IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Director of Civil Forfeiture v. Angel Acres Recreation and

Festival Property Ltd.,

 

2009 BCSC 322

Date: 20090311


Docket: 07 4460

Registry: Victoria

Between:

Director of Civil Forfeiture

Plaintiff

And

Angel Acres Recreation and Festival Property Ltd., Richard Phillips, Lloyd Stennes, Robert Widdifield, Raymond Bradley Cunningham, Lawrence Dean Bergstrom, and Gordon Keith Jones

Defendants

 

Before: The Honourable Mr. Justice Davies

Reasons for Judgment

Counsel for the Plaintiff:

T. Leadham, Q.C.

G.J. Underwood
P.D. Ameerali

Counsel for the Defendants:

P.C.M. Freeman, Q.C.

S. Chapman

Date and Place of Trial/Hearing:

May 15 and 29, July 22–24, September 2, 3, and 17, 2008
(Victoria), September 25–26, 2008
(Vancouver), B.C.

 

TABLE OF CONTENTS

 

 

Paragraph Range

Page
No.

I.

INTRODUCTION

[1]–[2]

5

II.

ISSUES

[3]–[10]

5

III.

BACKGROUND TO APPLICATIONS

[11]–[19]

9

 

A.     The Original Interim Order

[13]

9

 

B.     Interim Preservation Orders made subsequent to the Original Interim Order

[14]–[16]

10

 

C.     Consent amendments to the Original Interim Order

[17]–[19]

10

IV.

ANALYSIS AND DISCUSSION

[20]–[251]

11

 

A.     Procedural Issues

[21]–[29]

12

 

B.     The Applicable Legislation

[30]–[31]

15

 

C.     The Defendants’ Application to set aside the Original Interim Order

[32]–[167]

20

 

         (1)  Have the defendants established that the Original Interim Order should be discharged due to the Director’s failure to meet the obligations upon a party applying for relief without notice?

[35]–[106]

21

 

        Question #1:  What standard of disclosure must the Director meet when applying for a without notice interim preservation order under the Act?

[39]–[53]

21

 

        Question #2:  Have the defendants established that the Director failed to meet the required standard of disclosure?

[54]–[106]

28

 

          (a)   Alleged failure to adequately disclose relevant authorities.

[59]–[65]

30

 

          (b)    Alleged filing of evidence that may, in part, have been obtained in violation of s. 193 of the Code.

[66]–[77]

31

 

           (c)  Alleged filing of evidence obtained in violation of the Privacy Act.

[78]–[81]

35

 

            (d)  Alleged failure to disclose possible defences available to the defendants.

[82]–[85]

36

 

            (e)  Alleged “shoring up of the weakness of the evidence adduced” by invoking public safety issues.

[86]–[90]

37

 

            (f)   Alleged failure to correct an error concerning the previous threshold test for an interim preservation order.

[91]–[99]

38

 

           (g)   Alleged over-breadth and intrusiveness of the Original Interim Order.

[100]–[105]

41

 

            (h)  Conclusion

[106]

43

 

        (2)  Have the defendants established that the Original Interim Order should be discharged by reason of the state of the pleadings when it was granted and the evidence adduced in support?

[107]–[167]

43

 

          (a)    Can expert opinion evidence be admitted on application for an interim preservation order?

[117]–[131]

46

 

          (b)    Does the expert opinion evidence adduced by the Director offend the “ultimate issue” rule?

[132]–[137]

50

 

          (c)    Can opinion evidence from a lay witness be adduced?

[138]–[155]

51

 

          (d)    Can “double hearsay” be adduced?

[156]–[164]

58

 

           (e)   Conclusion

[165]–[167]

60

 

TABLE OF CONTENTS

 

 

Paragraph
Range

Page
No.

 

D.     The Director’s Application for a Continuing Preservation Order

[168]–[251]

61

 

        (1)  What is now the threshold test that must be met by the Director under the Act before an interim preservation order can be made?

[176]–[184]

64

 

        (2)  Has the Director met the burden of establishing that a continuing interim preservation order should be made with respect to property still in issue?

[185]–[211]

68

 

           (a)   The Clubhouse and Lot 7

[186]–[192]

68

 

           (b)   Lot 8

[193]–[195]

70

 

           (c)   Three Harley Davidson Motorcycles

[196]–[211]

70

 

        (3)  What continuing preservation order should be made concerning the Clubhouse, Lot 7 and Lot 8?

[212]–[251]

76

 

SCHEDULE 1
Terms of the Original Interim Order made November 7, 2007

 

90

 

SCHEDULE 2
Minutes of Settlement

 

102

 

SCHEDULE 3
Terms of Consent Order

 

106

 

I.          INTRODUCTION

[1]                On November 8, 2007, D.M. Smith J. (as she then was), after an in camera and without notice hearing, granted an interim preservation order (the “Original Interim Order”) under s. 9 of the Civil Forfeiture Act, S.B.C. 2005, c. 29 [the Act], authorizing the seizure and preservation of property in Nanaimo, British Columbia, that is colloquially known as the Nanaimo Hells Angels Motorcycle Club’s Clubhouse (the “Clubhouse”), the land upon which it is situated and its contents.  

[2]                The Original Interim Order was then executed without incident by the plaintiff, the Director of Civil Forfeiture (the “Director”) with the assistance of the Royal Canadian Mounted Police (the “RCMP”).

II.         ISSUES

[3]                The defendants have now applied to set aside the Original Interim Order and the Director has applied for a continuing preservation order pending the trial of this proceeding.

[4]                The defendants have submitted that in obtaining the Original Interim Order, both in camera and without notice, the Director failed to disclose material facts and issues to such an extent that the Original Interim Order should be set aside.  More specifically, the defendants have submitted that:

(1)        The Director failed in his obligations in applying for the Original Interim Order without notice to the defendants by:

(a)        inviting or failing to correct error by Smith J. concerning the test to be applied as to whether the Director had established reasonable grounds to believe that the Original Interim Order should be granted;

(b)        failing to provide relevant case law authority;

(c)        creating unwarranted concerns by applying for an in camera hearing;

(d)        failing to advise of defences available to the defendants, including deficiencies in the evidence adduced by the Director and deficiencies in the pleadings; and

(e)        breaching the provisions of the Criminal Code, R.S.C. 1985, c. C-46 [the Code] and the Privacy Act, R.S.C. 1985, c. P-21 [the Privacy Act] by reference to intercepted communications that should not have been referred to.

(2)        The statement of claim could not reasonably support the granting of the Original Interim Order due to the failure to allege substantive criminal offences and to sufficiently particularize the offences alleged to have been committed by the defendants.

(3)        The evidence adduced by the Director was incapable of establishing reasonable grounds to believe that the Original Interim Order should be granted due to:

(a)        the insufficiency of the evidence adduced in relation to the defective pleadings;

(b)        reliance upon inadmissible hearsay and double hearsay evidence; and

(c)        reliance upon inadmissible expert evidence.

(4)        Having regard to the evidence adduced by the Director, the Original Interim Order was overly broad and intrusive when considered in relation to the legitimate purposes of the Act as civil rather than criminal legislation.

