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Quebec (Attorney General) v. Laroche, [2002] 3 S.C.R. 708, 2002 SCC 72

 

The Attorney General of Quebec                                                                    Appellant

 

v.

 

Laurent Laroche and Garage Côté Laroche Inc.                                       Respondents

 

and

 

The Honourable Claude Pinard, J.C.Q.                                                     Mis en cause

 

and

 

The Attorney General of Canada and

the Attorney General for Ontario                                                                 Interveners

 

Indexed as:  Quebec (Attorney General) v. Laroche

 

Neutral citation:  2002 SCC 72.

 

File No.:  28417.

 

2002:  January 16; 2002:  November 21.

 

Present:  McLachlin C.J. and L’Heureux‑Dubé, Gonthier, Iacobucci, Bastarache, Arbour and LeBel JJ.

 


on appeal from the superior court of quebec

 

Criminal law — Proceeds of crime — Restraint order — Special warrant of seizure — Application for review — Burden of proof — Exercise of power of review — Whether power of review may be exercised only within limits defined by courts in wiretap authorization reviews — Whether review judge may consider validity of search warrants underlying seizure and restraint proceedings — Whether review judge erred in quashing restraint order and special warrants of seizure — Criminal Code, R.S.C. 1985, c. C‑46, ss. 462.32 , 462.33 , 462.34 462.37 .

 

Criminal law — Proceeds of crime — Restraint order — Nature and scope of restraint orders — Whether restraint order a seizure within meaning of s. 8  of Canadian Charter of Rights and Freedoms Criminal Code, R.S.C. 1985, c. C‑46, s. 462.33(3) .

 

Constitutional law — Charter of Rights  — Unreasonable search or seizure  — Restraint order on certain property under Criminal Code  — Whether restraint order a seizure within meaning of s. 8  of Canadian Charter of Rights and Freedoms Criminal Code, R.S.C. 1985, c. C‑46, s. 462.33(3) .

 


L operated Garage Côté Laroche Inc., whose principal business was repairing seriously damaged road vehicles.  Renting out industrial condominiums was added to the business, and the rentals are an important source of income.  In the course of an audit, an employee of the Société de l’assurance automobile du Québec (SAAQ) found serious irregularities in five rebuilt vehicle files submitted by the Garage.  The employee was convinced that the certificates of technical compliance for the vehicles had been obtained illegally, and referred the files to the police.  After an investigation, the five vehicles were seized.  The Crown filed charges of forgery, uttering forged documents and possession of stolen property against L.  The police investigation covered dozens of rebuilt vehicle files as well as recent real estate acquisitions.  Based on the affidavit of an investigator, the Court of Québec granted a restraint order and issued seven special warrants of seizure under ss. 462.32  and 462.33  of the Criminal Code , covering both the immovable properties and the vehicles.  When the police executed the warrants, they seized 24 vehicles that were not covered by the warrants and restraint order.  The respondents then brought an application for review in the Superior Court under s. 462.34 of the Code and s. 24(1)  of the Canadian Charter of Rights and Freedoms .  The Superior Court granted the application and quashed the restraint order and special warrants of seizure in full.

 

Held (McLachlin C.J. and Arbour J. dissenting in part):  The appeal should be allowed in part.  The restraint order and warrants of seizure authorized by the Court of Québec should be restored, except in respect of the 24 motor vehicles seized without authorization.

 


Per L’Heureux‑Dubé, Gonthier, Iacobucci, Bastarache and LeBel JJ.:  The special warrant of seizure provided for in Part XII.2 of the Criminal Code  constitutes a seizure with change of possession.  A restraint order must be characterized as a seizure within the meaning of s. 8  of the Charter .  Such an order supplements seizures that are taking place contemporaneously and freezes the property.  The status of the person in possession of the property is that of caretaker or administrator of his or her own property.  The property is placed under the legal and actual control of the criminal justice system.  The purpose of this measure for exercising control is to facilitate criminal investigations and prevent the disappearance or wasting of the property.  Doing this makes it possible to punish the crimes in question more effectively and facilitates the enforcement of any orders of forfeiture.

 

A judge may make a restraint order or issue a general warrant of seizure in respect of property if there are reasonable grounds to believe that an order of forfeiture may be made in respect of the property under s. 462.37(1) or 462.38(2).  The express reference to s. 462.37(1) in the English version of s. 462.37(2) means that any order of forfeiture made under that second subsection is in fact made under the first subsection.

 

While the principles stated in the wiretap case law concerning the importance of the role of the authorizing judge, and the obligations of the public officials who seek those wiretaps, remain relevant, the wording of s. 462.34(6) of the Code calls for the use of an analytical framework which differs substantially from the framework by which a judge who must review a wiretap authorization is governed.  The reviewing judge must decide whether he or she would have made the same decision as the authorizing judge, having regard to all of the evidence in the judge’s possession following the hearing.  If the reviewing judge is of a different opinion, he or she must correct the initial error.  The applicant bears the burden of establishing, on a balance of probabilities, that the authorization should not have been granted.  The applicant must demolish the appearance of validity attached to the authorization.

 


The Superior Court correctly held that it could review the validity of the search warrants underlying the seizure and restraint proceedings.  In this case, recognizing that the reviewing judge has jurisdiction that permits him or her to consider allegations that s. 8  of the Charter  has been seriously violated does not adversely affect the fundamental interests of the administration of justice and makes it possible to offer an effective remedy against a restraint order and warrants of seizure.  The restraint order will not necessarily be debated and reviewed in the course of the criminal trial.  When the defects in the decision authorizing a warrant of seizure or restraint order result from some unconstitutional illegality in the underlying search warrants, it would be difficult to examine the legal situation properly without considering those various proceedings as a whole, and without having regard to their close legal and factual connections.  A requirement that the remedy be sought by certiorari would amount to undue procedural strictness.  The Superior Court already exercises inherent jurisdiction over all aspects of the proceedings.  Moreover, an application for a remedy under s. 24  of the Charter  may be joined with the application for review and so allows that aspect of the case to be brought before the court in any event.

 


The information obtained by the SAAQ employee had originally been provided by the respondents in compliance with legislative and regulatory obligations. They should have known that this information would be examined and audited by the SAAQ and was therefore not private in relation to the government.  In carrying out and expanding his investigation, and transmitting information to the police, the employee was merely performing the duties of his position.  That information constituted reasonable and probable grounds for obtaining the search warrants.  The affidavit sworn by the investigator contained weaknesses and errors, but they did not mean that it could be given no weight at all for the purposes of making the order.  Having regard to the information obtained through the administrative investigations and searches, the Crown had reasonable and probable grounds, at the authorization stage, to believe that the property in respect of which the restraint order and warrants of seizure were sought was proceeds of crime and could eventually have been the subject of an order of forfeiture.  The onus was on the respondents, on review, to establish that the warrants of seizure should not have been issued and the restraint order should not have been made by the authorizing judge, on a balance of probabilities.  Having failed in their attack on the underlying warrants, the respondents then had to present evidence to explain the source of the property, in order to establish, on a balance of probabilities, that it was not proceeds of crime.  In this case, if the reviewing judge had applied Colarusso correctly, and had correctly understood the nature of the evidence that was required for judicial review, he would have had to dismiss the application for review, except in respect of the 24 vehicles seized without authorization.  There was no basis in law for the restraint or seizure of those vehicles, and the Crown was unable to establish that those vehicles were connected with criminal activities.  Nor did it establish that the vehicles might be the subject of an order of forfeiture as proceeds of crime.  For the other vehicles, the evidence wrongly excluded by the review judge related those vehicles to criminal activities involving fraud, falsifying documents and possession of stolen property and the respondents presented no evidence that effectively contradicted the information relied on in support of the application for the restraint order.  With respect to the immovables, the respondents had to establish, on a balance of probabilities, that they were not proceeds of crime and that therefore there were no reasonable and probable grounds for making the restraint order.  It was not required that innocence be proved at that stage.  Essentially, they had to establish the origin of the funds with which the immovables had been purchased, according to that standard of proof, something which they did not succeed in doing.

 


Per McLachlin C.J. and Arbour J. (dissenting in part):  The Superior Court erred in setting aside the warrants and the restraint order on the vehicles covered by the warrants.  Assuming without deciding that the court had the power to exclude the evidence obtained as a result of the initial seizures, its decision to do so cannot be justified.  The SAAQ was entitled to report the information it obtained in the course of its own internal audit to the police.  It is difficult to conclude that there was a reasonable expectation of privacy in the basic information turned over.  The subsequent warrants flow directly from the discoveries the police made in connection with the first five vehicles.  This is textbook police work, not a “fishing expedition”.

 

The Superior Court did not err in setting aside the restraint order with respect to L’s real property.  It found that the evidence did not support a reasonable belief that the real property was the proceeds of crime and it was not asserted that this property was needed for the purpose of investigation or evidence.  Section 462.34(6)(a) of the Code does not envisage a further requirement that the owner demonstrate that the affected property was not acquired with the proceeds of crime to have a restraint order lifted.  This reflects the presumption of innocence.

 

Cases Cited

 

By LeBel J.

 


Applied: R. v. Lanteigne (1994), 156 N.B.R. (2d) 17;  R. v. Fremanco Ltd. (1995), 135 Nfld. & P.E.I.R. 327; R. v. Domm (1996), 111 C.C.C. (3d) 449; R. v. Araujo, [2000] 2 S.C.R. 992, 2000 SCC 65; not followed: R. v. Seman (1994), 93 Man. R. (2d) 151; British Columbia (Attorney General) v. Felix, [1993] B.C.J. No. 1870 (QL);  referred to:  R. v. Colarusso, [1994] 1 S.C.R. 20; Wilson v. Canada (1993), 86 C.C.C. (3d) 464; Oerlikon Aérospatiale Inc. v. Ouellette, [1989] R.J.Q. 2680; 170888 Canada Ltée v. La Reine, [1999] R.J.Q. 1008; R. v. Brown, [2002] 2 S.C.R. 185, 2002 SCC 32; R. v. Garofoli, [1990] 2 S.C.R. 1421; R. v. Mac, [2002] 1 S.C.R. 856, 2002 SCC 24; R. v. Lamy, [2002] 1 S.C.R. 860, 2002 SCC 25; R. v. Bisson, [1994] 3 S.C.R. 1097; R. v. Dyment, [1988] 2 S.C.R. 417; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; Wilson v. The Queen, [1983] 2 S.C.R. 594; R. v. Meltzer, [1989] 1 S.C.R. 1764; Canada (Human Rights Commission) v. Taylor, [1990] 3 S.C.R. 892; R. v. Litchfield, [1993] 4 S.C.R. 333; Dagenais v. Canadian Broadcasting Corp., [1994] 3 S.C.R. 835; R. v. O’Connor, [1995] 4 S.C.R. 411; R. v. Beaulac, [1999] 1 S.C.R. 768; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33.

