The Instruments of Crime: Clubhouses, Hells Angels, Civil Forfeiture and the BC Court of Appeal

Introduction

For several decades, the provinces have fashioned their own tools to control profitable crime. While federal law enables the post-conviction forfeiture of the proceeds of crime, most provinces have regimes that permit property associated with unlawful activities to be seized and forfeit without any predicate conviction. Known as civil forfeiture law, these laws provoke controversy because of the merging of unlawful activity – crime - with a civil legal process. In 2009, the Supreme Court of Canada found an aspect of this merging to be consistent with constitutional norms.[1] Recently, in British Columbia (Director of Civil Forfeiture) v Angel Acres Recreation and Festival Property Ltd, the British Columbia Court of Appeal found a different piece of this merging also aligned with constitutional edicts.[2] This brief post canvasses the February 2023 British Columbia decision.

The BC Trial Decision

A lengthy saga drew to a partial close in 2020. In 2007, the B.C. Director of Civil Forfeiture initiated proceedings under B.C. forfeiture law against clubhouses owned, or otherwise under the control of, the Hells Angels Motorcycle club. Over the next 13 years, a prodigious venture of motions, countermotions and orders unfolded, culminating in a 2020 trial court decision that left the clubhouses secure in the hands of the private entity.[3]

At issue was the constitutionality of a piece of British Columbia’s civil forfeiture regime. Under the Civil Forfeiture Act, the Director (of Civil Forfeiture) has the power to apply to a court for an order to forfeit the instruments of unlawful activity.[4] “Unlawful activity’ means offences under federal law and under provincial law.[5] An instrument of unlawful activity is defined as ‘(a) property that has been used to engage in unlawful activity that, in turn, (i) resulted in, or was likely to result in, the acquisition of property or an interest in property, or (ii), caused or was likely to cause harm to a person’ and ‘(b) property that is likely to be used to engage in unlawful activity that may (i) result in the acquisition of property or an interest in property, or (ii) cause serious bodily harm to a person…’.[6]

The particular piece involved in Angels was section (b). The order was sought on the basis that the property, the clubhouses, were instruments likely to be used in unlawful activity, a provision described by the trial court as the future use provision. Initially, the province had sought forfeiture on the basis of that the properties had been used to engage in unlawful activity, the past use provision, but that action had been abandoned. In resisting the order, the defendants, owners of the clubhouses, contended that the future use provision exceeded provincial constitutional competence by transgressing the boundary into federal jurisdiction over criminal law. The trial judge agreed.

For the most part, the bulk of the trial judgement consists of a lengthy and meticulous charting of the epic journey. In connection with the past-use provisions, the court held that these came within provincial competence in relation to the property and civil rights.[7] But the same did not hold for the future use part. Here, the court found this prong of BC civil forfeiture law tended to criminalize a propensity to engage in crime.[8] The forfeiture would not be based on the past use of property in unlawful activity but on a penchant, or propensity, to engage in unlawful activity.[9] This was tantamount to criminalizing a criminal disposition or creating a new form of criminal liability. That domain, the criminal law, was outside provincial jurisdiction. Unconstitutional, the province’s action to secure the forfeiture of the clubhouses failed.

The Court of Appeal

Although the crux of the matter was the constitutionality of the future use provision, the likely to be used arm of the BC Act, the Court of Appeal identified five constitutional issues for its consideration in relation to the instruments provision of the BC law: whether the trial judge’s consideration of the constitutional issues was barred by the authority of Chatterjee and the principle of stare decisis; whether the defendants had private interest standing to challenge the past use provisions of the law since the Director had elected not to pursue forfeiture on that basis; whether the trial judge erred in rejecting the defendants arguments regarding the in personam nature of the past-use provisions; whether the trial judge erred in identifying the pith and substance of the past-use provisions or in ‘ignoring the practical effects’ in characterizing them as in relation to property and civil rights; and whether the judge erred in characterizing the future use provisions as relating to criminal law.[10]

On the first point, Chatterjee was a 2009 Supreme Court decision that considered whether Ontario’s civil forfeiture regime, similar in species to British Columbia’s, was ultra vires.[11] That case dealt with the constitutionality of Ontario’s power to forfeit the proceeds of unlawful activity, not the instruments of unlawful activity. Here, while the Chatterjee decision was relevant, the Court held a ruling about the constitutional character of the proceeds provisions did not bind a lower court with respect to the instruments provision.[12] Indeed, the trial judge’s analysis also drew heavily on Chatterjee

Since the next three grounds of appeal all relate to the past use provisions of the BC statute, they are a little tangential. A favourable decision for the defendants might forestall any subsequent attempts at forfeiture, for these defendants as any others.[13] But entitlement to the clubhouses hinged on the future use segment.

