R. v. Rafilovich

R. v. Rafilovich
Collection
Supreme Court Judgments
Date
2019-11-08
Neutral citation
2019 SCC 51
Report
[2019] 3 SCR 838
Case number
37791
Judges
Wagner, Richard; Abella, Rosalie Silberman; Moldaver, Michael J.; Karakatsanis, Andromache; Gascon, Clément; Côté, Suzanne; Brown, Russell; Rowe, Malcolm; Martin, Sheilah
On appeal from
Ontario
Subjects
Criminal law
Notes
Case in Brief
SCC Case Information
Decision Content
SUPREME COURT OF CANADA
Citation: R. v. Rafilovich, 2019 SCC 51, [2019] 3 S.C.R. 838
Appeal Heard: January 25, 2019 Judgment Rendered: November 8, 2019 Docket: 37791
Between:
Yulik Rafilovich
Appellant
and
Her Majesty The Queen
Respondent
- and -
Attorney General of Ontario,
Canadian Civil Liberties Association,
Criminal Lawyers’ Association of Ontario and
British Columbia Civil Liberties Association
Interveners
Coram : Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ.
Reasons for Judgment: (paras. 1 to 87)
Martin J. (Abella, Karakatsanis, Gascon, Brown and Rowe JJ. concurring)
Reasons Dissenting in Part: (paras. 88 to 176)
Moldaver J. (Wagner C.J. and Côté J. concurring)
r. v. rafilovich
Yulik Rafilovich Appellant
v.
Her Majesty The Queen Respondent
and
Attorney General of Ontario,
Canadian Civil Liberties Association,
Criminal Lawyers’ Association of Ontario and
British Columbia Civil Liberties Association Interveners
Indexed as: R. v. Rafilovich
2019 SCC 51
File No.: 37791.
2019: January 25; 2019: November 8.
Present: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ.
on appeal from the court of appeal for ontario
Criminal law — Proceeds of crime — Fine instead of forfeiture — Return of seized property for legal expenses — Property believed to be proceeds of crime seized from accused — Judge ordering that property be returned to accused for payment of reasonable legal expenses for his defence — Accused convicted — Sentencing judge deeming returned property to be proceeds of crime subject to forfeiture — Property used for legal expenses and no longer available for forfeiture — Whether fine instead of forfeiture may be imposed in relation to funds that have been judicially returned for payment of legal expenses for accused’s defence — Criminal Code, R.S.C. 1985, c. C‑46, ss. 462.34(4) (c)(ii), 462.37(3) .
R was arrested for possession of cocaine for the purpose of trafficking. The police seized about $42,000 in cash, found when searching his car and apartments, as potential proceeds of crime under Part XII.2 of the Criminal Code . Before trial, R applied under s. 462.34(4) (c)(ii) of the Criminal Code for the return of the seized funds to pay for reasonable legal expenses associated with his case. The application was allowed and the funds returned to pay for reasonable legal fees, with conditions. R pled guilty to several offences at trial. The sentencing judge imposed a term of imprisonment and forfeiture of R’s interest in an apartment, but declined to impose a fine instead of forfeiture equal to the amount of the returned funds spent by R on his legal fees as requested by the Crown under s. 462.37(3) of the Criminal Code . The Crown appealed. The Court of Appeal varied the sentencing order, adding a fine instead of forfeiture of $41,976.39, equal to the amount of the returned funds, and 12 months’ imprisonment should R not pay his fine.
Held (Wagner C.J. and Moldaver and Côté JJ. dissenting in part): The appeal should be allowed and the Court of Appeal’s order set aside.
Per Abella, Karakatsanis, Gascon, Brown, Rowe and Martin JJ.: Generally speaking, sentencing judges should not impose a fine instead of forfeiture in relation to funds that have been judicially returned for the payment of reasonable legal expenses associated with an accused’s criminal defence. The statutory discretion to impose a fine instead of forfeiture under s. 462.37(3) of the Criminal Code must be exercised in accordance with the purposes of the proceeds of crime regime. This regime as a whole seeks to ensure that crime does not pay or benefit the offender; however, by enacting the legal expenses return provision at s. 462.34(4) (c)(ii) of the Criminal Code , Parliament not only foresaw the possibility that seized funds may be needed to mount a defence, but explicitly allowed individuals to spend returned funds for this purpose. The return provision pursues two secondary purposes: providing access to counsel and giving meaningful weight to the presumption of innocence. These secondary objectives ensure fairness to the accused in criminal prosecutions. Clawing back reasonable legal expenses as a fine instead of forfeiture would, in most cases, undermine these purposes. If it turns out that the offender did not have a real financial need or the funds were not used to alleviate that need, it would be appropriate to impose a fine instead of forfeiture, as this would align with Parliament’s intent. This might occur where there is wrongdoing in the return of funds application or in the administration of the return order or if the accused experiences an unexpected change in circumstances after the funds have been returned. In the context of this case, ordering a fine undermines Parliament’s intent in enacting the return provision. There is no evidence that R misrepresented his financial position, misused returned funds, or experienced any change in circumstances. Therefore, the sentencing judge’s exercise of discretion was appropriate and should not be interfered with.