 

Statutes and Regulations Cited

 

Canadian Charter of Rights and Freedoms, ss. 8 , 24(1) .

 

Criminal Code, R.S.C. 1985, c. C‑46  [am. c. 42 (4th Supp.)], ss.  462.3  “proceeds of crime” [am. 1993, c. 25, s. 95; am. c. 37, s. 32; am. 1996, c. 19, s. 70(b)], 462.3  “judge”, 462.31 [am.  1996, c. 19, s. 70(c); am. 1997, c. 18, s. 28], 462.32 [am. 1997, c. 18, s. 29], 462.33 [am. 1993, c. 37, s. 21; am. 1996, c. 16, s. 60(1)(d); am. 1997, c. 18, s. 30], 462.34 [am. 1996, c. 19, s. 70(d) and (e); am. 1997, c. 18, ss. 31 and 140(d)(i)], 462.35 [am. 1997, c. 18, s. 33], 462.37 [am. 1995, c. 22, s. 10 (Sch. 1, items 15 to 17)], 462.38 [am. 1997, c. 18, s. 35], 462.43, 487 to 492, 490.8, 490.9, 504, 552, 673.

 

Highway Safety Code, R.S.Q., c. C‑24.2, ss. 546.1 et seq.

 

Supreme Court Act, R.S.C. 1985, c. S‑26, ss. 40 65.1 .

 

Authors Cited

 

Béliveau, Pierre, et Martin Vauclair.  Traité général de preuve et de procédure pénales, 7e éd.  Montréal:  Thémis, 2000.

 

Chevrette, François, and Hugo Cyr.  “La protection en matière de fouilles, perquisitions et saisies, en matière de détention, la non‑rétroactivité de l’infraction et la peine la plus douce”, in Gérald‑A. Beaudoin and Errol Mendes, eds., The Canadian Charter of Rights and Freedoms .  Scarborough, Ont.: Carswell, 1996, 10-1.

 


German, Peter Maurice.  Proceeds of Crime:  The Criminal Law, Related Statutes, Regulations and Agreements.  Scarborough:  Carswell, 1998 (loose‑leaf updated 2002, release 1).

 

Gold, Alan D.  Proceeds of Crime:  A Manual with Commentary on Bill C‑61.  Toronto:  Carswell, 1989.

 

Hutchison, Scott C., James C. Morton and Michael P. Bury.  Search and Seizure Law in Canada.  Toronto:  Carswell, 1993 (loose‑leaf updated 2002, release 2).

 

Reynolds, D. D. Graham.  “Selected Aspects of the Proceeds of Crime Provisions of the Criminal Code ”, in Renee Pomerance and Anil K. S. Kapoor, eds., Search and Seizure:  New Developments.  Toronto:  Department of Continuing Legal Education, Law Society of Upper Canada, 1998, 5‑1.

 

APPEAL from a decision of the Quebec Superior Court, [2001] Q.J. No. 7209 (QL), granting an application for review and setting aside a restraint order and seven special warrants of seizure issued by the Court of Québec.  Appeal allowed in part, McLachlin C.J. and Arbour J. dissenting in part.

 

Serge Brodeur, Alain Pilotte, Gilles Laporte and Patrick Michel, for the appellant.

 

Christian Desrosiers and Denis Lavigne, for the respondents.

 

Bernard Laprade and François Lacasse, for the intervener the Attorney General of Canada.

 

Trevor Shaw, for the intervener the Attorney General for Ontario.

 

The reasons of McLachlin C.J. and Arbour J. were delivered by

 


1                                   The Chief Justice (dissenting in part) — Sections 462.32  and 462.33  of the Criminal Code  (Part XII.2, Proceeds of Crime), R.S.C. 1985, c. C-46 , allow the police to impound property and prevent an owner from dealing with it, even before charges are laid.  The initial restraint order or seizure may be made without notice to the property owner.  However, s. 462.34 goes on to provide that the property owner may challenge the seizure before a judge, at which time he can present evidence and tell his side of the story.  This appeal raises the issue of what a person charged with an “enterprise crime offence” must show to set aside a seizure under this provision.

 

2                                   Section 462.34 provides that a special search warrant or a restraint order may be set aside if the reviewing judge is satisfied on a balance of probabilities: (1) that the warrant “should not have been issued” or that the order  “should not have been made”; and (2) that the property “will no longer be required for the purpose of any investigation or as evidence in any proceeding”.  The section reads, in pertinent part:

 

(6)  An order under paragraph (4)(b) in respect of property may be made by a judge if the judge is satisfied

 

(a)  where the application is made by

 

(i) a person charged with an enterprise crime offence or a designated substance offence, or

 

. . .

 

that a warrant should not have been issued pursuant to section 462.32  or a restraint order under subsection 462.33(3)  should not have been made in respect of that property, or

 

. . .

 

and that the property will no longer be required for the purpose of any investigation or as evidence in any proceeding.

 


3                                   Mr. Laroche was in the automobile reconstruction business.  He owned real property as well as a large inventory of motor vehicles.  The Crown alleged that he was in the business of selling vehicles constructed from stolen parts, commonly called a “chop shop”.  Charges were laid against him on May 4, 2000.  On July 13, 2000, on the basis of an affidavit of Inspector Morin, the Crown obtained seven warrants and a restraint order seizing five Toyota Tacoma vehicles, 70 other vehicles and six parcels of real property.

 

4                                   Mr. Laroche applied to Grenier J. of the Quebec Superior Court to have the orders set aside under s. 462.34  of the Criminal Code  and s. 24(1)  of the Canadian Charter of Rights and Freedoms .  He called evidence from his accountants showing that he had legitimate assets sufficient to acquire the real property and challenging Inspector Morin’s affidavit as flawed, misleading and incomplete.

 

5                                   Grenier J. set aside the orders with respect to the vehicles and the real property.  On the real property, he found that Inspector Morin’s assertions had been discredited, removing the basis for the order.  On the vehicles, he took the view that the Société de l’assurance automobile du Québec (SAAQ), the provincial vehicle licensing agency, had erred in giving the Quebec Police the information that had initiated the investigation without a warrant.  He concluded that this amounted to an illegal search or seizure, and held that all the subsequent warrants and seizures were invalid as a result of the initial illegal search.  Characterizing the investigation as a mere [translation] “fishing expedition”, Grenier J. excluded the evidence relating to the vehicles and set aside the orders with respect to them.

 


6                                   The question before us is whether Grenier J. erred in setting aside the orders.  I agree with my colleague Justice LeBel that he erred in setting aside the warrants and the restraint order on the vehicles covered by the warrants.  Assuming without deciding that Grenier J. had the power to exclude the evidence obtained as a result of the initial seizures, his decision to do so cannot be justified.  The SAAQ became aware of the alleged crimes with respect to the first five Toyota Tacomas in the course of an audit of its own files.  It was entitled to report this information to the police.  Indeed, s. 504 of the Criminal Code  allows an entity like the SAAQ to swear out an information directly when it discovers a crime.  If it can do this, surely it can report basic information to the police for further investigation.  Moreover, it is difficult to conclude that there was a reasonable expectation of privacy in the basic information turned over — name, product and registration information.  The subsequent warrants flow directly from the discoveries the police made in connection with the first five Toyota Tacomas.  This is textbook police work, not a “fishing expedition”.  It follows that the first condition of setting aside a warrant or an order — showing that the warrant should not have been issued or that the order should not have been made — was not fulfilled, and that Grenier J. ought not to have set it aside.

 


7                                   However, I cannot agree that the restraint order should stand with respect to Mr. Laroche’s real property.  The order required evidence supporting a reasonable belief that the property was the proceeds of crime; mere insinuations cannot justify a restraint order.  Grenier J. found that Inspector Morin had failed to disclose documents showing that Laroche had taken out substantial loans to purchase and build the real estate in question, and heard testimony from accountants who discredited Inspector Morin’s allegations that the buildings could only have been constructed with the proceeds of crime.  Based on the evidence before him, he concluded that [translation]  “[d]espite insinuations, nothing in the evidence establishes a connection between the real property seized and enterprise crime offences” ([2001] Q.J. No. 7209 (QL), at para. 10).  Grenier J. accordingly discounted the allegations that the real property had been acquired with the proceeds of crime. This removed the foundation for the order.  It was not asserted that the property was needed for the purpose of investigation or evidence.  Accordingly, the two conditions for setting aside the order against an accused person under s. 462.34  were met with respect to the real property, and Grenier J.’s ruling to that effect should stand.

 

8                                   My colleague LeBel J. suggests that, so as to have the restraint order lifted, it is not enough for the property owner to show that the order should not have been made and for the judge to determine that the property is not required for the purpose of investigation or evidence.  In his view, to have a restraint order lifted, the owner must also demonstrate that the affected property was not acquired with the proceeds of crime.  With the greatest respect, this requirement is not envisaged by the Code for persons charged with an “enterprise crime offence” under s. 462.34(6)(a).  Showing lawful ownership or possession is only required for other applicants under s. 462.34(6)(b), which reads:

 

(b) in any other case, that the applicant is the lawful owner of or lawfully entitled to possession of the property and appears innocent of any complicity in an enterprise crime offence or designated substance offence or of any collusion in relation to such an offence, and that no other person appears to be the lawful owner of or lawfully entitled to possession of the property . . . .

 

 


9                                   The burden in the two situations is importantly different.  The absence of the need to demonstrate lawful ownership or possession in the case of a person charged with an enterprise crime offence reflects the presumption of innocence, even at the expense of the possibility that not all proceeds of crime will be frozen pending the outcome of a criminal trial.

 

10                               I would allow the appeal in part, varying the original restraint order of Judge Pinard of the Court of Québec to release the real property and those vehicles that were seized without a warrant.

 

English version of the judgment of L’Heureux-Dubé, Gonthier, Iacobucci, Bastarache and LeBel JJ. delivered by

 

LeBel J.

 

I.  Introduction

 


11                               This is an appeal concerning the validity of a restraint order made and seven special warrants of seizure issued under ss. 462.32  and 462.33  of the Criminal Code, R.S.C. 1985, c. C‑46 , in the course of a police investigation into a business involving the possession and sale of stolen car parts that the respondents, Garage Côté Laroche Inc. and its principal shareholder and owner, Laurent Laroche (“Laroche”), were allegedly running in Victoriaville, Quebec.  The Attorney General has appealed from the judgment of the Superior Court quashing a restraint order and special warrants relating to a large number of motor vehicles and immovable properties owned by or in the possession of the respondents.  This appeal raises the issue of the scope of the power of review exercised by the Superior Court under s. 462.34  Cr. C.  For the following reasons, but without adopting the position advanced by the appellant as to the nature and extent of that power of review, I conclude that the restraint order and the special warrants of seizure must be restored in part, in respect of a certain number of vehicles and all of the immovable properties.

