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...invasions. (2) Parliament has sought to address this problem through the enactment of scheme for the restraint and forfeiture of offence-related property. That scheme is set out in the Controlled Drugs and Substances Act (the "CDSA"). (3)
The scheme for the restraint and forfeiture of offence-related property, such as a marijuana grow house, can be an extremely powerful tool to combat the illicit drug trade. It not only punishes the offender, but also sends a strong message to the community most directly affected by the offence. In this way, forfeiture of the marijuana grow house can have a significant community impact. In deciding whether they should engage in illegal activities, marijuana growers and those who assist them should know that they risk losing their property if caught. (4) The scheme enacted by Parliament, however, is a source of much concern for lenders who are often interested in offence-related property. Lenders have lent money in respect of offence-related property and have registered a mortgage against title to the property to protect their interest. The registration of a restraint order against title to offence-related property is often a default under the mortgage and restricts the lender's ability to deal with the property. This article examines the framework of the restraint, forfeiture and relief from forfeiture provisions of the CDSA and the impact these provisions have on the restraint and forfeiture of real property, especially as they relate to lenders.
THE STATUTORY FRAMEWORK OF THE CDSA
The CDSA is an important part of Canada's drug strategy and its efforts to reduce the harm caused by controlled substances to individuals, families and communities. (5) In addition to meeting its domestic goals, the CDSA also allows Canada to fulfill its international obligations under various United Nations international conventions designed to counter substance abuse and trafficking in narcotic drugs and psychotropic substances. (6) The CDSA sets out a statutory framework for dealing with controlled substances that is mindful of the public interest in reducing the number of drug offences in Canada, takes away the instrument by which the crime is committed and provides adequate property protection to an offender and innocent third parties. The legislative provisions concerning the definition, restraint, forfeiture and return of offence-related property, and the declaration and payout of a third party's interest in forfeited offence-related property, are set out in ss. 2, 14, 16, 19, 19.1 and 20 of the CDSA.
The starting point for any discussion concerning the statutory framework of the CDSA is the definition of offence-related property, which under the CDSA includes property, either in or outside Canada, which is somehow connected to the offence with which the offender is charged, property used or intended for use in the commission of the offence, or property by means or in respect of which the offence was committed. (7) Only property that relates to a designated substance offence, however, is offence-related property. Designated substance offences include the production of a controlled substance or trafficking in a controlled substance, and conspiracy to commit those offences. (8)
The CDSA provides for the search, seizure, restraint, subsequent detention and forfeiture of property, including offence-related property. (9) Things that are seized or restrained under the CDSA are, for the most part, divided into three major categories. The categories are offence-related property, controlled substances and property seized as evidence. (10) Each category is dealt with differently under the CDSA, which ensures that offence-related property is available for forfeiture, that safeguards are in place to protect the public from the deleterious effects of controlled substances and that evidence is preserved for the trial of the offender.
Subsections 14(1) and (2) of the CDSA permit the Attorney General of Canada (the "Crown") to apply for a restraint order in respect of any offence-related property. Such an order would most often apply to real property, which comes within the definition of offence-related property. A restraint order can also be used for other things that cannot be physically seized, such as bank accounts. Pursuant to s. 14(3) of the CDSA, the judge hearing an application for a restraint order must be satisfied that there are reasonable grounds to believe that the property is related to the designated substance offence. Once satisfied, the judge can prohibit anyone from disposing of or otherwise dealing with the property, and appoint a person to take over the property and manage it if the Crown so requests. The threshold for a restraint order is low, and the property needs only to meet the definition of offence-related property. Pursuant to s. 14(9) of the CDSA, a restraint order remains in force until an order for forfeiture is made under the forfeiture provisions of the CDSA (11) or the Criminal Code, (12) or an order for return of the offence-related property is made in limited circumstances. (13)
The Crown may apply for the forfeiture of offence-related property where an offender has been convicted of a designated substance offence. (14) There are two routes to forfeiture pursuant to s. 16 of the CDSA. The first and most direct route to forfeiture is by way of subs. 16(1). Under this subsection, the court shall order forfeiture where the Crown establishes on a balance of probabilities that the property is offence-related property in relation to which the designated substance offence was committed. The second route to forfeiture is through application of subs. 16(2), under which the court may order forfeiture where the Crown establishes beyond a reasonable doubt that the property is offence-related property, although not in relation to the specific designated substance offence for which the offender has been convicted.
The CDSA gives due consideration to the protection of the rights of an innocent owner or an innocent person who may have a valid interest in the offence-related property restrained under the CDSA. (15) Section 19 contemplates the return of restrained property that would otherwise be forfeited. The considerations for the return of the property...
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