As the Criminal Code does not expressly indicate whether judicially returned funds ought to be subject to a fine instead of forfeiture, the resolution of this issue requires recourse to the rules of statutory interpretation. This analysis is guided by the words that Parliament has chosen to use, the way it intended to achieve its objectives, and the scheme it has put in place. Where the dispute involves multiple legislative objectives and the inter-relationship between two or more statutory provisions, the scheme of the Act and the objectives underlying each of the relevant provisions are particularly significant. Parliament had several objectives in mind when it enacted the proceeds of crime regime. Parliament’s primary goal was to ensure that crime does not pay and that it does not benefit the offender. Forfeiture is intended to deprive offenders of the proceeds of their crime. Seizure allows the state to take control of property believed to be proceeds of crime before trial and sentencing, to ensure it remains available for possible forfeiture. The fine instead of forfeiture provision ensures that, if accused persons are able to keep proceeds of crime throughout criminal proceedings, they must in the end pay a fine equivalent to the value of the property that is not available to be forfeited.
The legal expenses return provision shows that Parliament intended that the secondary objectives underpinning it — providing access to counsel and giving meaningful weight to the presumption of innocence — must be balanced against the primary objective of ensuring that crime does not pay. The wording and the elaborate and detailed nature of the return provision indicates that Parliament clearly and deliberately sought to address an accused’s need for legal counsel, in the limited and narrow circumstances where the accused has no other assets or means and no other person appears to be the lawful owner of or lawfully entitled to possession of the property. The secondary objectives reflect an underlying intention to promote fairness in criminal prosecutions that runs through the proceeds of crime scheme. They constrain the pursuit of the primary objective. The return provision was intended to respect the principle of fairness in criminal prosecutions, including concepts of fair notice and reliance. It can be expected that accused people will rely on a court order authorized by a specific statutory scheme and those accused persons cannot reasonably know that doing so will lead to additional punishment. Also, accused persons who understand that judicially returned funds will be clawed back later may not apply for the return of funds and represent themselves instead. When an accused person cannot access legal counsel, the presumption of innocence suffers because it is difficult for lay persons to effectively navigate the complexity of criminal cases. Imposing retroactive penalties on accused persons who rely on the presumption of innocence undermines the presumption and the protections it affords.
The judicial return of funds to pay for a lawyer is not the type of benefit that Parliament sought to take away by way of a fine. It is a tightly controlled benefit Parliament expressly intended for a narrow category of accused persons in need. In the instant case, the return provision allowed R, who had no other assets or means to pay for his defence, an opportunity to access seized funds under close judicial scrutiny and tight conditions. It is undeniable that there is less money available to be forfeited to the Crown but a fundamental purpose of the criminal justice system is to provide a fair process to achieve just results, not to extract maximum retribution at any cost. Seized property returned pursuant to a judicial order is not thematically analogous to the reasons listed in s. 462.37(3) of the Criminal Code for ordering a fine instead of forfeiture. All of the circumstances listed reflect Parliament’s concern that an accused person might hide, dissipate or distribute property that may later be determined to be proceeds of crime. The accused’s lawyer is not some unknown person receiving funds by way of an uncontrolled, private transaction. They have been specifically authorized by a judge to be paid in aid of the accused’s defence. Further, Parliament has set out its desired statutory requirements for the judicial return of seized funds. Nothing indicates any intention to require the accused to demonstrate, in order to avoid the imposition of a fine instead of forfeiture, that the nature of the proceedings are such that it is essential to have counsel. Accordingly, not imposing a fine instead of forfeiture in relation to funds that have been judicially returned for the payment of reasonable legal expenses associated with an accused’s criminal defence will generally be most faithful to Parliament’s intent.