 

II.  Facts

 

12                               For several years, the respondent Laurent Laroche and his wife operated Garage Côté Laroche Inc., whose principal business was repairing seriously damaged road vehicles.  A few years later, they added renting out industrial condominiums to that business, and the rentals are now an important source of income for the respondent Laroche.  The building of the condominiums was financed out of substantial investments, the source and legality of which the appellant has questioned.

 

13                               In Quebec, for road safety reasons, strict regulations have been put in place and must be complied with when a rebuilt vehicle is put on the road.  Under ss. 546.1 et seq. of the Highway Safety Code, R.S.Q., c. C‑24.2, a person who wishes to license a rebuilt vehicle must obtain a certificate of technical compliance from the Société de l’assurance automobile du Québec (SAAQ).  The SAAQ or one of its agents will issue a certificate of compliance only when the rebuilt vehicle has been inspected and meets the manufacturer’s standards.

 


14                               In the course of an internal audit at Charest Automobile Ltée, which is an agent of the SAAQ, an SAAQ employee found serious irregularities in five rebuilt vehicle files submitted by Garage Côté Laroche Inc.  When the invoices and photos in the files were compared, it appeared that the same parts from a damaged vehicle had apparently been used to rebuild more than one vehicle.  The employee was convinced that the certificates of technical compliance for the vehicles in question had been obtained illegally, and referred the five fraudulent files to the Victoriaville police.  The files involved five Toyota Tacomas which, miraculously, shared some of the same parts.

 

15                               After an investigation, the five Toyota Tacomas were seized from their new owners pursuant to a warrant issued under s. 487 Cr. C.  Investigations by experts from the Sûreté du Québec and the Groupement des assureurs automobiles showed that no major repairs had been done on the allegedly rebuilt vehicles and that the serial numbers on some of the parts had been altered.  On May 4, 2000, based on those analyses, the Crown filed charges of forgery, uttering forged documents and possession of stolen property against Laurent Laroche.

 

16                               Over the next few months, the police investigation took on dimensions that had been unsuspected at the outset.  It covered dozens of rebuilt vehicle files submitted between 1998 and 2000.  During the period of the investigation, the police obtained a number of search warrants under ss. 487 and 487.01 Cr. C., and in addition, on February 18, 2000, they seized 154 rebuilt vehicle files involving Garage Côté Laroche Inc. and other companies related to Laurent Laroche from the SAAQ agent, which had issued the certificates of compliance for the five Toyota Tacomas.  An analysis of 142 of those 154 files showed serious irregularities in 98 cases.  They included the fact that identical invoices and photographs were found in more than one file, as well as invalid serial numbers.  A number of invoices were from businesses either non‑existent or no longer in operation on the billing date.  As well, parts that had apparently been purchased in the United States had been invoiced in French, with the G.S.T. and Q.S.T shown on the invoice!

 


17                               The scope of the respondents’ illegal activities prompted the police to extend their investigation to Laurent Laroche’s recent real estate acquisitions.  The title searches done regarding Laroche’s properties showed that he had apparently purchased immovables valued at about $1,800,000, and that there were no hypothecary charges against them.  On those findings being made, a police officer who was an investigator with the city of Victoriaville, Luc Morin, signed an affidavit in support of an application for a restraint order and special warrants of seizure, and the affidavit was submitted to Judge Pinard of the Court of Québec.  That application is what led to these proceedings.

 

III.  Judicial History

 

A.  Court of Québec

 

18                               On July 13, 2000, based on the allegations in the affidavit of the investigator Luc Morin, Judge Pinard granted a restraint order and issued seven special warrants of seizure under ss. 462.32  and 462.33  Cr. C.  The restraint order covered both the immovable properties and the vehicles described in the special warrants of seizure, in case some of the vehicles had been resold by the time the special warrants were executed.  When the police executed the special warrants of seizure, they seized 24 vehicles that were not covered by the warrants and restraint order.

 

B.  Quebec Superior Court, [2001] Q.J. No. 7209 (QL)

 


19                               The respondents brought an application for review in the Superior Court under s. 462.34  Cr. C. and s. 24(1) of the Canadian Charter of Rights and Freedoms .  In that application, they sought to have the restraint order and special warrants of seizure quashed and the property that had been seized restored to them.

 

20                               At the hearing before Grenier J., the parties presented new testimony and documentary evidence concerning the respondents’ financial situation, the source of the respondents’ property and the conduct of the police investigation.  When the hearing concluded on February 8, 2001, the Superior Court quashed the restraint order and special warrants of seizure in full.  Grenier J. agreed at the outset that the applicants bore the burden of proof.  However, in his opinion, all of the proceedings had been vitiated by a serious defect from their very beginning.  In Grenier J.’s opinion, the SAAQ employee could not hand over the five fraudulent files discovered at Charest Automobiles Ltée to the police.  The disclosure of that information was prohibited by the judgment in R. v. Colarusso, [1994] 1 S.C.R. 20.  Second, he said that the search warrants issued prior to the application for the restraint order and special warrants of seizure had been issued on the basis of mere suspicions, without reasonable or probable cause.  In his opinion, therefore, the police had gone on a giant fishing expedition into the respondents’ business, with no legal authority and in breach of their constitutional rights.  Third, the restraint order, in his opinion, had been obtained on the basis of incomplete and misleading information regarding the respondents’ business activities and the source of their movable or immovable property.  For one thing, nothing in the evidence could connect the fraud, the possession of stolen property and the purchase of the real estate.

 

C.  Quebec Superior Court

 


21                               On March 6, 2001, De Blois J. of the Superior Court granted a stay of execution under s. 65.1  of the Supreme Court Act, R.S.C. 1985, c. S‑26 , until judgment was rendered on the application for leave to appeal to this Court.  Leave to appeal was then granted.  This is a direct appeal under s. 40 of the Act, because the legislation in question does not provide for any appeal to another court.

 

IV.  Issues

 

22                               The central issue in this appeal is whether Grenier J. properly exercised his power of review when he quashed the restraint order and special warrants of seizure issued in respect of the respondents’ property.  To answer that question, I shall examine, first, the legal nature and the purpose of restraint orders.  Although the respondents have not challenged the constitutionality of the provisions of Part XII.2 of the Criminal Code  governing restraint orders and special warrants of seizure, I shall also, in the course of that review, consider whether a restraint order constitutes a seizure within the meaning of s. 8  of the Charter .  Second, I shall examine the procedure for reviewing restraint orders and special warrants of seizure, and the extent of the powers of a judge to whom an application for review is made.  Finally, I shall consider whether Grenier J.’s judgment was correct, having regard to the principles and legal rules that have been identified.  Before doing this, however, we should briefly review the legislative framework governing restraint orders and special warrants of seizure, in order to gain a better understanding of the nature of the legal issues raised by this appeal and the difficulties they present.

 

V.  Legislative Framework Governing Restraint Orders and Special Warrants of Seizure

 


23                               The procedure governing restraint orders and special warrants of seizure is found in Part XII.2 of the Criminal Code .  Parliament introduced those measures into Canadian criminal procedure as one of the components of a set of legislative reforms made for the purpose of combatting enterprise crime and drug trafficking.  For that purpose, Bill C‑61, which was enacted in September 1988 and was proclaimed in force on January 1, 1989, created new offences and gave the state and police forces expanded powers (on this point, see P. M. German, Proceeds of Crime:  The Criminal Law, Related Statutes, Regulations and Agreements (loose-leaf), at pp. 3‑1 et seq.; A. D. Gold, Proceeds of Crime: A Manual with Commentary on Bill C‑61 (1989), at pp. 15 et seq.).

 

24                               The enactment of Part XII.2, entitled “Proceeds of Crime”, was a central element of those major reforms of the criminal law and criminal procedure.  Part XII.2 provides for a new offence in relation to laundering proceeds of crime (s. 462.31 Cr. C.), interim measures that apply before conviction or even trial or charge, and provisions that facilitate the forfeiture of proceeds of crime once a finding of guilt has been made.  That Part, at the relevant time, applied only to two new categories of offence: enterprise crime and designated drug offences (s. 462.3 Cr. C.).  However, those two categories encompassed virtually all offences in the Criminal Code , other than minor offences, as well as crimes associated with drug trafficking, not including simple possession (see Gold, supra, at p. 5).

 


25                               The legislative objective of Part XII.2 plainly goes beyond mere punishment of crime: an analysis of the provisions of that Part shows that Parliament intended to neutralize criminal organizations by taking the proceeds of their illegal activities away from them.  Part XII.2 intends to give effect to the old adage that crime does not pay (see Wilson v. Canada  (1993), 86 C.C.C. (3d) 464 (Ont. C.A.), at p. 469; Oerlikon Aérospatiale Inc. v. Ouellette, [1989] R.J.Q. 2680 (C.A.), at p. 2687).  As German, supra, has observed, Part XII.2 organizes the fight against organized crime around a strategy that focuses on the proceeds of crime, as opposed to the offender.  As well, the effectiveness of that struggle depends largely on the speed with which proceeds of crime can be identified, located, seized and ultimately forfeited.  For that reason, Part XII.2 provides for new enforcement techniques that enable the police to freeze or immobilize the property of criminal organizations regardless of whose possession it may be in, even before charges are laid.

 

26                               Part XII.2 creates two procedures for the interim preservation of property, which are governed by ss. 462.32  and 462.33  Cr. C. respectively: special warrants of seizure and restraint orders.  Those two provisions plugged the loopholes in the Criminal Code , which, until then, had not permitted the seizure and restraint of immovable property, intangible property or proceeds of crime associated with certain serious drug offences.  The purpose of these measures, which precede trial, is to prevent the wasting of illegally obtained property and to make it possible for that property to be forfeited after a conviction is secured.  Although the objective of the two procedures is the same, they apply to separate matters, and certain aspects of the procedural rules that govern them are different.  While a special warrant of seizure deals with movable, tangible property such as vehicles and jewellery, a restraint order targets real estate, or intangible property such as bank accounts (see D. D. G. Reynolds, “Selected Aspects of the Proceeds of Crime Provisions of the Criminal Code ”, in R. Pomerance and A. K. S. Kapoor, eds., Search and Seizure: New Developments (1998), 5‑1, at p. 5‑4; P. Béliveau and M. Vauclair, Traité général de preuve et de procédure pénales (7th ed. 2000), at pp. 264 et seq.).

