314 ; and Alberta (Minister of Justice) v Zervos , 2018 ABQB 154 ). Often the

acceptance is based on the lack of prejudice to the Crown. I do not agree that there is no prejudice or that the Director has sustained no loss. Any stay order has an element of prejudice because it denies a plaintiff early access to justice. Richichi’s motion for

summary judgment is delayed and he argued against the stay for that reason. To say that the Director sustained no personal loss since it is an agent of the state is to ignore the purpose of the CPFA . The Director’s office exists because the Legislature has determined that it is a necessary element to civil recovery of the costs to the community arising from crime. The money raised through forfeiture of personal and real property is deposited into a separate account and managed by the asset manager under

section 19.7(2) (

a) of the CPFA . The criminal property forfeiture fund is not a general revenue stream for the province. Once money has gone into the fund, payment of money out of the fund is intended only for the specified purposes as outlined in section 19(4). Thus, delay does prejudice the access that victims of crime have to the proceeds of the forfeited property. [ 68 ] However, even assuming a lack of prejudice here, the lack of prejudice to the plaintiff is not enough to justify a stay.

The test on a motion for a stay of this nature is not whether the plaintiff will be prejudiced if the action is stayed, but whether the defendant will be prejudiced if it is not. It is the applicant who must show the exceptional circumstances (see Schreiber at para 8 ). The parties start with a presumption against the granting of a stay. This has a direct bearing on the range and nature of the considerations that may properly be taken into account in the exercise of the discretion.

Given the high threshold that has been established for obtaining a stay of a civil proceeding when there is a concurrent criminal matter, a lack of prejudice on the part of the plaintiff alone cannot fulfill the exceptional or extraordinary circumstances test which the defendants must meet. [ 69 ] There were other protections in the civil proceedings that would have protected the defendants and would still have allowed the case to proceed.

The implied undertaking rule (r 30.1(3) QB Rules ) that applies in civil proceedings prevents parties from using “documents or answers for any purpose other than securing justice in the civil proceedings in which the answers were compelled” ( McNair at para 14 ). Evidence disclosed on discovery cannot be used for a collateral or ulterior purpose. As such, the Director is prevented by law from disclosing any transcript of an examination for discovery directly to any party involved in the criminal proceeding.

In some cases, counsel have gone a step further and undertaken not to share compelled testimony with investigating authorities (see, for example, Leonidas at paras 57-63 ). [ 70 ] Another alternative might have been to allow the examinations for discovery to proceed, as well as any undertakings, and then consider a temporary stay of proceedings only at the point at which the defendants would have to give written or oral evidence in court.

In this way, the necessary preparations of the civil case could continue without being impacted by the progress of the criminal trial. [ 71 ] In any event, it has been suggested in the civil forfeiture context that “[i]f in fact the implied undertaking is not maintained or there is an attempt to improperly use the Applicant’s testimony from the civil proceedings in the criminal proceedings, then that matter ought to be decided by the judge hearing the criminal matter to determine the appropriate remedy, if any (as set out in Nedelcu )” ( McNair at para 23 , and also see, for example, Juman v Doucette , 2008 SCC 8 ). [ 72 ] The focus for cases of this nature is on whether there is specific prejudice to the fair trial rights of the applicant on the criminal charge that cannot adequately be addressed by the rules of civil procedure or a remedy available to an accused in the criminal process (see JG at para 18).

The additional circumstance of the

summary judgment motion does not overcome the lack of any specific evidence of prejudice to the defendants as opposed to mere speculation. [ 73 ] In conclusion, this case does not rise to the level of exceptional circumstances. If it did, then arguably all civil forfeiture cases involving pending criminal proceedings would always meet the test for a stay. The

summary judgment motion does not alter this analysis. As Mainella JA stated in JG , the issue is “whether there is specific prejudice to the fair-trial rights of the applicant on the criminal charge that cannot adequately be addressed by the rules governing the civil proceeding or a remedy available to an accused in the criminal process” (at para 18). The defendants in this case have not demonstrated any such prejudice. The nature of the remedy being sought by the defendants is entirely disproportionate to the theoretical concerns they are raising, as well as being premature.

EVEN IF THE MOTION JUDGE ERRED, SHOULD A NEW TEST BE DEVELOPED? [ 74 ] The defendants submit this case provides the Court an opportunity to harmonise the test for a stay of civil proceedings with the renewed emphasis on efficiency and cost-effectiveness of our Court system. There have been comprehensive amendments to the QB Act and the QB Rules in 2018 that emphasise the need for a change in the justice system to minimise cost and to consider proportionality.