(5)        The Director included in the legal description of the Property land that was vacant and that could not possibly meet any definition of “instrument of unlawful activity” and thus could never be the subject of a forfeiture order under the Act.

[5]                In response the Director submitted that:

(1)        He did not breach his obligations in relation to the without notice application in any way.

(2)        The pleadings and the evidence adduced before Smith J. were sufficient to support the granting of the Original Interim Order.

(3)        The issues now raised by the defendants are in substance matters for appeal rather than the present application to set aside the Original Interim Order.

[6]                The Director has, however, acknowledged that two bare lots that were the subject of the Original Interim Order do not comprise property upon which the Clubhouse is located, and do not allow access to the Clubhouse or otherwise assist in its utilization as a Clubhouse.  The Director submits that the inclusion of these two lots arose from an unintentional failure to understand the relationship between the legal description of the land upon which the Clubhouse is situated, as compared to its civic address at 805 Victoria Road, Nanaimo, British Columbia.

[7]                The Director has accordingly agreed that Lots 9 and 10 of Block 5, Section 1, Nanaimo District, Plan 2009 (collectively “Lots 9 and 10”), which have civic addresses of 843 Garden Street and 845 Garden Street, Nanaimo, British Columbia, respectively, should not have been included in the Original Interim Order.  The Director also does not seek their inclusion in the continuing preservation order now sought.

[8]                The Director does, however, continue to submit that Lot 8 of Block 5, Section 1, Nanaimo District, Plan 2009 (“Lot 8”), was properly part of the Original Interim Order and should be part of any continuing preservation order because it facilitates access to and use of the Clubhouse.

[9]                The Director thus submits that he has established both a legal and evidentiary basis to the continuing preservation order now sought.

[10]            In reply, the defendants have submitted that the totality of the Director’s improper actions in obtaining the Original Interim Order now preclude him from being granted any continuing preservation order but, in the alternative, have submitted that if any continuing preservation order is to be granted, it should be made on terms that are proportionate to the minimal past unlawful activity that the evidence adduced by the Director is capable of proving.

III.        BACKGROUND TO APPLICATIONS

[11]            The corporate defendant, Angel Acres Recreation and Festival Property Ltd. (“Angel Acres”) is the registered owner of the lands in Nanaimo, British Columbia (the “Property”) upon which the Clubhouse sits.

[12]            The individual defendants are alleged to be either: directors and officers of Angel Acres, members of the Hells Angels Motorcycle Club (“HAMC”) and its Nanaimo Chapter, the Nanaimo Hells Angels Motorcycle Club (“NHAMC”) and alleged to be beneficial owners of the Property and the Clubhouse, or the owners of some of the contents of the Clubhouse seized by the Director under the Original Interim Order.

A.  The Original Interim Order

[13]            Smith J.’s reasons for both allowing an in camera hearing and making the Original Interim Order are reported in this proceeding under neutral citation British Columbia (Director of Civil Forfeiture) v. Angel Acres Recreation and Festival Property Ltd., 2007 BCSC 1648, and the terms of the Original Interim Order are now reproduced as Schedule 1 of this judgment.

B.  Interim Preservation Orders made subsequent to the Original Interim Order

[14]            Because the Original Interim Order was made pursuant to the provisions of s. 9 of the Act and without notice to the defendants it was valid for only 30 days, and was also, by its terms, subject to being set aside on two days’ notice to the Director.

[15]            However, commencing on December 7, 2007, a series of subsequent consent replacement interim orders made under s. 8 of the Act were pronounced by various judges of this Court.  By their terms, all of the replacement interim orders continued the preservation of the Property, the Clubhouse and its contents on substantially the same terms as those contained in the Original Interim Order.  

[16]            The last of those replacement orders was pronounced by Gill J. on February 18, 2008 and by agreement of counsel appearing before me on these applications or pursuant to orders made by me during the hearing of these applications, that order has been extended until the order made pursuant to these reasons for judgment is filed.

C.  Consent amendments to the Original Interim Order

[17]            Since the execution of the Original Interim Order on November 7, 2007 the Property, the Clubhouse and its contents have been held by the Director or by the Independent Supervising Solicitor named and appointed by the Original Interim Order and as continued under the series of replacement preservation orders.

[18]            However, during some of the many adjournments of the hearing of the applications that are the subject of this judgment, the parties entered into Minutes of Settlement concerning the continued possession of some of the contents of the Clubhouse pending the trial or other disposition of this proceeding.  That agreement arose in part because of issues I raised concerning the Director’s and the Independent Supervising Solicitor’s continued possession of documents that might either be the subject of claims of privilege or that might be irrelevant to these proceedings.

[19]            I am grateful to counsel for the parties for their consideration and consensual resolution of those sensitive issues.  Because similar issues may arise in future cases under the Act, I have reproduced as Schedule 2 of these reasons a copy of those Minutes of Settlement and have also reproduced as Schedule 3 a copy of the consent order that was filed to give effect to them.

IV.        ANALYSIS AND DISCUSSION

[20]            Before turning to the merits of the parties’ competing applications, I must first address issues that arose before the commencement of this hearing because of Smith J.’s elevation to the Court of Appeal.  I must also address the legislative background to these applications.  

A.  Procedural Issues

[21]            When these applications first came before me for consideration, the defendants argued that their application to set aside the Original Interim Order should proceed before any application by the Director for a continuing preservation order and should be resolved without reference to any evidence other than that which was before Smith J. when she made the Original Interim Order.  

[22]            Mr. Freeman argued on behalf of the defendants that only after that application to set aside was heard and determined should I entertain the Director’s application for a continuing preservation order.  That argument was premised upon a submission that if I were to determine that the Director had failed in his duties to the Court concerning the without notice application as alleged, such a finding could preclude the Director from now applying for a continuing preservation order.

[23]            In response, the Director submitted that the defendants’ application to set aside the Original Interim Order and his own application for a continuing preservation order should be heard de novo based upon all of the information now adduced by the parties on both applications.  In addition, as preliminary objections to the hearing of the defendant’s application to set aside Original Interim Order, the Director submitted that the defendants’ application should be dismissed because:

(1)        amendments made to the Act after Smith J. granted the Original Interim Order rendered the defendants’ application moot;

(2)        by application of s. 9 of the Act, as well as by its terms, the Original Interim Order expired 30 days after its issuance so that the series of subsequent replacement interim preservation orders entered into by consent after the expiry of the Original Interim Order were all new orders that were not affected by any alleged deficiencies or improprieties in the granting of the Original Interim Order.

[24]            After hearing those preliminary submissions I ruled that, for the purposes of these applications, the series of replacement orders should be treated as extensions of the Original Interim Order, rather than as new orders, because to do otherwise would bar substantive reconsideration of the basis upon which the Original Interim Order was obtained.

[25]            I also ruled that while the amendments to the Act, which I will consider in more detail later in these reasons, may impact upon whether the Director could establish entitlement to a new continuing preservation order, they did not conclusively determine the issue of whether the Director was now barred from obtaining a new order because of any breach of his duties in obtaining the Original Interim Order.