 


27                               These interim preservation measures applied, at the relevant time, only to “proceeds of crime”, which included any property, benefit or advantage that may relate to the commission of an enterprise crime offence or a designated drug offence (s. 462.3 Cr. C. “proceeds of crime”).  Because of the possible effect of those measures on the rights of third parties, the judge to whom an application for authorization is made may require that certain precautions be taken to protect those rights (see Gold, supra, at p. 3).  For example, before issuing a warrant of seizure or making a restraint order, the judge may require notice to be given to third parties who appear to have a valid interest in the property.  However, the judge may not order that notice be given if giving notice could result in the disappearance, dissipation or reduction in value of the property (ss. 462.32(5) and 462.33(5) Cr. C.).  In all cases, however, the judge must make sure that the Attorney General has given appropriate undertakings to compensate the persons affected for any damages and costs that might be caused by the execution of the warrant of seizure or restraint order (ss. 462.32(6) and 462.33(7) Cr. C.). 

 

28                               Moreover, the procedural rules that apply to these two mechanisms differ somewhat, although they are closely related.  I shall therefore examine seizures and restraint orders separately, and then go on to examine the procedure for reviewing the decisions of the authorizing judge.

 

A.  Seizure

 


29                               A judge may issue a warrant under s. 462.32  if there exist reasonable grounds to believe that there is to be found, in a particular place, property in respect of which an order of forfeiture may be made under s. 462.37(1) or 462.38(2) because it is connected to a designated drug offence.  The procedure for obtaining a warrant of seizure is substantially similar to the rules governing the issuance of search warrants, set out in ss. 487 to 492 Cr. C.  However, a special warrant may be obtained only on the application of the Attorney General in writing (s. 462.32  Cr. C.).  In addition, the application must be made to a judge of a superior court, who may hear it ex parte (s. 462.32(2) Cr. C.).  In Quebec, however, a judge of the Court of Québec also has jurisdiction to hear the application (ss. 462.3 “judge” and 552 Cr. C.).

 

30                               The warrant of seizure must specify the property to be seized.  However, the officer who carries out the seizure may seize, in addition to the property named in the warrant, any other property that he finds in the place if he believes, on reasonable grounds, that an order of forfeiture may be made in respect of that property (final portion of s. 462.32(1) Cr. C.).  The officer who carries out the seizure must retain the property seized or give custody of it to another person, taking the necessary care, however, to ensure that the property is preserved.  The officer must also report within seven days of the seizure (s. 462.32(4) Cr. C.).

 

B.  Restraint Order

 

31                               Like an application for a warrant of seizure, an application for a restraint order is made in writing by the Attorney General to a judge of a superior court or, in Quebec, a judge of the Court of Québec.  The application may also be heard ex parte.  However, the procedure involves a number of additional requirements and special rules.  The affidavit of the Attorney General in support of the application must state the offence or matter under investigation.  It must also name the person who is believed to be in possession of the property, describe it, and state the grounds for the belief that an order of forfeiture may be made (s. 462.33(2) Cr. C.).


 

32                               The authorizing judge may make a restraint order only if the judge is satisfied of the existence of reasonable grounds to believe that an order of forfeiture may be made in respect of the property under s. 462.37(1) or 462.38(2) Cr. C.  The restraint order prohibits any person from disposing of, or otherwise dealing with any interest in, the property specified in the order otherwise than in such manner as may be indicated in it (s. 462.33(3)  Cr. C.).  Any person who has been served with a restraint order and breaches it is guilty of an indictable offence or an offence punishable on summary conviction (s. 462.33(11) Cr. C.).  Where the Attorney General so requests, the judge may appoint a person to take control of the property subject to the restraint order and require the person in possession of the property to give possession of it to that person (s. 462.33(3) (b) Cr. C., now s. 462.331(1) Cr. C.).  If the Attorney General of Canada so requests, the judge shall appoint the Minister of Public Works and Government Services Canada to take control of and manage the property subject to the restraint order (s. 462.33(3.1) Cr. C., now s. 462.331(2) Cr. C.).   In any case, the order may be made subject to such reasonable conditions as the judge thinks fit (s. 462.33(4) Cr. C.).

 

C.  The Connection Between Restraint and Seizure Proceedings and Orders of Forfeiture

 

33                               As we saw earlier, restraint orders and warrants of seizure are procedures that the Crown may use to preserve property prior to conviction.  On the other hand, an order of forfeiture is a sentence within the meaning of the criminal law, as is expressly recognized in s. 673 Cr. C. (See 170888 Canada Ltée v. La Reine, [1999] R.J.Q. 1008 (C.A.), at p. 1011, per Fish J.A.)

 


34                               This fundamental distinction between the legal characterization of the procedures, however, does not preclude the need for a careful consideration of the nature of the relationship between them at the point when a warrant of seizure is issued or a restraint order made and when they are reviewed.  The decision to authorize the use of those procedures requires that it first be established that there are “reasonable grounds”, the terminology applicable under ss. 462.32(1)  and 462.33(3) , to believe that an order of forfeiture may be made in respect of the property.

 

35                               The application for forfeiture is necessarily framed in terms of the either/or situation created by ss. 462.37(1) and 462.38(2), which correspond to two different legal situations.  The standard of proof that applies when an order of forfeiture is made is different, based on the different legal situation that justifies making that order.

 

36                               Section 462.37(1) defines the purpose of forfeiture more narrowly; it requires that it be established that the property is proceeds of the actual offence of which the accused has been convicted.  However, the less rigorous standard of proof on a balance of probabilities will govern the application of this section.  On the other hand, in the case of an order of forfeiture for which application is made under s. 462.38(2) , the Criminal Code  does not require evidence that the property be connected to the offence to which the conviction relates.  At the relevant time, it was enough that the prosecution establish that the property represented the proceeds of other designated drug offences or other enterprise crime offences, but in this case, according to the stricter standard of proof beyond a reasonable doubt.

 


37                               The fact that there exist two separate standards of proof inevitably affects how the mechanisms for authorizing seizures and restraint orders operate, and how those warrants and orders are reviewed.  At those stages, the judge must attempt to forecast the future.  He or she must determine, on a balance of probabilities, whether an order of forfeiture would be made under either of ss. 462.37(1)  and 462.38(2) .  Because the standards of proof that apply to an order of forfeiture depend on their source, it is important that the prosecution specify the provision under which it would be seeking forfeiture, and the legal and factual basis for its application.  In that context, as in this case, situations will arise in which orders of forfeiture could be made under different provisions of the Criminal Code  in relation to different property.  It might even be imagined that situations could arise in which the provisions authorising the making of the order could be invoked in the alternative.

 

38                               In this case, as may be seen in the decision of Judge Pinard, the appellant submitted in applying for the warrant of seizure that there were reasonable and probable grounds to believe that orders of forfeiture would be made under ss. 462.37(1)  and 462.38(2) .  The application seemed to be based on the first provision in the case of the vehicles, and the second in the case of the immovables.

 

39                               Accordingly, Judge Pinard, as the authorizing judge, had to be satisfied that there were reasonable and probable grounds to believe that an order of forfeiture would eventually be made according to the applicable standards of proof.  However, at that stage of the proceeding, the judge did not rule as if he were finding guilt and passing sentence.  As well, the reviewing judge had to remember that he was not ruling on the forfeiture, but only on whether there were reasonable and probable grounds to believe that forfeiture would be ordered.

 


40                               The procedure that Parliament has created for authorizing and reviewing seizures and restraint orders is certainly complex.  It involves multi‑stage judicial proceedings, and separate assessments of a changing legal situation, at its various stages, based on varying standards of proof.  The difficulty of the exercise increases when the prosecution does not state the bases for its application with sufficient clarity.

 

D.  Duration and Review of Seizures and Restraint Orders

 

41                               Property that is seized may be detained for six months.  The same rule applies to restraint orders.  However, the Attorney General may apply for an extension of that time, if the Attorney General establishes to the satisfaction of the judge that the property will be subject to an order of forfeiture or establishes that it may be required for the purpose of any investigation or as evidence in any proceeding (s. 462.35 Cr. C.).

 

42                               Judicial review of the special warrant or restraint order is possible, but only in three specific cases.  First, where the property is not useful for the purpose of an investigation or as evidence in another case, the lawful owner of the property may obtain the return of the property where that person appears innocent of any complicity in an offence under Part XII.2.  If the applicant is a person charged with an offence under Part XII.2 or a person who acquired a right of possession of the property under circumstances that give rise to a reasonable inference that the right was transferred for the purpose of avoiding the forfeiture of the property, the scope of the review narrows down.  The application may be granted only if it is shown that the special warrant of seizure should not have been issued or the restraint order should not have been made (s. 462.34(4) and (6) Cr. C.).

 


43                               Second, the judge may authorize the person in possession of the property that has been seized or in respect of which a restraint order has been made or any other person holding a valid interest in that property to pay the reasonable living expenses of that person or of his or her dependants and that person’s legal expenses, or to give security therefor, out of the property (s. 462.34(4)(c) and (5) Cr. C.).  Finally, the application may be granted where the applicant offers the court sufficient security for the recovery of the seized property (s. 462.34(4)(a) and (8) Cr. C.).

 

44                               In addition, the judge must revoke a restraint order, or order that the property be returned, where he or she is satisfied that the property will no longer be useful for the purpose of an investigation or as evidence.  The judge may make that decision on his or her own motion or on application by the Attorney General or a person having an interest in the property (s. 462.43 Cr. C.).

 

45                               Analogous procedures are found elsewhere in the Criminal Code .  One example is s. 490.8 , which also contains a provision for a restraint order in respect of offence‑related property and procedures for review and return of property that are similar to the procedures in issue in this appeal (see also s. 490.9 ).  That fact heightens the importance of the issues before this Court.

 


46                               Again, it will have been noted that the Criminal Code  as it now stands does not make satisfactory provision for the appeal of decisions made under Part XII.2.  The legislation contains no procedure for an appeal to the intermediate appellate courts in the case before this Court.  Those courts are therefore unable to perform their error correction function in the application of the law.  The legislation as it stands also deprives these courts of the opportunity to take part in the development of this particular part of the law.  Criminal trials have undergone changes.  The number of situations in which pre‑trial, interlocutory or incidental decisions are made has risen substantially.  The evolution of the law, and particularly the need to protect the constitutional rights of third parties such as victims, persons bound by professional privilege or the media, have given rise to new kinds of issues, which remain incidental to the main issue between the Crown and the accused.  Unfortunately, criminal procedure has scarcely kept up with these changes, as Major J. recently pointed out in the case of a direct appeal to this Court concerning a problem involving professional privilege (R. v. Brown, [2002] 2 S.C.R. 185, 2002 SCC 32, at paras. 105‑10).  We must therefore examine this case in a situation in which the parties have been denied an opportunity for a comprehensive review of the issues by the Quebec Court of Appeal.