Per Wagner C.J. and Moldaver and Côté JJ. (dissenting in part): Imposing a fine in lieu of forfeiture where an offender has used proceeds of crime to pay for his or her own defence achieves the forfeiture regime’s primary objective of ensuring crime does not pay; and it does not undermine the utility of the legal expenses restoration provision, which facilitates access to counsel in a manner that is both fair and consistent with the presumption of innocence. There is nothing inconsistent about allowing accused persons, who are presumed innocent, to access seized funds to pay for legal counsel but requiring offenders, who are proven guilty, to pay them back in the event that they are determined to be proceeds of crime. However, there is an important exception to this general rule: where a sentencing judge is satisfied that representation by counsel was essential to the offender’s constitutional right to a fair trial, the judge should exercise his or her limited discretion not to impose a fine in lieu of forfeiture. This interpretation gives proper effect to Parliament’s objective of ensuring an effective forfeiture regime while still vindicating the constitutionally protected right to counsel, and more particularly, the constitutional right to state‑funded counsel in limited circumstances.
Part XII.2 of the Criminal Code , which governs the seizure, restraint, and forfeiture of proceeds of crime, seeks to ensure that crime does not pay. To further this objective, it permits the state to seize and detain property believed on reasonable grounds to be proceeds of crime, thereby preserving it and facilitating the enforcement of any future forfeiture order. At the same time, Parliament recognized that the seizure and detention of property that is reasonably believed, though not yet proven, to be proceeds of crime may have a significant financial impact on accused persons, including by limiting their ability to access counsel. To address this concern, s. 462.34 of the Criminal Code permits accused persons to apply for a restoration order authorizing the release of seized property to pay for various expenses — one being reasonable legal expenses — where they have no other means available and no other person appears to be the lawful owner of or lawfully entitled to possession of the seized property. In creating this provision, Parliament struck a balance between ensuring an effective forfeiture regime and permitting otherwise impecunious accused persons to access funds for certain legitimate purposes. However, a court must, when sentencing an offender for an indictable offence, order the forfeiture of property determined to be proceeds of crime. Alternatively, where a court is satisfied that a forfeiture order should be made in respect of any “property of an offender”, but the property cannot be made subject to such an order, the court “may” order a fine in lieu under s. 462.37(3) of the Criminal Code .
Offenders who have used proceeds of crime to pay for their own defence derive a benefit from their crime and should generally be required to repay that benefit through a fine in lieu of forfeiture. This follows from a straightforward application of the primary objective of the proceeds of crime regime — namely, ensuring that crime does not pay. The proper interpretation of s. 462.37(3) of the Criminal Code reveals that where seized funds are released to an offender and then transferred to a lawyer, both prerequisites to imposing a fine in lieu are met. First, these funds are captured in the broad definition of “property of an offender”, which includes property originally in the possession or under the control of any person. Second, a transfer of released funds to a lawyer cannot be made subject to a forfeiture order. Section 462.37(3) sets out a non‑exhaustive list of example circumstances where this criterion is met, one of which is where property has been “transferred to a third party”. Parliament could have limited this class of transfers but did not. In the absence of any limiting language, the grammatical and ordinary sense of “transfer” — to move a thing from one place to another — must prevail. A judicially authorized transfer of released funds to a lawyer is therefore a “transfer to a third party”. This also fits comfortably within the consistent theme running through the examples listed in s. 462.37(3) , which is simply that the property cannot be made subject to a forfeiture order.
There is an exception to the general rule that a fine in lieu should be imposed where an offender has used proceeds of crime to pay for his or her own defence. Where a sentencing judge is satisfied, applying the test set out in R. v. Rowbotham (1988), 41 C.C.C. (3d) 1 (Ont. C.A.), that representation by counsel was essential to the offender’s constitutional right to a fair trial under ss. 7 and 11(d) of the Canadian Charter of Rights and Freedoms , the judge should exercise his or her limited discretion not to impose a fine in lieu in respect of the released funds. The language of s. 462.37(3) is permissive and confers a limited discretion not to impose a fine. This limited discretion must be exercised in a manner consistent with the spirit of Part XII.2 as a whole. Part XII.2 seeks to balance the need to ensure an effective forfeiture regime and the constitutionally protected right to counsel. To properly understand this balance, however, it is first necessary to examine what the constitutionally protected right to counsel does — and does not — entail. Neither s. 10(b) nor any other Charter right postulates a general right to legal assistance. The right to state‑funded legal counsel in criminal proceedings grounded in ss. 7 and 11(d) of the Charter is limited to circumstances where legal aid has been denied, the accused lacks other means, and representation by counsel is essential to the accused’s constitutional right to a fair trial. Thus, where an offender can show that he or she was constitutionally entitled to state‑funded legal counsel, it would be inconsistent to order the offender to pay back his or her legal expenses through a fine in lieu. This approach gives proper effect to Parliament’s objective of ensuring an effective forfeiture regime while still vindicating the constitutionally protected right to counsel. To go further would not only upset the careful balance struck by Parliament, it would effectively grant a constitutional entitlement where none exists.
