Application for Relief from Proceeds Forfeiture

From Criminal Law Notebook

General Principles

See also: Forfeiture of Proceeds of Crime
Purpose

While the purpose behind s. 462.42 was to "deprive criminals of the fruits of their crimes" it was not intended to accomplish this at the "expense of innocent third parties."[1]

This section provides a mechanism for 3rd parties to claim an interest in forfeited property. It permits the return of property or payment of equal value of ownership.[2]

Provisions
Application by person claiming interest for relief from forfeiture

462.42 (1) Any person who claims an interest in property that is forfeited to Her Majesty under subsection 462.37(1) [order of forfeiture of proceeds of crime] or (2.01) [order of forfeiture of proceeds of crime – particular circumstances] or 462.38(2) [requirements to order forfeiture] may, within thirty days after the forfeiture, apply by notice in writing to a judge for an order under subsection (4) [order declaring interest not subject to forfeiture] unless the person is

(a) a person who is charged with, or was convicted of, a designated offence that resulted in the forfeiture; or
(b) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (a) under circumstances that give rise to a reasonable inference that the title or right was transferred from that person for the purpose of avoiding the forfeiture of the property.

[omitted (2) and (3)]

Order declaring interest not subject to forfeiture

(4) Where, on the hearing of an application made under subsection (1) [application by person claiming interest for relief from forfeiture – requirements], the judge is satisfied that the applicant is not a person referred to in paragraph (1)(a) or (b) and appears innocent of any complicity in any designated offence that resulted in the forfeiture or of any collusion in relation to any such offence, the judge may make an order declaring that the interest of the applicant is not affected by the forfeiture and declaring the nature and extent of the interest.

Appeal from order under subsection (4)

(5) An applicant or the Attorney General may appeal to the court of appeal from an order under subsection (4) [order declaring interest not subject to forfeiture] and the provisions of Part XXI [Pt. XXI – Appeals – Indictable Offences (ss. 673 to 696)] with respect to procedure on appeals apply, with such modifications as the circumstances require, to appeals under this subsection.

Return of property

(6) The Attorney General shall, on application made to the Attorney General by any person who has obtained an order under subsection (4) [order declaring interest not subject to forfeiture] and where the periods with respect to the taking of appeals from that order have expired and any appeal from that order taken under subsection (5) [appeal from an order declaring interest not subject to forfeiture] has been determined,

(a) direct that the property or the part thereof to which the interest of the applicant relates be returned to the applicant; or
(b) direct that an amount equal to the value of the interest of the applicant, as declared in the order, be paid to the applicant.

R.S., 1985, c. 42 (4th Supp.), s. 2; 1996, c. 19, s. 70; 1997, c. 18, ss. 38, 140; 2001, c. 32, s. 23; 2005, c. 44, s. 9.
[annotation(s) added]

CCC (CanLII), (DOJ)


Note up: 462.42(1), (4), (5), and (6)

Requirements for Relief

To get relief, the applicant must show on balance of probabilities:[3]

  1. It has not been charged with one of the enumerated crimes;
  2. It did not acquire an interest in the forfeited property in circumstances which give rise to the reasonable inference that the person transferring the property did so for the purpose of avoiding the forfeiture of the property;
  3. It is innocent of any complicity in the enterprise crime that resulted in the forfeiture; and
  4. It is innocent of any collusion in relation to any such offence.
  5. It has a valid interest in the property that goes beyond the interest of a general creditor and that the nature and extent of that claim has been proven; and
  6. It would be appropriate in the circumstances for Applicants' interest to take priority over the forfeiture order.

Non-ransomed payouts in an extortion case do not constitute an "interest."[4]

Where there is no interests found, there is no discretion to nonetheless order the relief.[5]

  1. 1431633 Ontario Inc v Canada (Attorney general), 2010 ONSC 266 (CanLII), 250 CCC (3d) 354, per Molloy J, at para 30 ("Although Parliament intended to deprive criminals of the fruits of their crimes, it clearly did not intend to do so at the expense of innocent third parties who may have a legitimate interest in that same property. That is the purpose of the provisions permitting relief from forfeiture (such as s. 462.42) and that purpose must be kept in mind when considering whether a particular applicant is entitled to the relief sought.")
    Canada (Attorney General) v Dew, 2016 MBCA 95 (CanLII), per Monnin JA, at para 24 re CDSA provisions
  2. R v Connolly, 2004 NLTD 228 (CanLII), 191 CCC (3d) 357, per LeBlanc J, at para 50 ("s. 462.42 provides a mechanism for third parties who claim an interest in property ordered forfeited to apply for relief from forfeiture. If successful, that application does not mean that the earlier order is rescinded retroactively. It merely means that the third party will be entitled to a return of the property for which a valid claim is made or the payment of an amount equal to the value of the applicant’s interest.")
    R v 170888 Canada ltée, 1999 CanLII 13794 (QC CA), 135 CCC (3d) 367, per Fish JA
  3. R v Travelers Insurance Company of Canada, 2022 ONSC 5838 (CanLII), per Byrne J, at para 39
    1431633 Ontario Inc v Canada (Attorney general), ibid. pending appeal to ONCA
  4. Travelers, ibid.
  5. Travelers at para 61

Procedure

Fixing day for hearing

(2) The judge to whom an application is made under subsection (1) [application by person claiming interest for relief from forfeiture – requirements] shall fix a day not less than thirty days after the date of filing of the application for the hearing thereof.

Notice

(3) An applicant shall serve a notice of the application made under subsection (1) [application by person claiming interest for relief from forfeiture – requirements] and of the hearing thereof on the Attorney General at least fifteen days before the day fixed for the hearing.

R.S., 1985, c. 42 (4th Supp.), s. 2; 1996, c. 19, s. 70; 1997, c. 18, ss. 38, 140; 2001, c. 32, s. 23; 2005, c. 44, s. 9.
[annotation(s) added]

CCC (CanLII), (DOJ)


Note up: 462.42(1), (2), (3), (4), (5), and (6)