[26]            I did, however, also rule against the defendants’ application to have their application to set aside the Original Interim Order heard and determined before I proceeded with the hearing of the Director’s application for a new continuing preservation order.  I did so because I concluded that the procedure suggested by the defendants was unnecessarily complex and would not allow the efficacious consideration of all of the issues raised by these competing applications.

[27]            In the result, therefore, I determined that the defendants’ application to set aside the Original Interim Order would proceed as an application to discharge the order based only upon the evidence adduced by the Director on the without notice application but that the Director’s application for a continuing preservation order proceeded as a hearing de novo.

[28]            In taking those different approaches to the competing applications, I had regard to somewhat similar circumstances before Neilson J. (as she then was) in BMF Trading v. Abraxis Holdings Ltd., 2000 BCSC 1691 (varied by the Court of Appeal on other grounds, reported at 2001 BCCA 288) [Abraxis], in which she stated at paras. 116-117:

[116] The Mareva injunction was granted by Madam Justice Gill on an ex parte application on August 27, 1999.  It was subsequently continued by orders of Gill J. and Fraser J., apparently without Abraxis taking a position.  Abraxis now applies for an order setting the injunction aside on the basis that BMF failed to fulfil its duty to make full and fair disclosure of all material facts on the ex parte application.  BMF replies that there was no non-disclosure of material facts, or inadvertent non-disclosure at most, which is insufficient to set aside the injunction.  Alternatively, BMF has brought a fresh application for a Mareva injunction, in the event I accede to Abraxis' motion to set aside the existing injunction.

[117] The law guiding me with respect to both applications is set out in Gulf Islands Navigation Ltd. v. Seafarers' International Union of North America (Canadian District) et al (1959), 18 D.L.R. (2d) 625 (B.C.C.A.), and Vancouver v. Imperial Ventures Construction Ltd. et al (1985), 60 B.C.L.R. 265 (S.C.).  Since both parties concurred in setting down these applications before me, due to my involvement in earlier motions in this proceeding, I take it that both have consented to having me determine the fate of the Mareva injunction, rather than taking it back before Madam Justice Gill.  As such, this is a hearing de novo on the merits of the injunction.  Since both parties invite me to consider new affidavit material which was not before Madam Justice Gill, I treat this as an application to dissolve the injunction, rather than discharge it.  I must first determine whether BMF failed to disclose material facts on the application before Madam Justice Gill.  If not, I must consider whether, on all the material, the injunction should be continued.  If I do find material non-disclosure, I am nevertheless able to consider a fresh application by BMF on the same material for a new Mareva injunction.

[29]            Unlike the situation faced by Neilson J. in Abraxis, however, due to the arguments advanced by the defendants that by reason of misconduct in obtaining the Original Interim Order the Director might be precluded from seeking a continuing preservation order, I determined that in deciding that issue I could only consider the evidence upon which the Director relied to obtain the Original Interim Order.  If the defendants were, however, unable to establish such misconduct it would then be necessary to determine the Director’s application for a continuing preservation order not only by reference to all of the material now adduced by both parties but also in accordance with the applicable provisions of the Act as now amended.  

B.  The Applicable Legislation

[30]            When Smith J. made the Original Interim Order, the sections of the Act relevant to the issues now before me provided:

1.  In this Act: …

“instrument of unlawful activity” means property that

(a)        has been used to engage in unlawful activity that, in turn,

(i)  resulted in the acquisition of property or an interest in property, or

(ii)  caused serious bodily harm to a person, or

(b)        is likely to be used to engage in unlawful activity that is intended to

(i)  result in the acquisition of property or an interest in property, or

(ii)  cause serious bodily harm to a person;

“interim preservation order” means a court order made under section 8(3);

“proceeds of unlawful activity” means any of the following:

(a)  the whole or a portion of an interest in property if the whole or the portion of the interest, as the case may be, is acquired directly or indirectly as a result of unlawful activity;

(b)  the whole or a portion of an interest in property that is equivalent in value to the amount of an increase in value of the whole or the portion of the interest in property if the increase in value results directly or indirectly from unlawful activity;

(c)  the whole or a portion of an interest in property that is equivalent in value to the amount of a decrease in a debt obligation secured against the interest or the portion of the interest in property, if the decrease in debt obligation results directly or indirectly from unlawful activity;

“property” means a parcel of real property or tangible or intangible personal property and, for greater certainty, includes cash;

“unlawful activity” means an act or omission described in one of the following paragraphs:

(a)  if an act or omission occurs in British Columbia, the act or omission, at the time of occurrence, is an offence under an Act of Canada or British Columbia;

(b)  if an act or omission occurs in another province of Canada, the act or omission, at the time of occurrence,

(i)  is an offence under an Act of Canada or the other province, as applicable, and

(ii)  would be an offence in British Columbia, if the act or omission had occurred in British Columbia;

(c)  if an act or omission occurs in a jurisdiction outside of Canada, the act or omission, at the time of occurrence,

(i)  is an offence under an Act of the jurisdiction, and

(ii)  would be an offence in British Columbia, if the act or omission had occurred in British Columbia,

but does not include an act or omission that is an offence

(d)  under a regulation of a corporation, or

(e)  under an enactment of any jurisdiction if the enactment or the jurisdiction is prescribed under this Act.

(2)        For the purpose of the definition of “proceeds of unlawful activity”, “equivalent in value” means equivalent in value as determined or established by the regulations.

2.         (1) This Act applies to an unlawful activity occurring before, on or after the date this section comes into force.

(2) This Act applies to proceeds of unlawful activity, whether or not

(a)        the acquisition of the whole or the portion of an interest,

(b)        the increase in the value of the whole or the portion of an interest, or

(c)        the decrease in the debt obligation,

as referred to in the definition of “proceeds of unlawful activity”, occurred before, on or after the coming into force of this Act.

3.         (1) The director may apply to the court for an order forfeiting to the government

(a)  the whole of an interest in property that is proceeds of unlawful activity, or

(b)  the portion of an interest in property that is proceeds of unlawful activity.

(2) The director may apply to the court for an order forfeiting to the government property that is an instrument of unlawful activity.

8.         (1) As part of a proceeding under section 3 (1) for forfeiture of the whole or a portion of an interest in property, the director may make an application to court for one or more interim preservation orders in relation to

(a)  the whole or the portion of the interest in property

(b)  the property in which the whole or the portion of interest in property is held.

(2) As part of a proceeding under section 3 (2) for forfeiture of property, the director may make an application to court for one or more interim preservation orders in relation to the property.

(3) On application under subsection (1) or (2), the court may make one or more of the following orders for preservation of property or the whole or a portion of an interest in property:

(a)  an order restraining the disposition or transmission of the property or the whole or the portion of the interest in property;

(b)  an order for the possession, delivery to the director or safekeeping of property;

(c)  an order appointing a person to act as a receiver manager for property or the whole or a portion of an interest in property;

(d)  an order for the disposition of the property or the whole or the portion of the interest in property in order to better preserve the value of the property or the whole or the portion of the interest in property;

(e)  for the purpose of securing performance of an obligation imposed by an order made under Part 2 of this Act or under this Part, an order granting to the director a lien for an amount set by the court on property or the whole or the portion of an interest in property;

(f)  any other order that the court considers just for the preservation of

(i)  the property or the whole or the portion of an interest in the property,

(ii)  the value of the property or of the whole or the portion of an interest in the property, or

(iii)  the rights of creditors and other interest holders;

(g)  any other order that the court considers appropriate in the circumstances….