 

VI.  Analysis

 

A.  The Issues and the Parties’ Positions

 

47                               The case as it was argued in this Court raised three main issues between the parties.  First, I must examine the nature and scope of restraint orders.  Second, I will focus on the extent of the powers of the judge who hears an application for review of the decision to issue a warrant of seizure or to make a restraint order.  Third, having defined the legal framework, I will analyse the judgment of the Superior Court, and conclude, as indicated earlier, that it must be set aside in part and the warrants of seizure and restraint order restored to that extent.

 


48                               In the appellant’s submission, a correct interpretation of the relevant provisions of the Criminal Code  supports the position that the immovables in question were subject to forfeiture under s. 462.37  Cr. C. and that a restraint order could therefore have been made in respect of them.  The Attorney General also advances a restrictive interpretation of the powers of the reviewing judge, submitting that the reviewing judge could not review the merits of the decision to issue the warrant or make the order.  As is the case for review of wiretap authorizations, in the opinion of the Attorney General, that judge’s powers are limited to determining whether the authorization could have been given, and not whether it should have been granted.  In the appellant’s submission, the standards of review outlined by this Court in R. v. Araujo, [2000] 2 S.C.R. 992, 2000 SCC 65, apply.  In addition, the Attorney General submits that in this instance, the search warrants underlying the restraint and special seizure proceedings cannot be attacked, even based on allegations that the constitutional rights of the persons affected were violated.  The Attorney General for Ontario, who intervened in support of the appellant, is also concerned by the risk of encouraging collateral or incidental attacks here, at the expense of the principle of the finality and stability of judgments.  Ultimately, based on all these premises, the appellant challenges every aspect of the decision of the Superior Court, which was allegedly grounded on an erroneous definition of the powers of the reviewing judge.  That decision, it is submitted, was also extended improperly to the underlying search warrants because of an incorrect interpretation of the decision in Colarusso, supra.  As correctly understood, based on the appropriate legal principles, correctly defined, all aspects of the warrants of seizure and restraint order were justified by the evidence, in respect of both the motor vehicles and the immovable properties.

 


49                               The respondents concede that the Superior Court interpreted Colarusso incorrectly.  However, in their submission, that error of law does not affect the validity of its conclusions.  The court, in this instance, was exercising a broad power of review, pursuant to which it had to decide whether the warrants of seizure and restraint order could have been issued.  In the course of that review, the Superior Court considered the evidence submitted to the authorizing judge, and the new evidence presented by the respondents at the review hearing in order to establish that the property that was seized or in respect of which the restraint order was made was not proceeds of crime, or had no connection with an enterprise crime offence.  The respondents put particular stress on that last argument as it relates to the real estate, in respect of which no order of forfeiture could have been made, and in respect of which no restraint order could therefore have been made.  They made the same submission in respect of the vehicles seized which, on the evidence, could not have been considered to be proceeds of crime, and which were therefore not subject to forfeiture.  The respondents’ final submission is that the reasonable grounds cited in support of the seizures and restraint order carried no weight in law.  Because they were based on information obtained from illegal searches, the reviewing judge could exclude all of the information that was obtained under those warrants and find that the seizures and restraint order had been authorized without sufficient legally admissible grounds.  The respondents conclude by submitting that the appellant is seeking a review of the findings of fact made by the Superior Court in circumstances where no errors that would justify such a re‑examination on appeal have been made out.

 

B.  Nature and Scope of Restraint Orders

 

50                               As noted earlier, the respondents are not challenging the constitutionality of the provisions of Part XII.2 of the Criminal Code .  It is nonetheless necessary, when examining the nature of that procedure, to correctly identify its effects and its scope in order to determine whether a restraint order is a seizure within the meaning of s. 8  of the Charter .


 

51                               That question has certainly not been definitively answered by the courts, which have so far not exhausted the rich vein of the concepts of search and seizure, let alone explored the diverse situations of fact and law in which those concepts will apply.  However, this Court has on several occasions examined the definition of the word “seizure” in the context of s. 8  of the Charter , which protects individuals against “unreasonable search or seizure”.  Some comments in the case law suggest that actual change of possession is an essential element of a seizure within the meaning of s. 8 .

 

52                               In a 1988 decision concerning the application of s. 8  of the Charter , La Forest J. wrote that “the essence of a seizure under s. 8  is the taking of a thing from a person by a public authority without that person’s consent” (R. v. Dyment, [1988] 2 S.C.R. 417, at p. 431).  Similarly, two years later, Wilson J. defined a seizure as “the taking hold by a public authority of a thing belonging to a person against that person’s will” (Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425, at p. 493).  It will be noted that in that case, this Court held that the sending of a subpoena duces tecum or order to produce documents for an administrative investigation by a public body constituted a search.  Those definitions stress the process rather than its purpose.  They counter the risk of an overbroad interpretation of s. 8  under which it would be possible to challenge mere restrictions on the exercise of property rights.  Such an interpretation would eventually transform a provision intended to protect individual privacy into a constitutional guarantee of property rights, which was deliberately not included in the Charter .

 


53                               However, just as an overbroad interpretation of the word “seizure” might defeat the purpose of s. 8 , so too might a strict literal interpretation of that concept.  In interpreting the word “seizure”, we cannot look only at the process.  We must examine the context and the objective of the guarantee.  By ignoring the purpose and context of the provision, we might deprive it of part of its effect in numerous situations in which constitutional interests in privacy, not to mention the regularity and fundamental fairness of criminal procedure, are in issue.  Accordingly, if there is to be any limit on the definition of the word “seizure”, it must not relate to the process per se, but rather to the context in which it is carried out.  The issues involved in interpreting and applying s. 8  are clearly explained in the following comments by S. C. Hutchison, J. C. Morton and M. P. Bury:

 

One limitation ought to be put on the scope of “seizure” under the Charter .  The “enjoyment of property” as a specific right, as protected in the Canadian Bill of Rights, is not protected in the Charter .  The prohibition of unreasonable search and seizure is designed to promote privacy interests and not property rights.  Hence, Charter  protections against unreasonable seizure should not apply to governmental actions merely because those actions interfere with property rights.  Specifically, where property is taken by governmental action for reasons other than administrative or criminal investigation a “seizure” under the Charter  has not occurred.  A number of cases illustrate this view of seizure.  A detention of property, in itself, does not amount to a seizure for Charter  purposes — there must be a superadded impact upon privacy rights occurring in the context of administrative or criminal investigation. [Emphasis added.]

 

(S. C. Hutchison, J. C. Morton and M. P. Bury, Search and Seizure Law in Canada (loose-leaf), at p. 2‑5; see also:  F. Chevrette and H. Cyr, “La protection en matière de fouilles, perquisitions et saisies, en matière de détention, la non-rétroactivité de l’infraction et la peine la plus douce”, in G.‑A. Beaudoin and E. Mendes, eds., The Canadian Charter of Rights and Freedoms  (3rd ed. 1996), 10-1, at pp. 10-8 and 10-9).

 


54                               No difficulties arise in determining the legal character of special warrants of seizure under Part XII.2 of the Criminal Code .  Even if we were to apply the strictest interpretation of that concept, what we have is a seizure with change of possession.  The legal character of restraint orders is more problematic, in that such an order does not involve a change in possession of the property to which it applies.  However, when the objectives of a restraint order are considered, there is no doubt that it may be characterized as a seizure within the meaning of s. 8 .  The name given to that order perhaps too easily invites a comparison to a mere restriction on the exercise on property rights.  The conservatory nature of the order reinforces such an inclination.  However, given that a restraint order is intended to supplement seizures that are taking place contemporaneously, and that they place property under the control of the justice system that might otherwise have eluded it, whether for the purpose of a criminal investigation or for the punishment of crimes that fall within Part XII.2 of the Criminal Code , such an order must be characterized as a seizure within the meaning of s. 8  of the Charter .

 


55                               First, a restraint order freezes the property.  As provided in s. 462.33(3) (a) (now s. 462.33(3) ), it prohibits disposing of or dealing with the property in question otherwise than as specified by the court.  The person in possession of the property is then reduced to the status of caretaker or administrator of his or her own property, and must even obtain judicial permission to receive income or resources from it.  As we saw earlier, that person must bring an application in order to be able to do so, under s. 462.34(4) Cr. C.  As well, under s. 462.33(3) (b) (now s. 462.331(1)), a judge may order that the management of the property be transferred to a person appointed by the judge.  In that case, the decision involves a straightforward change in possession away from the person in possession of the property.  In both cases, the property is placed under the legal and actual control of the criminal justice system.  Moreover, the objectives of this measure for exercising control are twofold.  First, Parliament intended to facilitate criminal investigations, by enacting procedural provisions that make property, and information about it, more readily accessible to the police and the Crown.  Second, the purpose of those procedures is to prevent the disappearance or wasting of the property.  Doing this makes it possible to punish the crimes in question more effectively, and facilitates the enforcement of the orders of forfeiture that may be made in future.  We can conclude from those characteristics, and the context and objectives, that a restraint order must be regarded as a seizure within the meaning of s. 8  of the Charter .

 

56                               The issue of the scope of application of these restraint orders is also raised in this appeal.  The respondents submit, having regard to the facts in evidence, that because of certain aspects of the wording of the provisions in Part XII.2 in relation to orders of forfeiture, neither the motor vehicles nor the immovables in issue could have been the subject of a restraint order.  In their submission, the possibility of an order of forfeiture being made would have to have been established.  That requires that it be established that the property is proceeds of crime or was acquired using proceeds of crime.  In arguing this position, the respondents placed particular emphasis on the immovable properties in respect of which the restraint order was made.  That argument calls for an examination of the difference of opinion that has divided trial courts on the question of the interpretation and application of these provisions.

 

57                               The argument made results from a problem in the wording of ss. 462.32  and 462.33  Cr. C.  We saw earlier that a judge may make a restraint order or issue a general warrant of seizure in respect of property if there are reasonable and probable grounds to believe that an order of forfeiture may be made in respect of the property under s. 462.37(1)  or 462.38(2) .  Those sections read as follows, respectively, at the relevant time:

 

Forfeiture of Proceeds of Crime

 


 

462.37 (1) [Order of forfeiture of property on conviction]  Subject to this section and sections 462.39 to 462.41, where an offender is convicted, or discharged under section 730, of an enterprise crime 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 enterprise crime 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.

 

 

462.38 . . .

 

(2) [Order of forfeiture of property]  Subject to sections 462.39 to 462.41, where an application is made to a judge under subsection (1), the judge shall, if the judge is satisfied that

 

(a) any property is, beyond a reasonable doubt, proceeds of crime,

 

                          (b) proceedings in respect of an enterprise crime offence committed in relation to that property were commenced, and

 

(c) the accused charged with the offence referred to in paragraph (b) has died or absconded,

 

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.