Therefore, the defendants suggest that the Court adopt a new test as follows: “Where there are parallel criminal and civil proceedings which arise from substantially the same facts and issues, a stay of proceedings in the civil proceedings should be granted where the outcome of the criminal proceedings may be dispositive of the civil proceedings.” [ 75 ] While proportionality is not generally mentioned in cases involving concurrent civil and criminal proceedings, the increased emphasis on proportionality is reflected in r 1.04(1.1) of the QB Rules which provides: Proportionality 1.04(1.1) In applying these rules in a proceeding, the court is to make orders and give directions that are proportionate to the following: (

a) the nature of the proceeding; (

b) the amount that is probably at issue in the proceeding;

(

c) the complexity of the issues involved in the proceeding; (

d) the likely expense of the proceeding to the parties. [ 76 ] As well, as noted above,

section 17.11(1) (

b) of the CPFA requires that the stay be “in the interests of justice.” This factor is one that has been taken into account in other cases already and is a factor that can encompass all of the issues mentioned by the defendants. So, for example, section 50(1)(

b) of the Federal Courts Act empowers the Court to stay proceedings where “it is in the interest of justice that the proceedings be stayed” (see Mylan Pharmaceuticals ULC v AstraZeneca Canada, Inc , 2011 FCA 312 at para 3 ). This language is quite similar to

section 17.11(1) (

b) of the CPFA . Some of the factors contemplated in those cases relate to broader considerations surrounding the administration of justice, “such as the public interest in the fair, well-ordered and timely disposition of litigation, and the effective use of scarce public resources” ( Korea Data Systems (USA), Inc v Aamazing Technologies Inc , 2012 ONCA 756 at para 19 ). The British Columbia Court of Appeal has identified two principles animating such decisions: “The first concerns the public interest in the efficient use of judicial resources and avoiding ‘litigating in slices’. . . .

The second is balancing the prejudice between the parties” ( Li v Rao , 2019 BCCA 56 at para 13 ). [ 77 ] The new test proposed by the defendants would, in fact, delay access to the courts for the Director and Richichi. It is also unclear how the proposed test meshes with

section 11 of the Code , which clearly indicates that, “No civil remedy for

an act or omission is suspended or affected by reason that the act or omission is a criminal offence.” As well, the proposed test refers to proceedings arising from substantially the same facts and issues . These civil and criminal proceedings do not have the same parties (i.e . , Richichi has not been criminally charged).

Obviously, the goal of the civil proceedings is different than that of the criminal prosecution, and the law to be applied in each is quite different, with distinct burdens of proof. [ 78 ] Furthermore, while a finding of guilt in the criminal prosecution would obviously assist in resolving the civil forfeiture matter, a finding of not guilty (or some other resolution of the criminal charges, such as staying them, which occurred in this case) does not necessarily resolve the civil forfeiture matter.

This is not a case like Samuels , for example, involving reciprocal civil proceedings that are entirely dependent on the criminal matter (i.e., that will stand or fall with the outcome of the criminal case, such as where the accused sue the police civilly for conduct connected with the criminal prosecution). [ 79 ] Thus, an entirely new test is not necessary. The jurisprudence, as it presently stands, allows for such factors as the interests of justice, proportionality and cost-effectiveness to be considered.

CONCLUSION [ 80 ] The motion judge erred in the application of the test for issuing a stay of proceedings in a situation of concurrent civil and criminal proceedings. [ 81 ] I agree with the motion judge that an accumulation of several factors may lead to a finding of exceptional circumstances where the presence of only one of those factors would not. However, where each of those factors are based on errors of law, they cannot constitute exceptional circumstances.

This is the case for the motion judge’s findings that: the Director has a different position than a civil litigant because he has some kind of relationship with the Federal Criminal Prosecutions Office; that the Director suffers no prejudice as a result of the delay; and that the defendants may suffer as a result of the risk of incriminating derivative evidence. [ 82 ] The fact that there was a motion for

summary judgment does not take this type of action out of the ordinary. Moreover, there were a variety of mechanisms within the QB Rules which were not considered that could have allayed any concerns and which would have allowed the matter to proceed. [ 83 ] Civil and criminal actions are distinct proceedings. There are different parties, with different purposes and different standards of proof. The Court should not order a stay of proceedings as soon as there is the slightest risk that evidence will be revealed.

The case law in this area is clearly to the effect that a criminal court has the means to protect the rights of an accused and, in this case, the defendants. [ 84 ] The appeal is allowed. JA I agree: JA

I agree: JA