(5) Unless it is not in the interests of justice, the court must make an interim preservation order applied for under this section if the court is satisfied that there are reasonable grounds to believe that

(a)  the whole or the portion of the interest in property that is the basis of the application under subsection (1) is proceeds of unlawful activity, or

(b)  the property that is the basis of the application under subsection (2) is an instrument of unlawful activity.

9.         (1) Subject to subsection (2), a court may make an interim preservation order under section 8 without notice to any person.

(2) An order made without notice under subsection (1) may not be made for a period greater than 30 days.

15.       The director may commence proceedings under this Act by originating application or action.

[31]            The issues before me arising from the defendants’ application to set aside the Original Interim Order must be determined under the provisions of the Act in force on November 8, 2007.  I will address the specific amendments that were made to the Act after Smith J. made the Original Interim Order when discussing the Director’s application for a continuing interim preservation order pending the trial of this action.

C.  The Defendants’ Application to set aside the Original Interim Order

[32]            The defendants have assailed the manner by which the Director obtained the Original Interim Order.  They have also attacked the substantive validity of the Original Interim Order by reason of the state of the pleadings at the time it was granted and the evidence adduced in support of the application.

[33]            Those two separate challenges to the validity of the Original Interim Order and the defendants’ application to have it discharged raise very different legal and factual issues.

[34]            I have accordingly determined to proceed by first addressing the defendants’ application to set aside the Original Interim Order by reason of the Director’s alleged misconduct in failing to meet the obligations upon him in obtaining the Original Interim Order on a without notice basis.  I will then consider the specific substantive evidentiary and pleadings issues raised by the defendants.

(1)        Have the defendants established that the Original Interim Order should be discharged due to the Director’s failure to meet the obligations upon a party applying for relief without notice?

[35]            The determination of this issue requires three specific enquiries.

[36]            The first issue to be addressed is the standard of disclosure the Director must meet when applying for a preservation order without notice.

[37]            Once that question has been answered, it will then be necessary to determine whether the defendants have established that the Director failed to meet the required standard under the Act and, if so, to what extent?

[38]            If the defendants are able to establish that the Director failed to meet his obligations, the third issue to consider is the consequences that should flow from any non-compliance with those obligations.

Question #1:   What standard of disclosure must the Director meet when applying for a without notice interim preservation order under the Act?

[39]            The defendants have submitted that when applying for an interim preservation order under ss. 8 and 9 of the Act without notice to any affected party, the Director should be held to the same rigorous standards of full and fair disclosure that apply to litigants seeking relief in the nature of a without notice Mareva injunction or Anton Piller order.  Counsel for the defendants submitted that, since all such applications seriously interfere with the property rights of defendants not only without notice to them, but before any adjudication of the merits of the dispute, the same standards should apply to an applicant seeking such drastic prejudgment relief.

[40]            Mr. Freeman relied in particular upon the decision of Groberman J. (as he then was) in Green v. Jernigan, 2003 BCSC 1097, 18 B.C.L.R. (4th) 366 [Jernigan], in which Groberman J. was required to consider the defendant’s application to set aside a Mareva injunction based upon allegations that the plaintiff had not provided full, frank, and fair disclosure of information when the injunction was obtained. 

[41]            Although Groberman J. ultimately discharged the injunction due to his consideration of alternative jurisdictional arguments, he did, in obiter dicta, examine in some detail the question of the necessary standard of disclosure on such applications.  In postulating an onerous standard of disclosure, he stated at paras. 24-29:

[24]      I do agree with the defendants that, having proceeded ex parte, it was incumbent on the plaintiffs to be fastidious in disclosing to the court all important aspects of the evidence, and in pointing out what defences might be available to the defendants.  Above all else, the plaintiffs must not, in such a situation, exaggerate or misrepresent the strength of their case.

[25]      It is trite law that a litigant’s duties when it comes to court on an ex parte basis are onerous, and this is doubly true when the order that is sought is a draconian one, such as Mareva or Anton Piller relief.

[26]      While I will not go through the evidence presented on the ex parte application in detail, I will say that I have serious misgivings as to whether the plaintiffs met the standards for disclosure that the law imposes on them.

[27]      In particular, I am of the view that the plaintiffs failed to include in the documentary evidence a substantial body of correspondence that illuminates the tenor of the dispute, and shows it not to have been as one-sided as the evidence that was presented might have suggested.  As well, certain important events, such as the plaintiffs' changing instructions as to whether money was to be placed in a particular account, were not mentioned.  Finally, some key information that would cast the actions of the defendants in a different light was omitted; for example, while the plaintiffs disclosed that the defendants were attempting to sell certain property in British Columbia, they failed to advise the court that the property had been listed for sale not recently, but for a number of years.

[28]      The various failures to meet the high standard of disclosure required on an ex parte application would be sufficient to justify the court in setting aside the Mareva injunction.

[29]      I do not, however, think that the various sins alleged to have been committed by the plaintiffs are so egregious as to disentitle them from applying, in future, for similar relief.  Their omissions were largely a result of the perceived need to move quickly before the court.  I find no deliberate attempt to conceal information or to mislead the court.  If I had found such conduct, I have no doubt that the appropriate course would be to prohibit the plaintiff from re-applying for Mareva relief.

[42]            Mr. Freeman also relies on Groberman J.’s observations at para. 29 in support of the defendants’ argument that the Director should be precluded from applying for any continuing preservation order in this proceeding by reason of the Director’s alleged misconduct in obtaining the Original Interim Order.

[43]            In addition, the defendants rely upon other decisions of this Court to emphasize the strictness and breadth of the disclosure obligations that must be met by a party who seeks to invoke the Court’s authority to interfere with the proprietary interests of others on a without notice basis.  More specifically, the defendants rely upon:

(1)        Evans v. Silicon Valley IPO Network, 2003 BCSC 954, wherein Hood J. stated at para. 34:

[34]      The strictness with which the courts apply the principle of disclosure, and continue to do so, is emphasized in the decision of Chief Justice Wilson in Gulf Islands Navigation Ltd. V. Seafarers International Union Of North America (1959), 18 D.L.R. (2d) 216, (B.C.S.C.) particularly at p. 218 and the decision of McIntrye J, then of this court, in Canadian Pacific Railway V. United Transportation Union, Local 144, et al (1970), 14 D.L.R. (3d) 497 (B.C.S.C.) at p. 500, where it is stated that persons applying ex parte to the court must use the utmost good faith and if they do not, they cannot keep any benefits of their application.  And reference there is made to Re:  Gedye (1852), 51 Beav. 254 at p. 257, 51 E.R. 535 for the proposition:

All matters must be stated.  If there is suppression the court will not inquire if it would have been entitled to make the same order but only if the matters omitted required full discussion and notice should be given.

