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Criminal - Sentencing - Forfeiture of Property. R. v. Burden
In R. v. Burden (Ont CA, 2024) the Ontario Court of Appeal considered the sentencing issue of ordering 'forfeiture of proceeds of crime', and imposing fines in lieu of forfeiture:[15] Subsections 462.37(1) and (3) of the Criminal Code set out the jurisdiction to order the forfeiture of proceeds of crime and to impose fines in lieu of forfeiture. They provide as follows:Order of forfeiture of property
462.37 (1) Subject to this section and sections 462.39 to 462.41, if an offender is convicted, or discharged under section 730, of a designated offence and the court imposing sentence on or discharging the offender, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime obtained through the commission of the designated offence, the court shall order that the property be forfeited to His Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law.
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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 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. [16] The term “proceeds of crime” is defined in s. 462.3(1) as including “any property, benefit or advantage…obtained or derived directly or indirectly as a result of the commission in Canada of a designated offence”. Fraud is a designated offence for purposes of s. 462.37.
[17] Crown and duty counsel agree on the following four propositions:1. the $1.2 million that the appellant misappropriated from the victims is “proceeds of crime”, since the Crown established beyond a reasonable doubt that the appellant had obtained that money as a direct result of fraud;
2. the sentencing judge was therefore required, pursuant to s. 462.37(1), to order that these proceeds be forfeited to His Majesty, unless the making of such an order was not practicable;
3. the jurisdiction to order forfeiture or a fine in lieu of forfeiture is disjunctive, and a sentencing judge may impose one or the other, but not both. This is made clear by s. 462.37(3) which provides in relevant part that, where property of an offender cannot be made subject to a forfeiture order, “the court may, instead of ordering the property…to be forfeited, order the offender to pay a fine in an amount equal to the value of the property” (emphasis added); and,
4. therefore, the trial judge erred in imposing both the orders and one of them must be set aside. ....
(iii) The forfeiture order should be set aside and the fine in lieu of forfeiture should remain
[21] The determination of which of the orders was properly issued (and which should be set aside) must be guided by Parliament’s purpose in granting the discretion to impose a fine in lieu of an order of forfeiture.
[22] It is well established that the Code’s proceeds of crime provisions in Part XII.2 are intended to deprive offenders of ill-gotten gains and to deter other like-minded persons from participating in such criminal activity in the future: R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392 at paras. 14-17; R. v. Abdelrazzaq, 2023 ONCA 112, 165 O.R. (3d) 721, at para. 36; R. v. Ruthowsky, 2024 ONCA 432, 439 C.C.C. (3d) 137, at para. 198. In designing the proceeds of crime scheme, Parliament recognized the practical reality that proceeds of crime are often not available for forfeiture at the time of sentencing. In such cases, merely ordering the offender to forfeit the proceeds of crime would as a practical matter be largely meaningless. In fact, it would provide an incentive for offenders to dispose of criminal proceeds so that, in the event they were successfully prosecuted, the illegal fruits of their activity would be beyond the reach of the Crown. This would render the attempted enforcement of a forfeiture order an exercise in futility, a result that would run directly contrary to Parliament’s purpose in enacting Part XII.2, which is to ensure that “crime does not pay”.
[23] Section 462.37(3) attempts to avoid such a perverse result by providing that where a forfeiture order would be impracticable, sentencing judges may instead impose a fine in lieu of forfeiture. Moreover, where such a fine is imposed, s. 462.37(4) requires the imposition of a term of imprisonment if the fine is not paid within the time specified in the order. These “fine in lieu” provisions are necessary so that offenders who have benefitted from proceeds of crime and then taken steps that make the forfeiture of those proceeds impracticable, are nevertheless deprived of the benefits they improperly obtained.
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[28] Duty counsel argues that the fine in this case should be reduced by the amount recovered by the victims pursuant to their civil proceedings against the appellant. He relies in particular on R. v. Vallières, 2022 SCC 10, [2022] 1 S.C.R. 144, where the Supreme Court held that an offender may be ordered to pay less than the total value of the misappropriated property that was in their possession or control where several co-accused had possession or control of the same property that constituted proceeds of crime. The Court pointed out that if each offender was required to pay a fine representing the proceeds that they at any one time had in their possession, this could result in fines that exceeded the total value of the proceeds of crime. Such double recovery could be avoided by apportioning the amount of the fine between the co-accused where there is evidence indicating that they had simultaneous or successive possession of the same property. Duty counsel further notes that in Vallières the fine was reduced to account for the fact that some of the criminal proceeds had been subject to a freezing order and had been returned to the victim pursuant to s. 462.41 of the Criminal Code.
[29] Similarly, in R. v. Rafilovich, 2019 SCC 51, the Supreme Court declined to impose a fine in lieu of forfeiture in relation to criminal proceeds that had been seized at the time of the accused’s arrest and were ordered returned pursuant to s. 462.34(4)(c)(ii) to fund reasonable legal fees necessary for the accused’s defence. The Court found that one of the reasons that Parliament enacted s. 462.34(4)(c)(ii) was to provide access to counsel and give meaningful weight to the presumption of innocence. The Court was concerned that if an accused person understood that judicially returned funds would be clawed back later through the imposition of a fine and possibly imprisonment, they would likely choose to represent themselves. Balancing the secondary purposes associated with the enactment of s. 462.34(4)(c)(ii) against the primary objective of Part XII.2, namely, to ensure that “crime does not pay”, the Court concluded that the fine should not include the proceeds that had been returned to the accused to fund his defence.