 

58                               The interpretation of s. 462.38(2)  is not in issue in this case, which revolves around the nature of the reference in ss. 462.32  and 462.33  to s. 462.37(1) .  Does it include a reference to s. 462.37(2)?  Section 462.37(2) provided:

 

 

462.37  . . .

 

 (2) [Proceeds of crime derived from other offences]  Where the evidence does not establish to the satisfaction of the court that the enterprise crime 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.

 

462.37 . . .

 


(2) [Produits de la criminalité obtenus par la perpétration d’une autre infraction]  Le tribunal peut rendre une ordonnance de confiscation au titre du paragraphe (1) à l’égard des biens d’un contrevenant don’t il n’est pas prouvé qu’ils ont été obtenus par la perpétration de l’infraction de criminalité organisée dont il a été déclaré coupable — ou à l’égard de laquelle il a été absous sous le régime de l’article 730 — à la condition d’être convaincu, hors de toute doute raisonnable, qu’il s’agit de produits de la criminalité.

 

59      Relying on the wording of s. 462.37(2) Cr. C., the respondents submit that Judge Pinard could not have made the restraint order or issued the seven special warrants of seizure, on the ground that an order of forfeiture could not have been made in relation to the vehicles in question under s. 462.37(1).  The respondents answer that the reference to s. 462.37  is solely to subs. (1).  Hence, absent any evidence to establish that the property was proceeds of crime obtained in relation to the offences alleged, no order of forfeiture, and accordingly no restraint order, could have been made, at least in relation to the immovables.  The Crown replies that the reference to subs. (1) necessarily includes subs. (2).  At that point, it would have only to establish that an order of forfeiture could have been made in relation to the property as proceeds of crime, and this would satisfy the requirements of subs. (1).  The respondents then counter that in any event, there was no such evidence and the restraint order was therefore without any factual basis.

 

60      The decisions of the trial courts on this question have been contradictory.  Two of them support the respondents’ position (see R. v. Seman (1994), 93 Man. R. (2d) 151 (Q.B.), and British Colombia (Attorney General) v. Felix, [1993] B.C.J. No. 1870 (QL) (S.C.)).  In those decisions, the courts held that Parliament would not have referred specifically to ss. 462.37(1)  and 462.38(2)  if it had not intended to limit the situations in which a restraint order may be made or a special warrant of seizure issued.

 


61      Two other judgments have rejected that literal interpretation because it is inconsistent with the intention of Parliament (see  R. v. Fremanco Ltd. (1995), 135 Nfld. & P.E.I.R. 327 (Nfld. S.C.), and  R. v. Lanteigne (1994), 156 N.B.R. (2d) 17 (Q.B.)).  In Lanteigne, Deschênes J., now of the New Brunswick Court of Appeal, explained that the express reference to subs. (1) in the English version of s. 462.37(2) Cr. C. meant that any order of forfeiture made under that subsection was in fact made under subs. (1).  Deschênes J. summarized his interpretation of the legislation and the reasons why he rejected the contrary position as follows, at paras. 29, 30 and 32:

 

It is important to note that subs. 462.37(2) merely provides that in cases where the link or nexus has not been established, the court may still make an order of forfeiture under  subs. 462.37(1) if satisfied beyond a reasonable doubt that the property to be forfeited is “proceeds of crime”.  Subsection 462.37(2) merely provides the evidentiary rules to be applied so an order of forfeiture under subs. 462.37(1) can be made.  In fact, subs. 462.37(2) specifically says that “the court may make an order of forfeiture under subs. (1)” in relation to that property.

 

I do not agree with the suggestions being made in Seman that subs. 462.37(2) is a provision under which orders of forfeiture can be made.  In my view, if an order of forfeiture is made, it is made under subs. 462.37(1) and not 462.37(2).

 

. . .

 

Accordingly, when faced with an application for a restraint order, the judge must consider whether there are reasonable grounds to believe that the property sought to be restrained could eventually be the subject of an order of forfeiture under subs. 462.37(1) in the sense that such property may be related to the enterprise crime offence under investigation.  If the judge is not satisfied that there are reasonable grounds to believe that an order of forfeiture may eventually be made on the basis of a balance of probabilities referred to in subs. 462.37(1), he or she must then go on to determine if there are reasonable grounds to believe that an order of forfeiture may be made under subs. 462.37(1) on the basis that a judge may eventually grant an order of forfeiture upon being satisfied beyond a reasonable doubt that the property in question is “proceeds of crime” despite the absence of a connection or nexus between the property and the enterprise crime offence or designated drug offence for which the person has been convicted. [Emphasis in original.]

 


62      Like Deschênes J., I am of the opinion that the English version of the provision is a better reflection of the intention of Parliament.  Accordingly, and pursuant to the principles governing the interpretation of bilingual legislation, it should be preferred (see: R. v. Mac, [2002] 1 S.C.R. 856, 2002 SCC 24, R. v. Lamy, [2002] 1 S.C.R. 860, 2002 SCC 25).  In fact, Parliament has confirmed the interpretation adopted by Deschênes J.: in 1999, the Parliament of Canada amended the French version of s. 462.37(2) to include an express reference to subs. (1) of s. 462.37 .  Based on that interpretation, we must determine whether the restraint order could have been made and the special warrants of seizure issued, and more specifically whether the reviewing judge was correct to quash them.  First, however, we will have to turn to a question that is crucial to the outcome of this appeal: the nature and extent of the review of restraint orders and warrants of seizure.

 

C.  Nature and Extent of the Review of Warrants of Seizure and Restraint Orders

 

63      An examination of the power to review restraint orders and special warrants of seizure involves two separate but related problems which were the subject of heated debate in this case.  First, can the question of whether the authorizing judge decided correctly in granting the authorization be reopened, or is the review limited, as it is in the case of wiretaps, to determining whether there was sufficient basis to justify it?  Second, does the power of review give the judge authority to examine the validity of the search warrants underlying the order, having regard to the Charter , and if so, to grant a form of remedy under s. 24  of the Charter ?

 


64      According to the appellant, the power of review may be exercised only within the limits defined by the courts in wiretap authorization reviews, and that the only thing to be done is to determine whether the authorizing judge could have given the authorization, not whether he or she should have given it, in accordance with the rule laid down in R. v. Garofoli, [1990] 2 S.C.R. 1421, at p. 1452 (see also: R. v. Bisson, [1994] 3 S.C.R. 1097, at p. 1098; Araujo, supra, at para. 51).  If the reviewing judge determines that at least one such piece of evidence existed and could reasonably have been believed, to justify the application for the warrant, the judge’s examination should stop there (see Araujo, at para. 51).  That position, which the respondents strongly disputed, must be rejected for reasons grounded primarily on the wording of the legislation in issue and on legal policy considerations relating to the requirements of the sound administration of justice and procedural fairness in criminal matters.

 

65      As attractive as an extension of the rules derived from the decision in Garofoli and the subsequent decisions of this Court might look, it would fly in the face of the particularly clear wording of s. 462.34(6) Cr. C., which creates the review procedure.  In the case of a review application made under that provision by either the accused or a third party who claims an interest in the property in question, the judge must determine whether the “warrant should not have been issued” or a “restraint order under subsection 462.33(3)  should not have been made . . .”, as set out in s. 462.34(6)(a) as it read at the relevant time:

 

462.34 . . .

 

(6) [Conditions to be satisfied]  An order under paragraph (4)(b) in respect of property may be made by a judge if the judge is satisfied

 

(a)  where the application is made by

 

(i)  a person charged with an enterprise crime offence or a designated substance offence, or

 

 


(ii)  any person who acquired title to or a right of possession of that property from a person referred to in subparagraph (i) 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,

 

that a warrant should not have been issued pursuant to section 462.32  or a restraint order under subsection 462.33(3)  should not have been made in respect of that property . . . .

 

66                               This wording calls for the use of an analytical framework which differs substantially from the framework by which a judge who must review a wiretap authorization is governed.  The judge must decide whether he or she would have made the same decision as the authorizing judge, having regard to all of the evidence in the judge’s possession following the hearing of the application for review.  If the reviewing judge does not share the opinion of his or her colleague, the authorizing judge, the reviewing judge must correct the previous judge’s error.  The reviewing judge cannot simply identify sufficient basis for belief on reasonable and probable grounds, as could be done in wiretap cases.

 


67                               In the context of applications for review, the applicant undeniably bears the burden of proof, and must establish, on a balance of probabilities, that the authorization should not have been granted. The applicant may simply attack that decision and the sufficiency of the evidence submitted in support of it, such as the affidavits.  It must also be recalled, in this area, that the principles stated in the wiretap case law concerning the importance of the role of the authorizing judge, and the obligations of the public officials who seek those wiretaps, remain relevant.  The judge must carefully examine the documents and evidence submitted to him or her, and not be reluctant to require additional information.  Moreover, the party seeking the wiretap authorization is required to provide an accurate and sufficiently complete statement of the reasons for seeking the wiretap, and the factual bases for doing so.  That party must not attempt to mislead the judge.  Respect for the law and for the fundamental rights protected by it is at stake in this process.  The procedure cannot be allowed to lead to the rubber‑stamping of the authorizations requested, or to condonation of overly crafty tactics, even in the service of the best causes (see Araujo, supra, at paras. 46-49).  An application for authorization that does not comply with those principles may be challenged on that basis and on the sufficiency of the evidence submitted to the judge.

 

68                               As in this case, the applicant may also present evidence to rebut or undermine the justifications offered for authorization.  In that case, the Crown may also offer rebuttal evidence.  While we need not examine this question here, we might be somewhat sceptical as to the possibly of remedying, by amplification, the defects of an authorization for which the argument or evidence presented to the reviewing judge has been shown to be fundamentally flawed (see the comments on amplification in Araujo, at para. 59).  Subject to that caveat, the reviewing judge will assess the whole of the evidence submitted to him or her and to the authorizing judge, and will then decide whether the authorization should have been given.  The reviewing judge will begin the analysis by recalling that the law regards the authorization as facially valid, and that it is the task of the applicant, on review, to demolish that appearance of validity.  If that attempt fails, the authorization will be upheld.

 


69                               It will also be noted that, even in cases in which the judge concludes that the authorization should not have been given, the Crown still has the option of asking that the property remain under restraint or seizure, if it is still required for a criminal investigation or as evidence in other cases.  Section  462.34(6) in fine contemplates this possibility, apparently even where there was no basis for issuing the warrant or making the order in the first place.  Because the legal and factual basis of the original warrant or order would then have ceased to exist, the proceeding would amount to a fresh application, in which the burden of proof could not rest on the accused.  We need not consider the constitutional problems that might arise in relation to this aspect of the restraint and seizure procedures here.