These and other cases make it clear that the principle of full and fair disclosure is one of our most fundamental principles of justice.  Its abuse simply cannot be justified.  Finally, I would commend the consensual decisions of the three judges in Brink’s Mat Ltd. v. Elcombe et al, [1988] 1 W.L.R. 1350 (C.A.), particularly that of Ralph Gibson L.J., which thoroughly cover the subject matter.

(2)        Lalji v. Sunderji, [1997] B.C.J. No. 239 (QL), in which Levine J. (as she then was) stated at paras. 12-14 that:

12        There is ample authority supporting the principle that an applicant for ex parte relief must provide full and frank disclosure of all material and relevant facts.  Counsel for the respondents cites passages from S. Gee, Mareva Injunctions and Anton Pillar Relief, 3d ed. (London: FT Law & Tax, 1995) at 97-8; The Honourable Mr. Justice R.J. Sharpe, Injunctions and Specific Performance, 2d ed. (Aurora, Ontario: Canada Law Book Inc., 1995) at para. 2.40; Watson v. Slavik et al (23 August 1996) Vancouver C964741 (S.C.) at p. 2.

13        Material facts are those which may or might have influenced the court considering the ex parte motion (Canadian Pacific Railway v. United Transportation Union, Local 144, et al. (1970), 14 D.L.R. (3d) 497 at 501 (B.C.S.C.); Pazner v. Ontario (1990), 74 O.R. (2d) 130 at 134 (H.C.)).

14        The applicant has a duty to bring all relevant facts and arguments before the court, including those that are adverse to the applicant.  Rule 21 of chapter 8 of the Law Society's Professional Conduct Handbook states as follows:

In ex parte proceedings the lawyer shall inform the court or tribunal of all material facts known to the lawyer which will enable the court or tribunal to make an informed decision, even if the facts are adverse to the interests of the lawyer's client.

[44]            Counsel for the Director does not take exception to the proposition that the Director was obliged to provide full, fair and frank disclosure when applying for the Original Interim Order.  He does, however, submit that the decided case law concerning disclosure obligations in relation to Mareva injunctions and Anton Piller order applications should be considered and applied in the context of the statutory regime established by the Act.

[45]            More specifically, the Director submits that:

(1)        unlike the situation that arises when a without notice application is brought for a Mareva injunction or an Anton Piller order, s. 9 of the Act limits the length of such interim preservation orders to 30 days and bars the extension of such orders on a without notice basis except in specific circumstances;

(2)        unlike the extraordinary equitable jurisdiction of the Court invoked when seeking injunctive relief under a Mareva injunction or an Anton Piller order, s. 8 provides the Director with a statutory right to interim preservation orders in appropriate circumstances; and

(3)        when Smith J. made the Original Interim Order, s. 8(5) of the Act provided that the Court “must” make the preservation order sought if the Director had established “reasonable grounds to believe” that the property sought to be preserved was either the proceeds of unlawful activity or an instrument of unlawful activity “unless it was not in the interests of justice” to do so.

[46]            The Director also relies upon the observations of Huddart J. (as she then was) in Mooney v. Orr (1995), 100 B.C.L.R. (2d) 335, [1995] 3 W.W.R. 116 at para. 20 that:

… An ex parte chambers application is not a trial and should not be turned into one by demands for an unrealistic standard of disclosure.  Disclosure must be full in the sense that it must be adequate to the demands of the particular application and always fair to the absent defendant.  Re Philip's Manufacturing Ltd. (1991), 60 B.C.L.R. (2d) 311, [1992] 1 W.W.R. 651 (S.C.).

[47]            The Director submits that in the totality of the circumstances, within the statutory framework of the Act and the low evidentiary standard mandated by s. 8(5), the Director met his disclosure obligations when seeking the Original Interim Order by fully and frankly disclosing material information within his knowledge.

[48]            Concerning any obligation to disclose possible defences available to the defendants, the Director relies on the observations of Neilson J. in Abraxis at para. 121 that:

[121]  As noted above, the test for non-disclosure is objective. BMF must have drawn to Madam Justice Gill’s attention any defence which Abraxis might reasonably be expected to raise. In my view, this standard does not require a plaintiff to foresee at the outset of an action all defences which a creative defendant might advance.

[49]            Counsel for the Director has submitted that the possible defences now suggested by counsel for the defendants should be so assessed.  He submits that they are both not at all obvious and are also creative to the extent that the Director had no obligation to foresee them.

[50]            After considering the submissions of the parties, I have determined that the disclosure obligations upon the Director in the making of without notice applications are, as with any without notice application, very high.  However, I also find that those obligations must be assessed against both the statutory property preservation regime established by the Act and the relatively low threshold evidentiary requirements that the Director must meet to obtain such orders.

[51]            I am satisfied that given the very interim nature and short duration of without notice orders that have been statutorily authorized for public interest purposes (which I will later address at some length) it would be wrong to hold the Director to the fastidious disclosure standards that govern the actions of a plaintiff seeking to invoke the Court’s equitable jurisdiction to obtain relief that may often amount to pre-judgment execution.

[52]            I have accordingly concluded that when making without notice applications for interim preservation orders under ss. 8 and 9 of the Act, the Director must, in good faith, make full and fair disclosure of material facts, including those facts that would tend to diminish the Director’s right to the relief sought.  The Director must also not misstate or exaggerate the strength of the Director’s case or the evidence adduced to obtain the relief sought.

[53]            I reach that conclusion not only in relation to the wording of the Act at the time of the Director’s without notice application before Smith J., but also in respect of its present iteration with a lower threshold burden, as I will later discuss.

Question #2:   Have the defendants established that the Director failed to meet the required standard of disclosure?

[54]            As I have previously noted, the defendants have alleged that the Director failed to meet his without notice obligations under the Act by failing to bring to Smith J.’s attention:

(1)        all relevant authorities concerning the HAMC in the context of the “criminal organization” offences under the Code that are central to the Director’s claims against the defendants’ property;

(2)        the possibility that evidence filed in support of the without notice application was, in part, obtained in violation of s. 193 of the Code;

(3)        the possibility that much of the evidence filed in support of the without notice application was obtained in violation of the Privacy Act; and

(4)        possible defences available to the defendants arising from the weakness of the Director’s case against them, as well as deficiencies in the statement of claim.

[55]            The defendants also submitted that the Director deliberately sought to shore up the weakness of the evidence adduced by unnecessarily invoking public safety issues to convince the Court to hear the Director’s application for an interim preservation order in camera.

[56]            The defendants further submitted that counsel for the Director invited or failed to correct an error by the Court concerning the standard of proof required to establish entitlement to the granting of the Original Interim Order under the Act and that, having regard to the evidence adduced by the Director, the Original Interim Order was overly broad and intrusive when considered in relation to the legitimate purposes of the Act as civil rather than criminal legislation.

[57]            In response, counsel for the Director submitted that the defendants have failed to establish any of the deficiencies or excesses alleged.  The Director further submitted that if there is validity to any of the concerns raised, they are either insufficient to warrant the setting aside of the Original Interim Order or should have been addressed by way of appeal rather than pursuant to this application to set aside the Original Interim Order.

[58]            I will now address each of the defendants’ allegations against the Director.

(a)        Alleged failure to adequately disclose relevant authorities.

