R. v. Sankar, 2010 ONSC 6967

CITATION : R. v. Sankar, 2010 ONSC 6967 COURT FILE NO.: 2144/07 DATE: 20101221 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) HER MAJESTY THE QUEEN ) ) ) AIMEE GAUTHIER , for the Crown ) - and - ) ) ) DEREK SANKAR ) ) ) On his own behalf ) ) HEARD: November 26, 2010 Procedure and Onus Ruling on Crown Forfeiture Application DURNO, J. [ 1 ] Derek Sankar pleaded guilty to fraud over $5000 by defrauding SNC-Lavalin Profac and “laundering proceeds of crime” by using the money obtained with intent to conceal or convert the money knowing the funds were derived directly from the commission of a designated offence.

Mr. Sankar’s signed relinquishment of interest in the properties referred to the Agreed Statement of Facts (ASF) was filed on the plea. [ 2 ] After the factual admissions and finding of guilt, the Crown sought an adjournment to permit several parties who might wish to be heard on the Crown’s application for forfeiture of the property described in the ASF to be notified. [ 3 ] On the return date, the following parties responded to the notices:

i) Audrey Holder-Sankar, the offender’s wife, ii) Picard Foods, iii) Dunlop & Associates, and iv) SNC Lavalin-Profac [ 4 ] Counsel who acted for Audrey Holder-Sankar on the sale of one of the properties in issue sent a letter advising that he was holding money in his trust account pending the outcome of the litigation.

[ 5 ] Counsels were unable to agree on the procedure for the application, including whether it was one or two applications, who had the burden of proof and on what standard. All parties were given an opportunity to present written and oral submissions on the issues. The following questions required answers: 1. Which section(

s) of the Criminal Code apply? 2. Who bears the onus? 3. What is the evidentiary basis? 4. If s. 462.42 does not apply at this stage, is there a potential for it to apply at a later date for anyone who responded to the s. 462.41 notification? [ 6 ] The applicable sections of the Criminal Code are as follows: The Legislation [ 7 ] Pursuant to

section 462.3, the following

definitions apply to this motion: "designated offence" means (

a) any offence that may be prosecuted as an indictable offence under this or any other Act of Parliament, other than an indictable offence prescribed by regulation, 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); […] "proceeds of crime" means any property, benefit or advantage, within or outside Canada, obtained or derived directly or indirectly as a result of (

a) the commission in Canada of a designated offence, or (

b) an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence. [ 8 ] The forfeiture of property for the purposes of this application is governed by the following sections: Order of forfeiture of property on conviction 462.37

(1) Subject to this

section and sections 462.39 to 462.41, where an offender is convicted, or discharged under

section 730, of a designated offence and the court imposing sentence on the offender, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime and that the designated offence was committed in relation to that property, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law.

(2) Where the evidence does not establish to the satisfaction of the court that the designated offence of which the offender is convicted, or discharged under

section 730, 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 proceeds of crime, the court may make an order of forfeiture under subsection (1) in relation to that property.

[…] Offender may establish that property is not proceeds of crime

(2.03) A court shall not make an order of forfeiture under subsection (2.01) in respect of any property that the offender establishes, on a balance of probabilities, is not proceeds of crime. […] Exception

(2.07) A court may, if it considers it in the interests of justice, decline to make an order of forfeiture against any property that would otherwise be subject to forfeiture under subsection (2.01). The court shall give reasons for its decision. […] Fine instead of forfeiture

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

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

b) has been transferred to a third party; (

c) is located outside Canada; (

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

e) has been commingled with other property that cannot be divided without difficulty. Imprisonment in default of payment of fine

(4) Where a court orders an offender to pay a fine pursuant to subsection (3), the court shall (

a) impose, in default of payment of that fine, a term of imprisonment (

i) not exceeding six months, where the amount of the fine does not exceed ten thousand dollars,

(ii) of not less than six months and not exceeding twelve months, where the amount of the fine exceeds ten thousand dollars but does not exceed twenty thousand dollars, (iii) of not less than twelve months and not exceeding eighteen months, where the amount of the fine exceeds twenty thousand dollars but does not exceed fifty thousand dollars, (iv) of not less than eighteen months and not exceeding two years, where the amount of the fine exceeds fifty thousand dollars but does not exceed one hundred thousand dollars, (

v) of not less than two years and not exceeding three years, where the amount of the fine exceeds one hundred thousand dollars but does not exceed two hundred and fifty thousand dollars, (vi) of not less than three years and not exceeding five years, where the amount of the fine exceeds two hundred and fifty thousand dollars but does not exceed one million dollars, or (vii) of not less than five years and not exceeding ten years, where the amount of the fine exceeds one million dollars; and (

b) direct that the term of imprisonment imposed pursuant to paragraph (

a) be served consecutively to any other term of imprisonment imposed on the offender or that the offender is then serving. Fine option program not available to offender