 

70                               In this procedural context, it would be difficult to do justice to the party affected by a restraint order or warrant of seizure if the reviewing judge were not permitted to consider the merits of the decision to make the order or issue the warrant.  In fact, this is the only procedure available for challenging those decisions, with the exception of the admittedly rare remedy of a direct appeal to the Supreme Court of Canada.  The broad reach of those measures may also have a serious effect on an individual's personal situation or economic interests, or even, in some instances, the survival of a business.  Given that Parliament has chosen to circumscribe the remedies of the parties affected in this way, the scope of those remedies should be interpreted in such a way as to preserve their effectiveness and usefulness.  In any event, the wording of the law itself demands such an interpretation.

 


71                               The problem of defining the scope of the power of review arises also in relation to the examination of the search warrants underlying the restraint and seizure procedures.  On that question, the appellant, with the vigorous support of the Attorney General for Ontario, denied that the reviewing judge could exercise any jurisdiction in relation to those warrants, even where they were challenged on constitutional grounds, inter alia under the Charter .  It was argued that recognizing such jurisdiction would open the floodgates to collateral or incidental attacks on judgments, at the expense of the principles of the stability and finality of judicial decisions.  The fact that these are purely interim measures to ensure the preservation of the property, it was submitted, means that it is unnecessary to grant an opportunity to make representations regarding constitutional questions relating to the application of the Charter .  In addition, the trial judge could take any appropriate measure in respect of the property subject to the restraint order or seizure at that stage of the case.  As well, certiorari proceedings, separate from the application for review, could be brought against the underlying search warrants.  It was submitted that the fact that the judge of the Superior Court has jurisdiction over both procedures does not, however, justify failing to distinguish them, because each has its own set of legal rules and they each have different objectives.

 

72                               The question is not of merely theoretical interest in this appeal.  It will be recalled that the seizure and restraint proceedings were the result of an administrative investigation into the respondents’ rebuilt motor vehicles files.  That investigation led to a search under the general provisions of the Criminal Code  in relation to the Toyota Tacomas.  Based on the information obtained, and the expansion of the administrative investigation, further search warrants were issued.  As a result of all of these proceedings, information was collected that constituted a large part of the information alleged in support of the application for warrants of seizure and a restraint order under Part XII.2 of the Criminal Code .  A successful challenge to those underlying search warrants would mean that a substantial portion of the factual basis of the restraint order and seizures would have been wiped out.  Such was in fact the result in the Quebec Superior Court.  The respondents succeeded in their application, after representing that the rules against collateral attacks had to be relaxed somewhat when constitutional rights guaranteed by the Charter  were in issue.

 


73                               One may not deny that well‑settled jurisprudential principles, as a general rule, prohibit collateral or incidental attacks on judgments of the courts.  A judgment will be valid and binding on the parties for as long as it has not been varied or set aside pursuant to the exercise of the appropriate appeal rights or right to have a rectification made, as McIntyre J. stated in comments which are still relevant:

 

It has long been a fundamental rule that a court order, made by a court having jurisdiction to make it, stands and is binding and conclusive unless it is set aside on appeal or lawfully quashed.  It is also well settled in the authorities that such an order may not be attacked collaterally — and a collateral attack may be described as an attack made in proceedings other than those whose specific object is the reversal, variation, or nullification of the order or judgment.  Where appeals have been exhausted and other means of direct attack upon a judgment or order, such as proceedings by prerogative writs or proceedings for judicial review, have been unavailing, the only recourse open to one who seeks to set aside a court order is an action for review in the High Court where grounds for such a proceeding exist. 

 

(Wilson v. The Queen, [1983] 2 S.C.R. 594, at p. 599; see also R. v. Meltzer, [1989] 1 S.C.R. 1764; Canada (Human Rights Commission) v. Taylor, [1990] 3 S.C.R. 892, at pp. 972‑73, per McLachlin J. (as she then was).)

 


74                               Certainly those judgments of this Court do not incite to so‑called collateral attacks (R. v. O’Connor, [1995] 4 S.C.R. 411, at para. 179, per L’Heureux‑Dubé J. (dissenting on this issue)).  However, in Wilson, McIntyre J. acknowledged that exceptions to the general prohibition were possible, and mentioned the cases of fraud or an apparent defect on the face of the authorization attacked.  Other decisions have imported some limited flexibility into this principle.  For instance, in R. v. Litchfield, [1993] 4 S.C.R. 333, Iacobucci J. acknowledged that a pre‑trial order relating to the severance of a trial could be reviewed.  It would enable a court, in a matter related to the control of its own process and the conduct of its affairs, to remedy a decision that was so flawed as to fundamentally vitiate the judicial process.  Form should not triumph over substance (see Litchfield, supra, at pp. 348‑50; see to the same effect: Dagenais v. Canadian Broadcasting Corp., [1994] 3 S.C.R. 835, at pp. 870‑72; R. v. Beaulac, [1999] 1 S.C.R. 768, at para. 11, per Bastarache J.).

 


75                               A particularly interesting analysis of the scope of the rule against collateral attacks is found in the decision of the Ontario Court of Appeal in R. v. Domm (1996), 111 C.C.C. (3d) 449.  In that case, the Court of Appeal rejected a collateral attack on a non‑publication order made in a trial that was receiving a great deal of media attention.  Domm was convicted of disobeying that order, and tried to argue that the order was constitutionally invalid in defence to the charges laid against him, which he could have done in the proceedings in relation to that order, and in appeal proceedings if necessary.  His challenge failed.  The trial judge and the Court of Appeal cited the rules against collateral attacks.  However, Doherty J.A., the author of the unanimous opinion of the Court of Appeal, pointed out that exceptions had to be made to this principle, in the fundamental interests of the administration of justice, inter alia to ensure compliance with the rule of law.  That objective demands that the reputation of the justice system be preserved while guaranteeing the orderly and functional administration of that system.  In so far as they contribute to preserving those values, narrow limits may be placed on the rule against collateral attacks as, he noted, may be seen in the judgments of this Court, such as Litchfield, to which he referred to illustrate his comments (Domm, at pp. 460‑62).  Doherty J.A. noted on this point that in order to preserve the integrity of the rule of law, individuals must be provided with meaningful access to independent courts with the power to enforce the law by granting remedies to those individuals whose rights have been violated (Domm, at p. 455).  He added that this aspect of the values involved takes on particular importance in the case of a violation of the Constitution, which represents the foundational element of our country’s legal system:  “where constitutional rights are implicated, the court must be particularly concerned about the availability of an effective remedy apart from collateral attack when considering whether an exception should be made to the rule against collateral attack” (Domm, at p. 460).  It is therefore important to avoid immunizing court orders from any form of review (Domm, at p. 462).

 

76                               Limited exceptions, controlled by the courts, to the rule against collateral attacks do not offend the principle of the stability of judicial decisions, which retains its place as a central element in a sound administration of justice and an orderly judicial system.  Recognition of such exceptions, on the other hand, also allows for the integrity of the fundamental rule of law to be maintained, by ensuring compliance with that rule in situations where constitutional rights would otherwise be severely impaired, absent such a remedy.

 

77                               In the case at bar, recognizing that the reviewing judge has jurisdiction that permits him or her to consider allegations that fundamental constitutional rights have been seriously violated, in this instance rights under s. 8  of the Charter , does not adversely affect the fundamental interests of the administration of justice.  On the other hand, such acknowledgment makes it possible to offer an effective remedy against a restraint order and warrants of seizure.  The restraint order itself, unlike the evidence obtained when wiretap authorization is granted, will not necessarily be debated and reviewed in the course of the criminal trial.  Moreover, when the defects in the decision authorizing a warrant of seizure or restraint order result from some unconstitutional illegality in the underlying search warrants, it would be difficult to examine the legal situation properly without considering those various proceedings as a whole, and without having regard to their legal and factual connections.  In this appeal, the manner in which the case has proceeded since the administrative investigation first began shows how closely connected they are.


 

78                               Moreover, a requirement that the remedy be sought by certiorari, in circumstances such as those in this case, would amount to undue procedural strictness.  First, the court seized with the matter in both cases would be the Superior Court, which exercises inherent jurisdiction over all aspects of these proceedings.  We do not need to examine here the problem that review proceedings in the Court of Québec, which may occur in the province of Quebec, would pose.  Second, an application for a remedy under s. 24  of the Charter  may be joined with the application for review under the Criminal Code  and so allows that aspect of the case to be brought before the court in any event.  There seems to be no procedural obstacle to such an application being joined, and that is what happened in this case.

 

79                               The Superior Court correctly held that it could review the warrants underlying the seizure and restraint proceedings.  However, when we look at the record, it seems that it exercised that jurisdiction incorrectly.  As a result, all of the warrants of seizure and the restraint order were quashed.  Such an outcome should not have happened, if the issues had been considered correctly.  Having regard to the framework for the exercise of the reviewing judge’s jurisdiction, and the nature of that jurisdiction, we must now review how the evidence was examined, as it relates to the different classes of property in issue.

 

D.     Exercise of the Power of Review and Quashing of the Restraint Order and the Seizures

 


80                               This Court is actually exercising first level appellate jurisdiction in this appeal. The situation in which appellate courts stand in relation to questions of fact that are submitted to them is common knowledge.  In fact, a recent decision has once again examined the nature and limits of their functions when they review the findings of fact made by a trial court (Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33).  The criticism of the Superior Court’s findings of fact in this case is based on the determination that its analysis was so fundamentally flawed that intervention by this Court became necessary.  These flaws vitiated its assessment of the facts and, accordingly, of the basis on which the restraint order and special warrants of seizure were made.

 

81                               The trial judge did correctly identify the burden of proof that rested on the respondents, who were required to show, on a balance of probabilities, that the restraint order should not have been made. With respect, that is the point at which the Superior Court’s analysis of the evidence went off track.  The error made tainted the assessment of the Crown’s evidence by the Superior Court and its understanding of the nature of the evidence needed to justify a review.

 


82                               The trial judge’s reasoning was based on two separate but closely related fundamental elements.  First, in his opinion, the appellant’s evidence was obtained through illegal seizures carried out in contravention of s. 8  of the Charter .  The disclosure of information to the police by an SAAQ employee constituted an illegal seizure of documents and information, according to the decision of this Court in Colarusso, supra.  That conclusion necessarily had an effect on most of the evidence presented by the Crown in support of the application for the restraint order and warrants of seizure.  The information regarding the respondents’ activities that was obtained in that way had to be excluded.  Consequently, there were no reasonable grounds left to justify the underlying search warrants and thus the applications for a restraint order and warrants of seizure, which were based, at least in part, on the information obtained as a result of those search warrants.  The judge next criticized the investigator Morin, who had sworn the affidavit submitted in support of the application for a restraint order, for presenting an incomplete picture of the respondents’ financial situation and the resources available to them to finance the construction of the industrial condos.  Contrary to what the affidavit said, having regard to the information that was omitted and the information presented at the hearing of the review application, in the opinion of the Superior Court, no evidence connected the immovables to criminal activities, and they did not represent “proceeds of crime” within the meaning of the Criminal Code .