[30] Duty counsel argues that these cases establish that the court has discretion to impose a fine that takes into account restitution that has previously been provided to victims. Accordingly, he submits that the fine should be reduced to $985,269.94, since the victims had recovered the balance of the misappropriated funds through enforcement of the civil judgment.
[31] The Crown opposes reducing the fine in this manner, arguing that this court has declined to take into account the availability of civil remedies in imposing a fine in lieu of forfeiture: R. v. Schoer, 2019 ONCA 105, 371 C.C.C. (3d) 292, at paras. 108-11; R. v. Mojadiddi, 2021 ONCA 796, at paras. 11-14. For example, in Schoer, the court declined to reduce the fine in lieu of forfeiture by an amount that the offender had paid to one of the victims pursuant to a civil judgement, since that payment had been made out of commingled funds of other victims of the offender’s Ponzi scheme. In Mojadiddi, the court refused to reduce the fine on account of payments made by a co-accused or from funds stolen from other victims.
[32] We accept the submissions of duty counsel and would reduce the quantum of the fine in lieu of forfeiture in the matter he proposes. Vallières establishes that sentencing judges do have a discretion in certain limited circumstances to set a fine in lieu of forfeiture in an amount that differs from the total proceeds of crime.
[33] One such circumstance is where the offender has returned a portion of the proceeds to the victim from whom those proceeds were misappropriated. This court has affirmed on a number of occasions that a fine in lieu of forfeiture is to be reduced by amounts paid pursuant to a restitution order: R. v. Waxman, 2014 ONCA 256, at para. 31; R. v. Reeve, 2020 ONCA 381, 151 O.R. (3d) 65, at para. 3. It should not matter whether such a repayment is made in satisfaction of a restitution order or otherwise, provided that the offender has returned some of the criminal proceeds to the victim. Nor is this principle inconsistent with this court’s decision in R. v. Angelis, 2016 ONCA 675, 133 O.R. (3d) 575, at paras. 62 and 75, where the court declined to reduce a fine in lieu of forfeiture since the corporate victim had been indemnified for its loss from an insurer rather than from the offender.
[34] In this case, unlike in Mojadiddi or Schoer, there is a single set of victims and thus the amount that was repaid by the appellant was not obtained from other victims, nor was it paid by a third-party as in Angelis. It is true that we cannot be certain that the amount that the appellant repaid represented a portion of the illegal proceeds as opposed to other funds in the lawful possession of the appellant. However, the reason the trial judge did not inquire into this particular matter is because he was mistakenly advised by the Crown that he had no discretion and was required to set the fine in an amount equal to the total amount of the fraud. We are also concerned that the Crown advised the trial judge that, notwithstanding the higher amount specified in the Orders, the appellant would not be required to actually pay that higher amount through “adjust[ment] by law”. Thus, the expectation of the trial judge was that, regardless of the quantum of the fine set out in the formal order, the appellant would only be required to pay a reduced amount reflecting a ‘credit’ for the restitution that she had already paid. Indeed, the Crown acknowledged in his submissions to the trial judge that this was the fair outcome.
[35] In the circumstances, we would reduce the fine in lieu of forfeiture from $1,208,000 to $985,269.94. We would further direct, in accordance with Waxman, at para. 31, that the restitution order shall take priority over payment of the fine in lieu of forfeiture, and that the fine in lieu of forfeiture shall be reduced by any amount paid pursuant to the restitution order. . Canada (Attorney General) v. Georgiou
In Canada (Attorney General) v. Georgiou (Ont CA, 2023) the Court of Appeal considered motions for both leave to appeal, and a direct appeal, under the Mutual Legal Assistance in Criminal Matters Act brought by a mother seeking assets forfeited by a US criminal court against the son. The underlying procedure was a relief from forfeiture against 'forfeiture of property' proceeding under CCC 462.42.
In this quote the court characterized the trial court as considering the 'relief from forfeiture' provisions of the proceeds of crime of the CCC:[23] The application judge noted the parties’ agreement that ss. 462.42(1) and (4) of the Criminal Code governed Loukia’s request for relief from forfeiture. As he summarized it, before his discretion to grant relief could be exercised, Loukia had the onus to show that: (a) she was not charged with or convicted of an offence that resulted in the forfeiture; (b) she is innocent of any complicity or collusion with respect to the offences of which George was convicted; (c) she has a valid interest in the disputed funds; and (d) her interest was not transferred to her under circumstances that give rise to a reasonable inference that the transfer was for the purpose of avoiding forfeiture of the disputed funds. . R. v. Abdelrazzaq
In R. v. Abdelrazzaq (Ont CA, 2023) the Court of Appeal considered the CCC 462.3(3-4) 'orders of forfeiture of property - fine instead of forfeiture' provisions and their existing doctrine, here at paras 29-62.
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