(5) Section 736 does not apply to an offender against whom a fine is imposed pursuant to subsection (3). [ 9 ] Before a forfeiture order is made the following notice provisions apply: Notice 462.41

(1) Before making an order under subsection 462.37(1) or (2.01) or 462.38(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. […] Order of restoration of property

(3) Where a court is satisfied that any person, other than (

a) a person who is charged with, or was convicted of, a designated offence, or (

b) a person who acquired title to or a right of possession of that 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 thereof that would otherwise be forfeited pursuant to subsection 462.37(1) or (2.01) or 462.38(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 thereof be returned to that person. [ 10 ] After a forfeiture order has been made the following provisions apply: Application by person claiming interest for relief from forfeiture 462.42

(1) Any person who claims an interest in property that is forfeited to Her Majesty under subsection 462.37(1) or (2.01) or 462.38(2) may, within thirty days after the forfeiture, apply by notice in writing to a judge for an order under subsection (4) unless the person is

(

a) a person who is charged with, or was convicted of, a designated offence that resulted in the forfeiture; 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 from that person for the purpose ofavoiding the forfeiture of the property. Analysis The Applicable Criminal Code sections [11] Counsel provided conflicting positions whether the application was under s. 462.37, under s. 462.37 and s. 462.41 or whether s.462.37 applied to an initial hearing involving only the Crown and Mr. Sankar with a s. 462.42 hearing held after a forfeiture order wasmade.

For the following reasons, I am persuaded that s. 462.37 and s. 462.41 apply to this application and not s. 462.42. [12] A s. 462.37 Crown forfeiture application is part of the sentencing hearing. However, before a forfeiture order can be made thecourt must require notice be given to any person who appears to have a valid interest in the property sought to be forfeited. The thirdparty claims are determined as part of the forfeiture application and before forfeiture. R. v. Wilson (1993), (ON CA),86 C.C.C. (3d) 464 ((Ont. C.A.) at par. 25, 26 and 27.

The Court of Appeal has expressly rejected the view that third party claims couldonly be considered after forfeiture. Wilson, para. 26. [13] By having the forfeiture hearing as part of the sentencing and determined before the sentence is imposed permits the court toutilize s. 462.37(3) as part of the sentence. That

section provides that where the judge concludes that a forfeiture order should be madebut the property or any part of it cannot be made the subject of a forfeiture order, the judge may instead of ordering forfeiture, impose afine in an amount equal to the value of the property or part of or interest in the property. Wilson, supra at para. 33. [14]

Section 462.41(1) provides that before making an order under s. 462.37 a court shall require notice to be given to and may hearany person who, in the opinion of the court, appears to have a valid interest in the property. While it was argued that s. 462.41(1) meantthe notice had to be provided but not the opportunity to be heard before the forfeiture order was made, I am unable to find that wasParliament’s intention.

Were it so, persons who appear to have a valid interest in the property would be notified of the application butpresumably would be silent spectators at the forfeiture stage and only participate after the forfeiture order was made. That is in contrastwith s. 462.41 that provides the person shall be notified and may be heard. To proceed on the basis they play no role in the forfeituredetermination, is contrary to the wording of the legislation. Why would a judge ask for their input if they could not affect the outcome ofthe forfeiture application?

If those notified only had an opportunity for involvement after the forfeiture order, the notices would be givenfor a return date after the forfeiture order was made. [15] From the foregoing analysis alone, I am persuaded that s. 462.42 has no application at this time. There are additional reasons Ireach that conclusion. There are significant differences between the two provisions. While s. 462.41 issues are dealt with as part of thesentencing hearing, s. 462.42 applications are not part of the sentencing hearing. They are heard after the property has been orderedforfeited at the sentencing hearing.

Wilson, at para. 32. As noted earlier, s. 462.41 refers to notice being given before the forfeiture orderis made.

Section 462.42 applies where any person claims an interest in property that is forfeited under s. 462.37. That person may applywithin 30 days after the forfeiture in writing to a judge for an order declaring their property is not subject to forfeiture. It makes no senseto give notice to parties who appear to have an interest and may be heard before a forfeiture order and then require those same persons toapply in writing to a judge, and perhaps a different judge, for an order declaring their property is not forfeited. [16]

Section 462.42 applications can only be heard by a judge of the Superior Court of Justice while the s. 462.37 applications can beheard by a judge of the Ontario Court of Justice or a judge of the Superior Court of Justice depending on the court in which thesentencing is to occur. If the only time the third parties’ claims could be determined was at the s. 462.42 hearing, parties who appear tohave an interest would be notified that they could attend the Ontario Court where an offender was being sentenced and where theforfeiture order would be made.