Contrary to the majority’s approach, the primary objective of the proceeds of crime regime need not be sacrificed to achieve the restoration provision’s “secondary purposes” of providing access to counsel, giving meaningful weight to the presumption of innocence, and giving effect to the underlying intention to ensure fairness in criminal prosecutions. Once the respective roles of the restoration provision and the fine in lieu provision are properly understood, it becomes clear that all of the statutory scheme’s objectives can be achieved. The restoration provision facilitates access to counsel in a manner that is both fair and consistent with the presumption of innocence. But where a restoration order is followed by a conviction, an “accused” becomes an “offender”, and a fine in lieu should be ordered because the primary objective of ensuring that crime does not pay takes centre stage. While Parliament intended to give accused persons the benefit of having access to seized funds to pay for reasonable legal expenses, it did not intend to give offenders the benefit of never having to pay them back. Had that been Parliament’s intent, it could easily have enacted such a provision.
In this instance, the funds transferred to R’s lawyer qualified as R’s property and were determined to be proceeds of crime. They could not be made subject to a forfeiture order. Consequently, the authority to order a fine in lieu was engaged. In exercising her limited discretion not to invoke this authority, the sentencing judge did not consider whether representation by counsel was essential to R’s constitutional right to a fair trial and the record is insufficient to decide this issue. The Court of Appeal’s order should therefore be set aside and the case remitted to the sentencing judge for determination.
Cases Cited
By Martin J.
Distinguished: R. v. Rowbotham (1988), 41 C.C.C. (3d) 1; considered: R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392; referred to: R. v. Appleby, 2009 NLCA 6, 282 Nfld. & P.E.I.R. 134; R. v. Wilson (1993), 15 O.R. (3d) 645; R. v. Smith, 2008 SKCA 20, 307 Sask. R. 45; R. v. MacLean (1996), 184 N.B.R. (2d) 26; R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530; Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140; Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R. 271; R. v. Davidson, 2016 ONSC 7440; R. v. Alves, 2015 ONSC 4489; R. v. Borean, 2007 NBQB 335, 321 N.B.R. (2d) 309; R. v. Gagnon (1993), 80 C.C.C. (3d) 508; R. v. Chaulk, [1990] 3 S.C.R. 1303; R. v. Oakes, [1986] 1 S.C.R. 103; R. v. Whyte, [1988] 2 S.C.R. 3; R. v. Hodgson, [1998] 2 S.C.R. 449; Greenshields v. The Queen, [1958] S.C.R. 216; R. v. G.D.B., 2000 SCC 22, [2000] 1 S.C.R. 520; R. v. Jordan, 2016 SCC 27, [2016] 1 S.C.R. 631; R. v. Antic, 2017 SCC 27, [2017] 1 S.C.R. 509; R. v. Mabior, 2012 SCC 47, [2012] 2 S.C.R. 584; R. v. Levkovic, 2013 SCC 25, [2013] 2 S.C.R. 204; R. v. Taylor, 2014 SCC 50, [2014] 2 S.C.R. 495; R. v. Keating (1997), 159 N.S.R. (2d) 357; R. v. Hobeika, 2014 ONSC 5453; R. v. Kizir, 2014 ONSC 1676, 304 C.R.R. (2d) 287; R. v. Ro, [2006] O.J. No. 3347 (QL).