 

83                               The judgment contained a major error from the outset, about the judgment in Colarusso.  In fact, the respondents did not defend the judgment on that point either in their factum or at the hearing.  They conceded the error.  The judge misinterpreted Colarusso, in which he seemed to think he had discovered a rule prohibiting the disclosure of information collected in the course of an administrative investigation to the police or the Crown for the purposes of a criminal investigation.  In his view, disclosure of that information breached the privacy interests protected by s. 8  of the Charter .

 


84                               We need not dwell on the interpretation of Colarusso.  Suffice it to note that the SAAQ employee was auditing rebuilt vehicle files submitted by the respondents in order to obtain certificates of technical compliance.  The information thus obtained had originally been provided by the respondents, in compliance with the obligations imposed by the legislation and the regulations that applied under the legislation.  Laroche and Garage Côté Laroche Inc. should have known that this information would necessarily be examined and audited by the SAAQ and was not, properly speaking, private in relation to the government.  In carrying out and expanding his investigation, the employee was merely performing the duties of his position.  Transmitting information to the police, to initiate an investigation into the irregularities that had been observed, was connected with the performance of his duties.  That information constituted reasonable and probable grounds for obtaining the underlying search warrants at the stage when the restraint order was made and the warrants of seizure issued, and when they were reviewed; it was a major source of information concerning the respondents’ criminal activities.  The judge’s error concerning Colarusso seems to have misled him into neither giving any attention to nor placing any weight on this fact, because the seizures and restraint order were quashed even in respect of the Toyota Tacomas and the allegedly rebuilt vehicles.

 

85                               The affidavit sworn by Morin unfortunately contained weaknesses and errors, but they did not mean that it could be given no weight at all for the purposes of making the restraint order and issuing the warrants of seizure.  In particular, Morin presented an inaccurate picture of Laroche’s criminal record.  His document listed a series of criminal charges, but did not identify the acquittals or withdrawn charges in which the prosecutions had ended.  Nonetheless, after those cases are eliminated, the pending cases and the information obtained from the administrative investigations and the searches gave an essentially correct idea of the respondents’ involvement in large‑scale transactions involving the sale and possession of stolen car parts.  It would have been preferable, however, to file an accurate record of the criminal convictions.  While this type of error or omission is not always determinative, it can take on considerable importance in determining the legality of the order and warrants in issue here, and should be scrupulously avoided.

 


86                               The other errors Morin is alleged to have made relate to the description of the respondents’ financial situation and the financing of Laroche’s industrial condos.  In short, the appellant initially justified the restraint of the immovables by saying that purchasing them implied access to sources of funding derived from criminal activities.  Having regard to the income reported by Laroche between 1995 and 2000, and the income of the respondent Garage, there could have been no other way to explain the sudden appearance in about 1998 of a source of the additional income derived from the operation of those condos.  The judge then criticized Morin for failing to include information in the financial information submitted to Judge Pinard, at the authorization stage, concerning loans and sources of financing and the construction costs of the condos.  That information is alleged to have been available in the financial statements attached to the annual income tax returns filed with the Quebec Ministère du Revenu.

 


87                               The information submitted by Morin definitely did not include all of the fine points and details which would have been desirable.  If, at that stage of the proceeding, he had consulted a professional accountant, he would have been better able to use and describe the documents and information to which he had access when the application was made.  Those lacunae, however, do not destroy the facial validity of the overall picture presented to the authorizing judge.  For one thing, the respondents were to all appearances, on the evidence presented by the prosecution at the time of the authorization and the review, engaged in criminal activities connected with the stolen car trade.  For another, Laroche had suddenly, within a very few years, acquired land and built industrial condos that were valued, for municipal tax purposes, at about $1,800,000.  Those transactions were going on at a time when he was declaring only modest income, and the operations of his garage did not seem to be capable of generating sufficient funds.  Despite indications in the documents attached to the income tax returns regarding certain loans and liquid assets, the picture presented to the authorizing judge was not fundamentally misleading.  Having regard, as noted earlier, to the information obtained through the administrative investigations and searches, the appellant had reasonable and probable grounds, at the authorization stage, to believe that the property in respect of which the restraint order and warrants of seizure were sought was proceeds of crime and could eventually have been the subject of an order of forfeiture under Part XII.2 of the Criminal Code .

 

88                               The order and warrants affected about 80 motor vehicles, including the Toyota Tacomas.  Twenty‑four other vehicles seized were not the subject of any authorization.  The restraint order itself was in respect of the immovables.  The onus was then on the respondents to establish that the warrants of seizure should not have been issued and the restraint order should not have been made by the authorizing judge.  Having failed in their attack on the underlying warrants, the respondents then had to present evidence to explain the source of the property, in order to establish, on a balance of probabilities, that it was not proceeds of crime.  If the reviewing judge had applied Colarusso correctly, and had correctly understood the nature of the evidence that was required for judicial review, he would have had to dismiss the application for review, except in respect of the 24 vehicles seized without authorization.  There was no basis in law for the restraint or seizure of those vehicles, and the appellant was unable to establish that those vehicles were connected with criminal activities, nor did the appellant establish that the vehicles might be the subject of an order of forfeiture as proceeds of crime.

 


89                               The situation is totally different for the other vehicles.  The evidence wrongly excluded by the review judge related those vehicles to criminal activities involving fraud, falsifying documents and possession of stolen property.  The case presented by the appellant more than established that vehicle parts had been altered or disguised, and the information in the technical certification files submitted to the SAAQ had been systematically falsified.  The respondents presented no evidence that effectively contradicted the information relied on in support of the application for the restraint order, which information was admissible and valid as a source for reasonable and probable grounds that an order of forfeiture might be made under s. 462.37(1).

 

90                               With respect for the opinion stated by the Chief Justice, given the evidence presented by the Crown, the burden of proof that the respondents had to meet at the review hearing required that they establish the origin of the funds that would explain their real estate investments in such a way as to show that there was no reasonable and probable cause for the restraint order against the immovables in issue.  It was not required that innocence be proved at that stage, any more than that the prosecution prove guilt by the standard calling for proof beyond a reasonable doubt, or, if forfeiture were to occur, by that same standard.  At the stage when the restraint order and warrants of seizure are issued and challenged, the proceeding is subject to the probabilities standard, and relates to the existence of reasonable and probable grounds.  However, lest the procedure be stripped of its meaning and left without the efficacy that Parliament intended it to have, once the basis for the restraint order has been established, the applicant in the review proceeding may not avoid the burden of presenting evidence that is sufficient and such as will establish that there were no reasonable and probable grounds in support of the restraint order.  The problem of the respondents’ innocence or guilt, by the standards that apply to a criminal trial, is not to be addressed in this part of the proceeding.  That issue will have to be considered during the criminal trial, at which, irrespective of what was argued during the interim preservation proceedings, the respondents will enjoy the full protection of the appropriate constitutional guarantees, including the presumption of innocence.

 


91                               The position taken by the Chief Justice may jeopardize the distinction between very different stages of criminal procedure.  That approach tends to blur the line between preparatory, interim preservation measures, that is, seizures and restraint orders, and forfeiture itself.  It fails to distinguish between stages and proceedings within criminal procedure that Parliament intended to differentiate.  In the context of this procedural system, cases will inevitably arise in which restraint orders are not followed by forfeiture, if, in the course of the trial, evidence that meets the strict criminal standard cannot be assembled and presented.  The fact that this remains possible, as it always is, does not mean that the courts may ignore the line between measures for the interim preservation of property, in which guilt is not in issue and is left undetermined, and the criminal trial in which that issue is decided.  At this preparatory stage, each party has its own burden of proof.  On a careful and complete examination of the evidence presented by the parties, avoiding the errors made by the reviewing judge, it is clear that the respondents failed to meet their burden.

 


92                               The most difficult part of the case involves the immovables.  Here again, however, it must be kept in mind that the respondents had the burden of proof.  Because a restraint order had been made in respect of the immovables, based on the apparently sufficient information provided by the Crown at the authorization stage, which established at the very least that the forfeiture power set out in s. 462.38(2)  would apply, the respondents had to establish that those immovables were not proceeds of crime.  They had to provide sufficient proof, applying the standard of the balance of probabilities, that there were no reasonable and probable grounds for making the restraint order.  Essentially, they had to establish the origin of the funds with which those immovables had been purchased, according to that standard of proof.  On this point, the reviewing judge seems to have misunderstood their obligation to establish the source of the funds that were used to carry out the industrial condo plans.

 

93                               The evidence that was central to the respondents’ case consisted of an expert accounting opinion and the testimony of a chartered accountant from the firm Raymond, Chabot, Grant, Thornton.  That witness gave a clear explanation of the limits of his functions as an accountant, which were limited to preparing unaudited financial statements using the figures supplied by his clients, and explaining those statements using information that was generally not verified.

 

94                               The work done by that expert was used to organize a diverse series of accounting entries to try to establish a correlation between the investments and the funding sources.  Except for a line of credit of about $175,000 opened by a caisse populaire, and possibly a loan from one of Laroche’s family members, after she sold her house, all that the expert report shows is that funds were used.  In a majority of the cases, the origin of the funds is left uncertain or unexplained.  In order to meet the burden of proof that rested on the respondents, an explanation would have had to be given concerning the funds or advances used by the respondents — the source and nature of the liquid assets that meant that they were able to finance the construction while seeking only very little assistance from a financial institution.  The evidence on this point was inadequate and did not justify review of the authorization granted in respect of the immovables.

 


VII.  Conclusion

 

95                               For these reasons, the appeal should be allowed in part.  The judgment of the Superior Court quashing the restraint order and warrants of seizure should be set aside, except in respect of the 24 motor vehicles seized without authorization.  Subject to that exception, the restraint order and warrants of seizure authorized by Judge Pinard of the Court of Québec should be restored.

 

Appeal allowed in part, McLachlin C.J. and Arbour J. dissenting in part.

 

Solicitor for the appellant:  The Attorney General’s Prosecutor, Ste‑Foy.

 

Solicitors for the respondents:  Desrosiers, Turcotte, Marchand, Massicotte, Montréal.

 

Solicitor for the intervener the Attorney General of Canada:  The Department of Justice, Ottawa.

 

Solicitor for the intervener the Attorney General for Ontario:  The Department of the Attorney General, Toronto.

 

 

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