With respect to private interest standing, the Court of Appeal found no error. The Supreme Court of Canada’s broad approach to the discretion coupled with the fact that, initially, the action was grounded on both the past use and the future use tools of the BC Act, was an ample basis for the trial judge to have afforded the defendants standing.[14]

In considering the next two grounds of appeal – the alleged in personam nature of the proceedings and the constitutionality of the past use provision - the Court of Appeal relied heavily upon the reasoning and authority of Chatterjee. Chatterjee held that Ontario’s civil forfeiture law fell within provincial constitutional competence over property and civil rights. Ontario’s law aimed to suppress and deter criminality, to attend to crime’s civil consequences by focusing on property.[15] There was no bar to a province enacting measures to attend to the effects of crime provided the measures related to provincial competence.[16] The regime was not part of the criminal sentencing process and while there might be some overlap with federal jurisdiction, some overlap was permissible. There was no ‘operational conflict’ with criminal code that would invalidate the civil regime.[17]

Adopting this reasoning, the Court of Appeal found that the British Columbia regime had similar objectives – the suppression and deterrence of crime - and operated in a civil context.[18] Although Chatterjee applied this reasoning to the constitutionality of the proceeds of crime dimension of provincial law, there was no reason to depart from this in analysing the past-use provision.[19] The provision was part of a civil regime that would prevent or suppress ‘the use of property to acquire wealth or to cause bodily harm’. The Court of Appeal confirmed the decision of the trial judge on this point – the past use forfeiture powers lay within provincial jurisdictional competence over property and civil rights.

Where the Court of Appeal broke with the trial judge was on the final ground of appeal, the trial court’s conclusion that the future use prong of the BC regime was ultra vires. Here, the Court of Appeal chiefly found fault with the trial judge for allowing the propensity analysis to displace the analysis of the dominant purposes and effects of the law.[20] To place a particular law into a discrete constitutional category – in this case either provincial jurisdiction over property and civil rights or federal jurisdiction over the criminal law – the classic test involves an analysis of the dominant purpose and effect of a law. Applying that test, the Court of Appeal held:

Having decided that the future use piece was within provincial jurisdiction, the Court of Appeal then, as had the trial judge, engaged in a lengthy consideration of the evidence and the legislative regime to determine whether the clubhouses constituted instruments of crime. Notably, pursuant to the BC regime, and other provincial regimes, the standard applied to forfeiture determinations is the civil standard of proof, a balance of probabilities.[22] Here, and through reliance on a series of inferences, the Court of Appeal held that the clubhouses qualified as instruments likely to be used in unlawful activity and were therefore forfeit to the province.

Comments

It is difficult to know what to make of the Court of Appeal judgement. It is always a matter of some delicacy to attempt to summarize a lengthy decision – it extends to 334 paragraphs – and to focus simply on one dimension – the constitutional investigation of the future use prong. Much of the 2023 decision is devoted to determining whether the evidence establishes that the clubhouses constitute instruments of unlawful activity. With this caveat, several points might be advanced.

First, with respect to broad terrain of civil forfeiture law, there are troubling signs of the provincial devices straying from their original ambitions. As noted at the outset, provincial civil forfeiture law emerged as an antidote to profitable crime. When Ontario, the first province to brandish such a device, introduced civil forfeiture in 2001, the law was explicitly labeled as Remedies for Organized Crime and Other Unlawful Activities, with organized crime largely synonymous with profitable crime.[23] By then, international forums had already begun to agitate for global regimes attentive to the financial element of crime.[24] Federal criminal forfeiture laws are part of the response to the international call as is federal anti-money laundering regulation.[25] International law encourages the adoption of non-conviction based forfeiture in connection with resources linked to crime.[26] Few challenge the bedrock notion of devising new tools to target serious criminal prosperity. Yet the use of civil forfeiture has not been confined to that context. It diverges. Its application has been proposed in settings which have little to do with the accumulation of serious unlawful proceeds or with organized profitable crime.[27]

Any such straying from its initial moorings underscores the potential breath of provincial civil forfeiture law, particularly the instruments provisions. A property in which an assault occurs, the situs of the unlawful activity, would, under the regime, be liable to forfeiture. So too might some modest tax evasion – an offence under federal tax law – trigger the right to forfeit the premises within which that occurred. While this might not necessarily directly shape constitutional investigations, it certainly might give pause for re-thinking the legitimacy of this tool.