[59]            Mr. Freeman submitted that in both written and oral submissions made during the application for the Original Interim Order, the Director “relied heavily” on the decision of Feurst J. in R. v. Lindsay, 2005 O.J. No. 2870 (Ont. Sup. Ct.J.) [Lindsay], as establishing that the HAMC is a “criminal organization” without referring to a competing line of authority.  He submitted that, in the circumstances, the failure to bring that other line of authority to the attention of the Court constituted material non-disclosure.

[60]            In making that submission, Mr. Freeman noted that counsel for the Director not only referred Smith J. to Lindsay as establishing that the HAMC is a criminal organization but also stated:

…The case, if you research the case into Quicklaw, there’s loads of iterations on that case that comes up.

[61]            The defendants submitted that the reference to Quicklaw was at best incomplete because it failed to mention two decisions (R. v. Ciarnello, 2006 BCSC 1671 [Ciarnello], and R. v. Kirkton, 2007 MBCA 38 [Kirkton]), decided subsequent to Lindsay, which unlike cases in Ontario that had applied Lindsay to establish “as a fact” that the HAMC is a criminal organization in Canada, held that such a finding could only be made upon proof by admissible evidence.

[62]            I agree that Ciarnello and Kirkton preclude reliance solely upon Lindsay as proof that the HAMC is a criminal organization.

[63]            I do not, however, agree that the Director’s failure to specifically bring those two authorities to the attention of the Court was either a deliberate or material failure of disclosure.  That is so because during argument on the without notice application, counsel for the Director correctly stated that to obtain the interim relief sought the Director “did not have to go so far as to prove that the HAMC is a criminal organization.”

[64]            When he delivered argument before Smith J., Mr. Leadham (who was at that time acting as counsel for the Director) submitted that it was only necessary for the Director to establish, based upon on the evidence adduced, that there were “reasonable grounds to believe” (pursuant to s. 8(5) of the Act as then enacted) that the Clubhouse and its contents were “instruments of unlawful activity” that had been used or would likely be used to engage in an “unlawful activity” as then defined by the Act.

[65]            Further, my review of Smith J.’s reasons for judgment leads me to conclude that she was not in any way misled by any failure of the Director to bring to her attention the authorities now identified by the defendants.  Her decision was based upon her consideration of the evidence adduced and her assessment of the statutory test to be met before the relief sought could be granted.  

(b)        Alleged filing of evidence that may, in part, have been obtained in violation of s. 193 of the Code.

[66]            This allegation is rooted in the proposition that, by adducing evidence obtained from the interception of private communications pursuant to authorizations granted in criminal proceedings under the Code relating to some of the defendants, the Director may have breached s. 193(1) of the Code.

[67]            The defendants also submitted that the Director failed in his without notice obligations to the Court by failing to specifically advise that the tendering of the impugned evidence could run afoul of s. 193(1) and that, in those circumstances, none of the evidence should have been considered by Smith J., so that the Original Interim Order should be set aside.

[68]            The evidentiary basis for those submissions by the defendants is complex.  It relates primarily to references, in affidavits filed by various police officers in support of the Director’s application for the Original Interim Order, to an investigation (code-named “Project Halo”) carried out by members of the Combined Forces Special Enforcement Unit of British Columbia (the “CFSEU”) into alleged criminal activity by members of the NHAMC and others from 2001 to 2003.  

[69]            Project Halo, and in particular a search of the Clubhouse by members of the CFSEU (pursuant to a warrant issued under the provisions of the Code) on December 13, 2003, was the primary source of much of the evidence relied upon by the Director in alleging that the Clubhouse was then and is now an “instrument of unlawful activity” as defined by the Act

[70]            Evidence adduced by the Director relating to Project Halo not only included summaries of the CFSEU investigation, but also many references to communications intercepted during Project Halo pursuant to judicial authorizations issued under Part VI of the Code.  Although the affidavit material filed did not include the transcripts of or summaries of the content of any particular intercepted communication, there is no question that the Director relied upon the fact of such intercepted communications, and the implications of criminal activity related thereto, to obtain the Original Interim Order. 

[71]            The defendants submitted that the disclosure of the intercepted communications without a court order and the references to their contents by the Director not only may have constituted a breach of s. 193(1) of the Code, but was improper in that it introduced hearsay evidence for a substantive purpose while precluding any possibility of assessing the reliability of the evidence.

[72]            The relevant provisions of s. 193 of the Code engaged by the defendants’ submission provide:

193. (1) Where a private communication has been intercepted by means of an electro-magnetic, acoustic, mechanical or other device without the consent, express or implied, of the originator thereof or of the person intended by the originator thereof to receive it, every one who, without the express consent of the originator thereof or of the person intended by the originator thereof to receive it, wilfully

(a) uses or discloses the private communication or any part thereof or the substance, meaning or purport thereof or of any part thereof, or

(b) discloses the existence thereof,

is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.

(2) Subsection (1) does not apply to a person who discloses a private communication or any part thereof or the substance, meaning or purport thereof or of any part thereof or who discloses the existence of a private communication

(a) in the course of or for the purpose of giving evidence in any civil or criminal proceedings or in any other proceedings in which the person may be required to give evidence on oath…

[73]            Strict interpretation of s. 193(1) could support a conclusion that the Director’s disclosure of the existence of the private communications intercepted during Project Halo, and reference to the criminal nature of the communications intercepted, breached the provisions of the Code.

[74]            Having said that, however, regard must also be had to s. 193(2)(a), which creates an exception to the prohibition against unauthorized disclosure of intercepted communications for the purpose of giving evidence.  The Director relies upon that provision.

[75]            In response, the defendants submitted that existing case law limits the ambit of the “purpose of giving evidence” exception to those cases in which the witness is compelled to provide the information in the proceedings in which it is disclosed.  In making that argument, the defendants relied upon Tide Shore Logging v. Commonwealth Insurance (1979), 100 D.L.R. (3d) 112, 13 B.C.L.R. 316 (S.C.); Re Royal Commission of Inquiries into the Activities of Royal American Shows Inc. (No. 2) (1977), 39 C.C.C. (2d) 22 (Alta. Commission of Inquiry); R. v. Lessard (No. 3) (1986), 33 C.C.C. (3d) 569 (Q.S.C.); and Law Society of Upper Canada v. Canada (Attorney General), [2008] O.J. No 210, 163 A.C.W.S. (3d) 851, as all requiring some form of mid-proceeding compulsion to disclose the intercepted communications.  The defendants submitted that, since the Director elected to disclose the existence of the communications on the without notice application, he was under no such compulsion.

[76]            I have concluded that, while the argument advanced by the defendants has some support in the cases relied upon by them, I should not decide such an important substantive criminal law issue in these civil proceedings, especially when the individuals who swore the impugned affidavits are not themselves before the Court and have had no opportunity to make submissions.

[77]            Further, the defendants’ submissions concerning the Director’s alleged breach of s. 193(1) of the Code must fail because the information that was disclosed by the affiants was within the public domain when adduced by the Director.  See: R. v. Angel Acres Recreation and Festival Property, 2004 BCPC 224 and R. v. Angel Acres Recreation and Festival Property, 2004 BCSC 925.

(c)        Alleged filing of evidence obtained in violation of the Privacy Act.