They would then have to apply under s. 462.42 before the Superior Court for an order exempting theirproperty from forfeiture. The Onus [17] Once the applicable sections are identified, the onus and burden issues are governed by those sections - s. 462.37 and s. 462.41. The onus is on the Crown on the balance of probabilities to establish 1) the property is proceeds of crime, and 2) the designated offencewas committed in relation to that property. There is no onus on those claiming an interest. At the end of the evidence, if any, andsubmissions, the question is whether the Crown has met their onus.

The Evidence [18] Before a person can be found guilty of a criminal offence, either by way of guilty plea or trial, the Crown has to establish theelements of the offence(

s) charged. What the Crown has to establish on a forfeiture application is that the property was proceeds ofcrime and that the enterprise crime was committed in relation to the property which the Crown seeks forfeited. Wilson, para. 13. [19] An application for forfeiture after a conviction is not a criminal trial. The focus is on the property, not guilt or innocence. Theapplication typically relies upon the factual findings of the jury or trial judge. It is not intended to be a rehearing of the evidence or

factual findings of the trial judge or implicit findings from the jury’s verdict. Nor are those claiming an interest permitted to re-litigatefactual issues determined at trial. However, supplemental evidence that is relevant to the forfeiture issues may be heard. R. v. HellsAngels Motorcycle Corp. (ON SC), [2009] O.J. No. 3503 (S.C.J.) at paras. 12 and 14 [20] Here, the Crown relies on the ASF from the guilty plea as the factual basis upon which I should make the forfeiture orders.

Those claiming an interest will have an opportunity to make written and oral submissions as to whether the ASF satisfies the onus on theCrown. If it does, the order will be made. If it does not, the Crown will have an opportunity to call evidence as will those claiming aninterest in the property.

Section 462.42 [21] As noted above, an application under s. 462.42 can only be made after a forfeiture order has been made and only be heard in theSuperior Court, regardless of the court in which the sentencing occurred. It is an application brought by the person claiming an interest,not the Crown and the onus is on the person claiming an interest. Even if the applicant establishes the criteria in s. 462.42 the judge hasa discretion whether to make an order. Wilson, supra at para. 31 [22] There is a right of appeal for those who unsuccessfully claim an interest in the property.

Unlike a relief from forfeiture orderunder s. 462.37 there is no provision on a s. 462.42 hearing for the judge to impose a fine as part of the sentencing because theapplication is not part of the sentencing hearing. Wilson, at para. 32. [23] Picard Foods’ written submissions request leave of the Court to bring an application under s. 462.42 if a forfeiture order is madein relation to the property for which they claim an interest. This application can be dealt with quickly. There is no provision in theCriminal Code that would permit me to grant leave to bring the application under s. 462.42.

Indeed, there is nothing in the legislationthat requires leave to bring the application. [24] In R. v. Obront [Canadian Bank of Commerce v. Canada] [1999] O.J. No. 1500, Beauleau J. held that where a person claimingan interest in property was heard at the s. 462.37/462.41 hearing, they had no right to a s. 462.42 hearing. His Honour held that theperson’s recourse was an appeal to the Court of Appeal pursuant to s. 462.44. The Court of Appeal heard the appeal in Obront implicitlyupholding the finding of Beauleau J. (ON CA), [2000] O.J.

No. 4149 Conclusions [25] For the following reasons, 1) Sections 462.37 and s. 462.41 apply to these applications, not s. 462.42, 2) The application is part of the sentencing hearing at which the Crown and Derek Sankar are the only parties, 3) The Crown bears the onus on a balance of probabilities, an onus that remains throughout the application, 4) The ASF is admissible as evidence on the application, 5) The Crown will argue that the ASF provides sufficient evidence to establish that the property should be forfeited, 6) The weight to be attached to the ASF including any issues upon which Derek Sankar did not have personal knowledge may be raisedon the application by those claiming an interest in the property, 7) The parties who have responded to the s. 462.41 notices may make written and oral submissions as to whether the ASF providessufficient evidence, 8) If I were to determine that the ASF does not provide a sufficient evidentiary basis upon which to make the order under s. 462.36, theCrown would have an opportunity to call evidence on the issue, 9) If evidence was called, those who responded to the notice could have an opportunity to cross-examine the Crown witnesses and callevidence, [26] The parties shall appear on January 21, 2011 at 10 a.m. to set a date for the application. ___________________________ DURNO, J.

Released: December 21, 2010 CITATION: R. v. Sankar, 2010 ONSC 6967 COURT FILE NO.: 2144/07

DATE: 20101221 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: HER MAJESTY THE QUEEN - and – DEREK SANKAR Procedure and Onus Ruling on Crown Forfeiture Application DURNO, J. Released: December 21, 2010