Second, while the distinctions between the past use and future use are interesting, the tension the instrument provisions present can be framed differently. The difficulty, simply stated, is that the provisions are blunt. They render property liable to forfeiture for its use in unlawful activity but do not take any account of the proportionality between the use of property and the underlying unlawful activity. In any civil proceeding, a remedy, a consequence, is ordinarily tailored to the underlying wrong. In a classic tort action, the compensation a tortfeasor owes reflects the injuries caused. Civil forfeiture simply condemns property for its role in unlawful activity. It fastens onto property yet admits no consideration of the proportionality between the forfeiture and the underlying activity. In this, the lack of proportionality, the blunt forfeiture of property, whether based on past or future use, risks imposing harsh, punitive, consequences.

A punitive element within a legal regime is not necessarily fatal. A civil legal process can accommodate the notion of punishment.[28] In the United States, the punitive potential, or distinct lack of proportionality, meant that similar forfeiture provisions were subject to the Eight Amendment, the constitutional restraint on excessive fines, a restraint that governs both criminal and civil proceedings.[29] A limit of similar ilk is arguably built into the BC civil forfeiture regime. Section 6 gives a court the discretion to refuse, limit, or place conditions on, an order if it determines the forfeiture of property is clearly not in the interests of justice. It may be that in exercising this discretion, the courts are attending to the punitive element, the potential inherent in the blunt instrument, by requiring some measure of proportionality between the unlawful activity and the property. Some decisions speak of a substantive, or more than passing, relationship between the property liable to forfeiture and an offence.

The British Columbia Court of Appeal decision is an intriguing twist on an evolving civil forfeiture story. There is little doubt that the saga will continue. The 16 year venture is likely to end with an appeal to the Supreme Court of Canada.

 [1] Chatterjee v Ontario (Attorney General), 2009 SCC 19.
 [2] 2023 BCCA 70.
 [3] British Columbia (Director of Civil Forfeiture) v Angel Acres Recreation and Festival Property Ltd., 2021 BCSC 1574 In 13 years of litigation, there were at least 50 interlocutory applications: see infra, at para 5.
 [4] SBC 2005 Chapter 29, section 3.
 [5] BC law, section 1.
 [6] Ibid.
 [7] Supra note 3 at paras 1411 – 1464.
 [8] Ibid at paras 1465-1468.
 [9] Ibid at para 1485.
 [10] Supra note 2 at para 59. In a gentle rebuke to the quality of the factums in establishing the grounds of appeal, the Court identified these five constitutional points rather than directly point to matters raised in the factums.
 [11] Supra note 1.
 [12] Supra note 2 at para 69.
 [13] One of the intermittent steps in this saga was a successful application for an order staying the 2020 trial court ruling because it jeopardized multiple other actions against other parties brought in connection with the future use provisions: British Columbia (Director of Civil Forfeiture v Angel Acres Recreation and Festival Property Ltd., 2021 BCCA 128.
 [14] Supra note 2 at paras 71 and 72.
 [15] Supra note 1 at paras 20 – 30.
 [16] Ibid at para 40.
 [17] Ibid at para 53.
 [18] Supra note 2 at para 85-86.
 [19] Ibid at para 84.
 [20] Ibid at para 93.
 [21] Ibid at para 91.
 [22] Civil Forfeiture Act, SBC 2005 Chapter 29, section 17.
 [23] 2001, SO 2001, c 28 – Bill 30. The Act was later renamed the Civil Remedies Act.
 [24] The first international convention attentive to the financial element of crime congealed in 1988, focused distinctly on property connected to the trade in illegal drugs: Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988.
 [25] Proceeds of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17.
 [26] See, Financial Action Task Force Recommendations, recommendation 4 which counsels that countries consider adopting measures that permit the proceeds or instrumentalities of crime to be confiscated without a predicate criminal conviction: International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation: the FATF Recommendations, Financial Action Task Force, 2012 (updated to March 2022). The Financial Action Task Force is an international entity charged with overseeing the implementation of global norms and with developing with respect to money laundering, terrorist finance and proliferation norms.
 gafi.org/content/dam/recommandations/pdf/FATF%20Recommendations%202012.pdf.coredownload.inline.pdf
 [27] For instance, for violations of COVID measures: https://www.thestar.com/news/canada/2021/09/28/bc-seeks-forfeiture-of-28m-condo-owned-by-alleged-covid-19-violator.html; the seizure of a house in connection with assault: https://winnipeg.ctvnews.ca/manitoba-government-wants-to-seize-house-of-former-coach-accused-of-sexual-assaults-1.5946636; the forfeiture of assets in relation to the 2022 Convoy:
 https://www.cbc.ca/news/canada/ottawa/convoy-freeze-order-extended-may-1.6404550.
 [28] This tension animates the imposition of punitive damages: see Whiten v Pilot Insurance C., 2002 SCC 18.
 [29] Austin v United States, 509 US 602 (1993).

The views and opinions expressed in the blogs are the views of their authors, and do not represent the views of the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.