By Moldaver J. (dissenting in part)
R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392; Quebec (Attorney General) v. Laroche, 2002 SCC 72, [2002] 3 S.C.R. 708; R. v. Rowbotham (1988), 41 C.C.C. (3d) 1; Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559; United States v. Monsanto, 491 U.S. 600 (1989); R. v. Dieckmann, 2017 ONCA 575, 355 C.C.C. (3d) 216; R. v. Angelis, 2016 ONCA 675, 133 O.R. (3d) 575; R. v. Khatchatourov, 2014 ONCA 464, 313 C.C.C. (3d) 94; R. v. Bourque (2005), 193 C.C.C. (3d) 485; R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530; R. v. Appleby, 2009 NLCA 6, 282 Nfld. & P.E.I.R. 134; R. v. Dwyer, 2013 ONCA 34, 296 C.C.C. (3d) 193; R. v. Wilson (1993), 15 O.R. (3d) 645; R. v. MacLean (1996), 184 N.B.R. (2d) 26; R. v. Smith, 2008 SKCA 20, 307 Sask. R. 45; R. v. Sinclair, 2010 SCC 35, [2010] 2 S.C.R. 310; R. v. Manninen, [1987] 1 S.C.R. 1233; British Columbia (Attorney General) v. Christie, 2007 SCC 21, [2007] 1 S.C.R. 873; R. v. Willier, 2010 SCC 37, [2010] 2 S.C.R. 429; R. v. Smith, 2004 SCC 14, [2004] 1 S.C.R. 385; R. v. McIntosh, [1995] 1 S.C.R. 686; R. v. MacDougall, [1982] 2 S.C.R. 605; R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606; R. v. G.D.B., 2000 SCC 22, [2000] 1 S.C.R. 520.
Statutes and Regulations Cited
Act for enabling Persons indicted of Felony to make their Defence by Counsel or Attorney (U.K.), 1836, 6 & 7 Will. 4, c. 114, s. 1.
Canadian Charter of Rights and Freedoms, ss. 7 , 10(b) , 11(d) , 24(1) .
Controlled Drugs and Substances Act, S.C. 1996, c. 19, s. 2 .
Criminal Code, R.S.C. 1985, c. C‑46, ss. 2 , 354(1) , Part XII.2 [ad. c. 42 (4th Supp.), s. 2 ], 462.3(1), 462.32, 462.33, 462.34, 462.37(1), (2), (3), (4), 730.
Authors Cited
Canada. House of Commons. Debates, vol. 14, 2nd Sess., 33rd Parl., July 7, 1988, pp. 17258‑59.
Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C‑61: An Act to amend the Criminal Code, the Food and Drugs Act and the Narcotic Act, No. 1, 2nd Sess., 33rd Parl., November 5, 1987, p. 1:8.
Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C‑61: An Act to amend the Criminal Code, the Food and Drugs Act and the Narcotic Act, No. 5, 2nd Sess., 33rd Parl., May 10, 1988, pp. 5:5 and 5:9.
Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C‑61: An Act to amend the Criminal Code, the Food and Drugs Act and the Narcotic Act, No. 1, 2nd Sess., 33rd Parl., June 1, 1988, pp. 9:22‑9:24.
Canada. House of Commons. Minutes of Proceedings and Evidence of the Legislative Committee on Bill C‑61: An Act to amend the Criminal Code, the Food and Drugs Act and the Narcotic Act, No. 1, 2nd Sess., 33rd Parl., June 2, 1988, pp. 10:17‑10:18.
Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.
German, Peter M. Proceeds of Crime and Money Laundering, vol. 1, 2nd ed. Toronto: Thomson Reuters, 2018 (loose‑leaf updated April 2019, release 1).
Hubbard, Robert W. et al. Money Laundering and Proceeds of Crime, Toronto: Irwin Law, 2004.
Langbein, John H. The Origins of Adversary Criminal Trial, Oxford: Oxford University Press, 2003.
MacFarlane, Bruce A., Robert J. Frater and Croft Michaelson. Drug Offences in Canada, 4th ed. Toronto: Thomson Reuters, 2019 (loose‑leaf updated April 2019, release 2).
Rose, Gregory J. “Non‑Part XII.2 Warrants and Proceeds of Crime” (1996), 38 Crim. L.Q. 206.
Sullivan, Ruth. Sullivan on the Construction of Statutes, 6th ed. Markham, Ont.: LexisNexis, 2014.
APPEAL from a judgment of the Ontario Court of Appeal (Weiler, Hourigan and Pardu JJ.A.) 2017 ONCA 634, 137 O.R. (3d) 81, 353 C.C.C. (3d) 293, [2017] O.J. No. 4064 (QL), 2017 CarswellOnt 11968 (WL Can.), varying a sentencing decision of Croll J., 2013 ONSC 7293, [2013] O.J. No. 5421 (QL), 2013 CarswellOnt 16580 (WL Can.). Appeal allowed, Wagner C.J. and Moldaver and Côté JJ. dissenting in part.