[78]            The defendants submitted that because much of the information filed by the Director to obtain the Original Interim Order was improperly obtained by the Director from investigations by the RCMP into the activities of some or all of the defendants, any RCMP information related to those defendants is “personal information” as defined by the Privacy Act, and that as a “government institution” under its provisions, the RCMP was bound not to disclose that information to the Director.

[79]            I find that even if the information complained of is “private information” protected by the provisions of the Privacy Act as alleged (allegations in respect of which I make no findings) it is not necessary to address the defendants’ argument in depth.

[80]            I reach that conclusion due to s. 8(2)(f) of the Privacy Act, the relevant portions of which provide:

(2) Subject to any other Act of Parliament, personal information under the control of a government institution may be disclosed

(f) under an agreement or arrangement between the Government of Canada or an institution thereof and the government of a province…for the purpose of administering or enforcing any law or carrying out a lawful investigation

[My emphasis]

[81]            Notwithstanding the submissions of the defendants to the contrary, I am satisfied that an information sharing agreement entered into between the Government of British Columbia and the Government of Canada dated July 27, 1983, constitutes such an agreement so that the defendants’ Privacy Act submissions must be rejected.

(d)        Alleged failure to disclose possible defences available to the defendants.

[82]            These allegations were founded upon the propositions that:  (1) I would determine that the Director improperly used “criminal organization” opinion evidence to exaggerate any proven unlawful use of the Clubhouse to obtain the Original Interim Order; and (2) the pleadings as they existed when the Original Interim Order was made could not support the allegations made.

[83]            As I will later discuss, I have not acceded to either of those underlying submissions.

[84]            I also find that any questions about the insufficiency of the evidence adduced in obtaining the Original Interim Order in relation to the pleadings as they then stood ought to have been addressed by way of appeal and not by this application to set aside the Original Interim Order.

[85]            In the result, I do not accept the defendants’ submission that the Director had an obligation to advise the Court of the possible defences now alleged by counsel for the defendants, or that any failure to do so is a factor to be weighed when determining the defendants’ application to set aside the Original Interim Order.

(e)        Alleged “shoring up of the weakness of the evidence adduced” by invoking public safety issues.

[86]            I find no merit to this submission.

[87]            The previous police investigation of some of the defendants and their activities in and around the Clubhouse and the opinion evidence filed by the Director concerning the HAMC’s reputation for violence and use of intimidation to achieve criminal objectives were all introduced to support the Director’s application for the seizure of the Clubhouse as an “instrument of lawful activity” under the provisions of the Act.

[88]            Issues of public safety were also legitimately invoked by the evidence filed by the Director in order to address the fortification of the Clubhouse and the presence of surveillance cameras.

[89]            Further, during the police search of the Clubhouse conducted in 2003 under warrant in the Project Halo investigation, improperly stored firearms were found in the Clubhouse.

[90]            In my opinion, the Director appropriately adduced all of that evidence when applying to proceed both without notice and in camera.

(f)         Alleged failure to correct an error concerning the previous threshold test for an interim preservation order.

[91]            The defendants’ submissions concerning this allegation relate to Smith J.’s determination at paras. 46-49 of her reasons for judgment wherein she stated:

[46]      The evidence establishes the Director subjectively believes the property is being used as an instrument for unlawful activity.  The evidence of Detective Constable Loader, Inspector Turnball, and Officers Johnson and Richards provides the objectively justifiable grounds to support that subjective belief.

[47]      In the face of these findings, s. 8(5) of the Act requires the Court to grant the Director an interim preservation order of the property.  In the circumstances of this case, there is no evidence to support the exercise of the limited judicial discretion under s. 8(5) to decline to make such an order.

[48]      The province’s authority to implement the Act is grounded in the division of powers allocated to the provinces under s. 92(13) of the Constitution Act, 1867.   The Canadian Charter of Rights and Freedoms does not guarantee property rights (except as provided for in s. 35).  Therefore, in balancing the property rights of parties with government’s responsibility to safeguard the public interest by preventing unlawful activity, the Court must be vigilant in ensuring that the evidence relied upon to support the extraordinary measure authorized by s. 8(5) of the Act is reliable.  Mere assertions, or the taking of judicial notice of commonly accepted or known behaviour patterns of certain individuals or groups, are not, in my view, sufficient to establish the requisite “reasonable grounds to believe”.

[49]      In this case, the direct and indirect evidence filed in support of the application established the reasonable grounds to believe that the NHAMC clubhouse was being used to engage in unlawful activity.  Accordingly, the granting of the order was “in the interests of justice” and also measured through its limiting terms to ensure the defendants’ rights to a fair trial are maintained.

[92]            The defendants submitted that Smith J. misdirected herself by considering the subjective belief of the Director in relation to the then existing statutory test that had to be met under the Act as a precondition to the granting of the Original Interim Order.  Counsel for the defendants further submitted that the misdirection was either invited by counsel for the Director in breach of the Director’s without notice obligations or not corrected by counsel with the same result.  

[93]            The defendants have submitted that the Director should have specifically brought to Smith J.’s attention this Court’s decisions in both Director of Civil Forfeiture v. Peterson, 2007 BCSC 1536 [Peterson], and R. v. Tse, 2007 BCSC 995 [Tse], neither of which had approved a threshold test based upon the Director’s subjective belief in the existence of “reasonable grounds to believe.”

[94]            In making those submissions, counsel for the defendants directed my attention to the transcript of the without notice proceedings before Smith J., and a number of exchanges between the Court and counsel for the Director related to the threshold test that the Director had to satisfy before being entitled to the relief sought.

[95]            That transcript reveals that the impugned dialogue concerned the extent to which the test of “reasonable grounds to believe” under s. 8(5) of the Act, as it then read, might equate with the concept of “reasonable and probable cause,” as applied in criminal law.  Specifically engaged was the question of whether the test under s. 8(5) of the Act had both a subjective and an objective component.

[96]            My review of the transcript leads me to conclude that there is no evidentiary support for the defendants’ submissions that counsel for the Director either invited any alleged error of interpretation of s. 8(5) of the Act or breached any obligation by failing to correct any error “initiated by the Court.”

[97]            I note specifically the following exchange at pages 31-32 of the transcript:

MR. LEADEM:  …I’ve had some time to think about Your Ladyship’s discussion with me earlier in these proceedings concerning the test, and I think Your Ladyship has it correctly, that the test is a low threshold test.

If you want to equate it with reasonable and probable grounds in the criminal context, I think you probably would be accurate in the context of saying that reasonable grounds to believe and reasonable and probable grounds, there’s probably some equanimity in the terminology.

THE COURT:  Well the -- case law uses the two descriptions as -- in the same --

MR. LEADEM:  Interchangeably.

THE COURT: -- interchangeably, yes.

MR. LEADEM:  Right. And I think that Your --

THE COURT:  But I think the -- what I was asking you about specifically was the requirement for both a subjective belief and objective indicia to support that belief.

MR. LEADEM:  Right.  And I think that normally courts do that all the time, they look for the subjective criteria as well as the objective criteria.

THE COURT:  Mm-hmm.

