On May 12, the Ontario Court of Appeal will consider the limits of civil forfeiture and the power of the Attorney General to use this powerful tool to dispose of assets without compensation.
Civil forfeiture is a process that allows government to seize property and other assets tainted by crime. These laws exist across Canada, and in Ontario civil forfeiture is governed by the Civil Remedies Act.
Civil forfeiture laws were originally intended to deter crime and compensate victims. And many members of the public are untroubled by these laws, and consider them something that only affects criminals. Unfortunately, civil forfeiture laws allow provincial governments to seize property not only from criminals, but also from people who have never been charged with or even suspected of a crime.
Typically, all the government has to show is that the property at issue was used by someone – anyone – as an “instrument of crime” or was “the proceeds of crime”. And in the case being heard by the Ontario Court of Appeal on May 12, the government is now arguing it doesn’t even need to show that.
The case being heard is Norwood (Estate) v Attorney General (Ontario), and it involves an unusual set of facts and a little used provision of the Civil Remedies Act.
Michael Norwood was arrested and charged with drug related offences. His property, including his family home, were seized by the federal government at the time of his arrest. The property was restrained and sold, but Mr. Norwood later died and the charges against him were vacated without a trial. Following some interim proceedings, the Superior Court ordered on consent that the funds from the sale of the home be released to the estate.
That’s when things started to get sticky. A week after the order of the return of the funds to the estate, the Attorney General for Ontario stepped in. The Ontario AG, who had not been heard from before, delivered a Notice of Application for forfeiture of the money under the Civil Remedies Act. But the Ontario AG’s application for forfeiture under that act never proceeded past the bare notice itself.
Instead of proceeding with a forfeiture using the standard steps laid out in the Civil Remedies Act, the Ontario AG proceeded to use a new and little used provision of the Civil Remedies Act to side step the forfeiture and deplete the assets. Section 18.1 of the Civil Remedies Act allows the Attorney General to enter into court approved settlements with third parties who have an “innocent interest” in the property.
In this case, Mr. Norwood’s mother, Rosa Norwood, claimed a partial interest in the family home. However, Rosa Norwood’s claim to the home was disputed by Mr. Norwood’s estate. Nevertheless, the Ontario AG entered a settlement with Rosa Norwood, and over the objections of the estate, that settlement was approved by the court.
The case is now at the Ontario Court of Appeal, and will consider whether a court can approve a settlement under this section of the Civil Remedies Act prior to the determination that the funds were the proceeds or instrument of crime. The Canadian Constitution Foundation, a legal charity with a history of work on the issue of civil forfeiture, is intervening in that case.
The CCF argues that this novel interpretation of s 18.1 is inconsistent with the purpose of the Civil Remedies Act, which is intended to prevent crime and compensate victims. The lower court’s interpretation would effectively remove any burden the Act places on the Attorney General to tender evidence that the assets are tainted by crime, and permit the AG to sidestep the requirements of the act by disposing of any assets as they see fit, so long as they can arrange a settlement with third parties.
Civil forfeiture is a powerful tool, and because of the power the Civil Remedies Act gives the government to take property without compensation, the limits on how this tool may be exercised must be clear. Norwood Estate creates an excellent opportunity for the courts to clarify those limits.
This article originally appeared in the Lawyer’s Daily.