Gregory Lafontaine and Carly Eastwood, for the appellant.
Bradley Reitz and Sarah Egan, for the respondent.
Brett Cohen and Melissa Adams, for the intervener the Attorney General of Ontario.
Michael W. Lacy and Bryan Badali, for the intervener the Canadian Civil Liberties Association.
Alan D. Gold and Deepa Negandhi, for the intervener the Criminal Lawyers’ Association of Ontario.
Gregory DelBigio, Q.C., and Alison M. Latimer, for the intervener the British Columbia Civil Liberties Association.
The judgment of Abella, Karakatsanis, Gascon, Brown, Rowe and Martin JJ. was delivered by
Martin J. —
I. Introduction
[1] Do the proceeds of crime provisions of the Criminal Code, R.S.C. 1985, c. C-46 (“Code ”), require courts to give with one hand, only to take away with the other? The appellant, Yulik Rafilovich, applied for and was returned funds that the state had initially seized from him as potential proceeds of crime, because he needed the funds to pay for his legal defence to charges related to drug trafficking. After he pled guilty, the Crown asked the sentencing judge to impose a fine on Mr. Rafilovich under the forfeiture provisions of the Code , on the basis that by using his returned funds for his defence, he had thereby benefitted from the proceeds of crime. In my view, Parliament did not intend these provisions to operate in such an inconsistent manner.
[2] In 1988, Parliament enacted a comprehensive and distinct legal regime to address proceeds of crime, which now forms Part XII.2 of the Code . The overall goal of this complex and multi-factored regime was to ensure that “crime does not pay”, and to deter offenders by depriving them of their ill-gotten gains.
[3] Under this regime, the state may seize property from accused persons where the property is believed, on reasonable and probable grounds, to be proceeds of crime.[1] The seized property is then held for possible forfeiture to the Crown at a future sentencing hearing (ss. 462.32(1), 462.33(1), 462.33(2) and 462.33(3)).[2] This initial seizure means that accused persons, who are presumed innocent and have not been found guilty of any crime, may nevertheless have their property taken away and held by the state prior to and throughout trial. If their property had not been seized, these accused persons would have had unfettered access to their property to finance their defence. But, when some or all of their assets have been seized, many accused persons will not be able to afford to hire lawyers to answer the charges against them. Parliament was alive to the serious problems created by such a situation and recognized the need to alleviate them.
[4] In response, Parliament created a specific procedure within the Code ’s proceeds of crime regime that allows accused persons to seek the return of some or all of the seized property for certain designated purposes if the accused has “no other assets or means available” (s. 462.34(4) ).[3] Parliament’s list of approved purposes expressly includes reasonable legal expenses (s. 462.34(4) (c)(ii)). Under this procedure, which occurs early in a criminal proceeding, an accused applies to a judge to ask for the return of seized property to pay for a lawyer (s. 462.34(1)). Thereafter, two separate hearings are held, evidence is tendered, and the judge determines: (1) whether the accused actually needs any of the seized property to pay for reasonable legal fees (ss. 462.34(4) and 462.34(5)); (2) what amount may be returned; and (3) the appropriate terms related to the return of the funds (s. 462.34(4) ). The return of any seized funds is, therefore, done under the authority of a judicial order. Returned funds are normally held in trust by legal counsel, to be used only for the defence of the accused, and such funds are no longer considered to be seized property held by the state.
[5] The criminal process will then proceed. If the accused person is convicted or pleads guilty, there will be a sentencing hearing to impose a fit and proportionate criminal penalty. The sentencing judge will also determine what, if any, of the offender’s property (including property previously seized) has been proven to be proceeds of crime. As a general rule, property proven to be proceeds of crime must be forfeited to the Crown (s. 462.37(1)).
[6] Parliament has also addressed the situation in which property proven to be proceeds of crime at sentencing is not available for forfeiture to the Crown, such as situations where the money has been spent or given to a third person. In such a case, the sentencing judge may order a “fine instead of forfeiture” equal to the amount proven to be proceeds of crime (s. 462.37(3) ).[4] The offender’s failure to pay the fine may result in imprisonment (s. 462.37(4)).
[7] This case concerns the legal relationship between a judicial order returning funds to pay for reasonable legal fees and the sentencing judge’s discretion to order a fine instead of forfeiture. This Court is, for the first time, being asked to address when, if ever, a sentencing judge should use the statutory discretion to order a fine instead of forfeiture in respect of property that was used, with prior judicial authorization, to pay for the reasonable costs of an accused’s legal defence. Parliament has provided no express response to this question. The courts below have reached opposing conclusions and the limited jurisprudence across the country on these two provisions is similarly divided (R. v. Appleby, 2009 NLCA 6, 282 Nfld. & P.E.I.R. 134; R. v. Wilson (1993), 15 O.R. (3d) 645 (C.A.); R. v. Smith, 2008 SKCA 20, 307 Sask. R. 45; R. v. MacLean (1996), 184 N.B.R. (2d) 26 (C.A.)).
[8] In my view, the application of the principles of statutory interpretation leads to the conclusion that, generally speaking, sentencing judges should not impose a fine instead of forfeiture in relation to funds that have been judicially returned for the payment of reasonable legal fees associated with an accused’s criminal defence. This approach is most faithful to Parliament’s intent.
[9] The statutory discretion afforded to sentencing judges to impose a fine must be exercised in accordance with the purposes of the provisions in the proceeds of crime regime (R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, at para. 28). Those purposes can be found by examining the Code to discern Parliament’s intent about how the legal expenses return provision and the fine instead of forfeiture provision should operate together. By enacting the return provision, Parliament not only foresaw the possibility that seized funds may be needed to mount a defence, but explicitly allowed individuals to spend returned funds for this purpose. While it is true that the proceeds of crime regime as a whole seeks to ensure that crime does not pay or benefit the offender, the legal expenses return provision pursues secondary purposes, namely: (1) providing access to counsel and (2) giving meaningful weight to the presumption of innocence. Underlying both of these objectives is a desire to ensure fairness to the accused in criminal prosecutions. Clawing back reasonable legal fees as a fine instead of forfeiture would, in most cases, undermine these equally valid purposes.
[10] At the same time, where it turns out that the offender did not have a real financial need or the funds were not used to alleviate that need, it would be appropriate for a judge to impose a fine instead of forfeiture, as this would align with Parliament’s intent. For example, this might occur where there is wrongdoing in the return of funds application, such as the misrepresentation of the accused’s financial position. It might also occur where there is wrongdoing in the administration of the return order, such as funds not being applied in the manner contemplated, expenditures for purposes outside the scope of the return order, or fees in excess of judicially authorized limits. Further, it might occur where the accused experiences an unexpected change in circumstances after the funds have been returned but before sentencing, such that recourse to returned funds is no longer necessary after the accused became aware of the changed circumstances. These are examples of the kinds of situations that undermine the basis of the return order such that Parliament would have intended to recover the returned monies by way of a fine.
[11] In the context of this case, because ordering a fine would undermine Parliament’s intent in enacting the legal expenses return provision, I would allow the appeal and set aside the Court of Appeal’s order, which imposed a fine and imprisonment in default of payment.
II. Facts and Judicial History
[12] The appellant, Mr. Rafilovich, was arrested for possession of cocaine for the purpose of trafficking twice in fourteen months. The police searched Mr. Rafilovich’s car and two apartments, and seized, among other things, a fake Social Insurance Number identification card, about $47,000 worth of cocaine, and about $42,000 in cash. The cash was seized by the Crown as potential proceeds of crime.
[13] In 2009, before his trial, Mr. Rafilovich’s counsel brought an application under s. 462.34 of the Code for the return of some of the seized funds to pay for reasonable legal fees associated with the case. Justice MacDonald of the Ontario Superior Court of Justice granted the application pursuant to s. 462.34(4) (c)(ii). He was satisfied that Mr. Rafilovich met the financial need requirement in s. 462.34(4) of the Code (A.R., vol. II, at p. 1). He ordered that the returned funds be held by Mr. Rafilovich’s counsel in an interest-bearing trust account and imposed the following conditions: the returned funds were to be used only for the payment of legal fees and, before any fees could be paid, Mr. Rafilovich’s counsel had to provide “an itemized account justifying such fees to Mr. Rafilovich and he [had to] sign that account acknowledging his agreement as to the reasonableness of the fees and his consent to payment” (A.R., vol. II, at p. 2). Justice MacDonald also determined the hourly rate and maximum court hours that could be billed up to the conclusion of the preliminary inquiry.
[14] At trial, Mr. Rafilovich pled guilty to: possession of a counterfeit mark (a Social Insurance Number card); two counts of possession of cocaine for the purpose of trafficking; and two counts of possession of property exceeding $5,000, knowing that it was obtained or derived directly or indirectly as a result of the commission in Canada of an offence punishable by indictment. The sentencing judge sentenced Mr. Rafilovich to 36 months in custody, which was reduced by 13 months for pretrial custody and by another 9 months to account for the terms of his interim release. In addition to this sentence, Mr. Rafilovich was required to forfeit to the Crown his 50 percent interest in an apartment that was “offence-related property” as defined in s. 2 of the Controlled Drugs and Substances Act, S.C. 1996, c. 19 (“CDSA ”). Mr. Rafilovich’s term of imprisonment and the forfeiture of the interest in the apartment are not at issue in this appeal. While the interest in the apartment was forfeited under the CDSA , the parties agree that the forfeiture provisions applicable to the funds at issue in this case are those found in the Code . For the purposes of this appeal I accept, without deciding, that the governing provisions are those in the Code , not the CDSA .
[15] At the sentencing hearing, the Crown also sought a fine instead of forfeiture under s. 462.37(3) , equal to the amount seized and then returned to Mr. Rafilovich to pay for his legal counsel. The sentencing judge declined to impose the discretionary fine for four reasons. First, as the application judge found, Mr. Rafilovich did not have any funds to pay for legal representation and did not qualify for legal aid. Therefore, “[i]t was necessary for the seized funds to be released” (2013 ONSC 7293, at p. 20 (CanLII)). Second, Mr. Rafilovich did not obtain a benefit from the returned funds except to have legal representation. This was not a situation where an offender profited from criminal conduct. Third, Mr. Rafilovich did not squander or divert any of his other assets. Fourth, the non-payment of the fine would lead to the imposition of a further sentence of imprisonment of 12 to 18 months — an outcome that offenders who have access to funds or legal aid would not have to face.
[16] The Crown appealed. The Court of Appeal for Ontario unanimously held that the sentencing judge’s exercise of discretion in this case was inappropriate. While it recognized that sentencing judges have a statutory discretion to not impose a fine, the exercise of this discretion, according to Lavigne, cannot hinder the achievement of the objectives that the proceeds of crime regime seeks to achieve. One of these objectives is that offenders cannot profit from their criminal conduct, and the Court of Appeal considered Mr. Rafilovich to be profiting from his criminal conduct by having access to seized funds to pay for his legal fees. It viewed the fact that the Code allows judges to return seized funds for payment of reasonable legal fees as compatible with the imposition of a fine instead of forfeiture at a later stage in the criminal proceedings.
[17] The Court of Appeal also held that the sentencing judge erred in considering the possibility of imprisonment for non-payment of a fine. It considered that, according to this Court’s decision in R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530, an offender cannot be imprisoned for failing to pay a fine if the offender has a reasonable excuse. Since inability to pay constitutes a reasonable excuse, Mr. Rafilovich would not face any risk of additional imprisonment if he were ultimately unable to pay the fine.
[18] On the basis of the above analysis, the Court of Appeal imposed a fine instead of forfeiture of $41,976.39, equal to the amount of the seized and returned funds. It further ordered that, in the event that Mr. Rafilovich did not pay the fine and did not have a reasonable excuse, he would be sentenced to an additional 12 months of imprisonment over and above the 14 months that remained in his prison sentence. Mr. Rafilovich now appeals to this Court by leave.
III. Issue
[19] The issue before this Court is: how should a sentencing judge, who has discretion whether to impose a fine instead of forfeiture under s. 462.37(3) for property proven to be proceeds of crime, treat property that has been judicially returned for the payment of reasonable legal expenses under s. 462.34(4) (c)(ii)? Stated otherwise, what is the intended relationship between the return provision and the fine instead of forfeiture provision in the context of reasonable legal fees?
IV. Analysis
[20] As the Code does not expressly indicate whether judicially returned funds ought to be subject to a fine instead of forfeiture, the resolution of this issue requires recourse to well-established rules of statutory interpretation. This analysis, which is concerned with legislative intent, is guided by the words that Parliament has chosen to use, the way it intended to achieve its objectives, and the scheme it has put in place (Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at para. 21). Under the modern approach to statutory interpretation, the meaning of words and phrases are interpreted in their context and within the scheme of the Act in which they are found (ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140, at para. 48). Parliament also is presumed to intend for its provisions to be read harmoniously, and to be interpreted and applied so they fit together in a way that respects Parliament’s multiple objectives and gives purpose and meaning to each provision. In the present case, where the dispute involves multiple legislative objectives and the i