MR. LEADEM:  And you know, certainly the Director, the person moving to -- on this is of the subjective belief that this is an instrument of unlawful activity, and he’s buttressed in that belief by the objective criteria of all of the evidence that he’s aware of, as well as the evidence that I’ve put before you now.

            So I suggest to you that that test under s. 8(5) is easily met with the facts and circumstances that I have here. …

[98]            It is in my view also noteworthy that while Smith J. adverted to the subjective belief of the Director (at para. 46 of her reasons), she also, in that same paragraph, determined that the evidence adduced by the Director provided “objectively justifiable grounds to support that subjective belief.”  That approach is, in my opinion, entirely compatible with the threshold test applied by this Court in both Peterson and Tse.

[99]            Also, any alleged error in Smith J.’s determination of the threshold test to be applied under s. 8(5) of the Act, as it then read, should have been the subject of an appeal, not this application to set aside the Original Interim Order. 

(g)        Alleged over-breadth and intrusiveness of the Original Interim Order.

[100]        The defendants submitted that the admissible evidence adduced by the Director in support of the Original Interim Order was only possibly capable of establishing three allegedly “unlawful activities” associated to the Clubhouse as an alleged “instrument of unlawful activity” under the provisions of the Act.

[101]        The defendants submitted that the three alleged unlawful activities were limited to:

(1)        the operation of a “booze can“ in the Clubhouse, contrary to the provisions of the Liquor Control and Licensing Act, R.S.B.C. 1996, c. 267 on December 12, 2003;

(2)        the improper storage of unregistered weapons and restricted weapons on December 12, 2003; and

(3)        an assault upon a former NHAMC member allegedly committed within the Clubhouse on September 16, 2002.

[102]        The defendants submitted that while those alleged unlawful activities involving the Clubhouse could be sufficient to ground the granting of some relief under the Act, they also submitted that given the historic nature of the offences as well as the fact that none were successfully prosecuted, the extensive and intrusive relief sought and obtained by the Director is not supportable.

[103]        I have previously addressed the defendants’ allegations concerning the alleged irrelevancy of much of the evidence adduced in support of the without notice application having regard to the statement of claim as it stood at the time of the application.  I have also previously addressed the allegation that the Director sought to shore up the weakness of the evidence adduced by unnecessarily invoking public safety issues.

[104]        In my view, the defendants’ attack on the alleged over-breadth of the Original Interim Order is in substance simply a recasting of those same arguments, coupled with an invitation to the Court to now reconsider the evidence adduced before Smith J. to reach a different conclusion as to the appropriate interim preservation order that the evidence tendered would support.  As such, these arguments must fail.  The appropriate course would have been to appeal the order made.

[105]        In addition, to the extent that the defendants question the validity of the Original Interim Order in the context of the legitimate purposes of the Act as civil rather than criminal legislation, they invite constitutional analysis without the defendants having met the necessary prerequisites to the bringing, hearing and consideration of constitutional questions.

(h)        Conclusion.

[106]        I have concluded that the defendants have not established any misconduct by the Director in obtaining the Original Interim Order and have also failed to establish that the Director failed to meet his without notice obligations under the Act.

(2)        Have the defendants established that the Original Interim Order should be discharged by reason of the state of the pleadings when it was granted and the evidence adduced in support?

[107]        The defendants have submitted that much of the evidence adduced by the Director in support of the Original Interim Order was irrelevant because the pleadings in the statement of claim, as they existed at the time of the application, failed to sufficiently particularize the specific criminal acts alleged against some or all of the defendants and thus failed to provide sufficient foundation for some or all of the causes of action alleged.

[108]        The defendants submitted that in those circumstances, the evidence led by the Director concerning imprecise general allegations of criminal activity allegedly carried on by the HAMC and the NHAMC at, from, or by means of the Clubhouse were not only substantively irrelevant but part of a purposefully prejudicial approach utilized to overstate the strength of the Director’s case.

[109]        I have determined that I should not review the pleadings filed by the Director in relation to those submissions either at length or in depth.  I say that because no applications to strike the pleadings due to such alleged deficiencies were filed by the defendants.  While the Director addressed the arguments to some extent in responding to the defendants’ application to set aside the Original Interim Order, in my opinion, substantive pleadings decisions should not be made in the absence of fully articulated submissions. 

[110]        The pleading concerns raised by the defendants may eventually be brought on a formal basis in this proceeding.  If so, they, as well as other substantive pleadings applications, including applications to amend or applications for particulars, will have to be resolved by the Court.  That will be the time and place for the adjudication of the merits of such substantive issues.

[111]        In addition, I am satisfied that issues now raised concerning the insufficiency of evidence in relation to the state of the pleadings at the time of the granting of the Original Interim Order should have been the subject of appeal, not an application to set aside that order.

[112]        The defendants have, however, also raised four discrete evidentiary issues.  They have submitted that those four issues are relevant not only to the substantive validity of the Original Interim Order, but also germane to the Director’s application for a continuing interim preservation order pending the trial of this proceeding.  They say that when the impugned evidence is excluded from consideration the result would be that there was no reliable evidentiary record upon which the Court could have granted the Original Interim Order.

[113]        The defendants have further submitted that the same evidence upon which the Director continues to rely remains inadmissible and that the Director has accordingly also failed to meet the evidentiary burden required for the making of any continuing interim preservation order.

[114]        I have thus determined to consider the defendants’ submissions concerning the specific substantive evidentiary issues raised by them in the context of both applications.

[115]        The four specific evidentiary issues are:

(a)        Can expert opinion evidence be admitted on an application for an interim preservation order under the Act?

(b)        Does the expert opinion evidence adduced by the Director offend the “ultimate issue” rule?

(c)        Can opinion evidence from a witness who is not qualified as an expert be adduced or relied upon to obtain an interim preservation order under the Act?

(d)        Can “double hearsay” or “bare allegations” be adduced or relied upon to obtain an interim preservation order under the Act?

[116]        The discussion of each of these issues requires some examination of the evidence relied upon by the Director in obtaining the Original Interim Order and in pursuing a continuing interim preservation order.

(a)        Can expert opinion evidence be admitted on an application for an interim preservation order?

[117]        In making the application for the Original Interim Order, the Director filed the affidavits of Detective Constable Mark Loader of the Ontario Provincial Police and Andrew Richards, a police officer and member of the Organized Crime Agency of British Columbia, both of which were sworn “for the purpose of providing expert opinion evidence in support of” the application.  

[118]        At the hearing of the Director’s application on November 8, 2007, counsel for the Director sought to have Detective Loader qualified as an expert in respect of the HAMC “as it exists in Canada — and as it exists throughout the world.”  Counsel for the Director also sought to have Officer Richards qualified as an expert permitted to give opinion evidence concerning “outlaw motorcycle gangs and in particular the Hell’s Angel Motorcycle Club, and their development and history in British Columbia.”

[119]        Smith J. accepted that both Detective Loader and Officer Richards had sufficient expertise to provide those opinions.

[120]        The defendants have submitted that the Rules of Court, B.C. Reg. 221/90, do not allow the use of expert opinion evidence in interlocutory Chambers applications.  They thus submitted that neither Detective Loader nor Officer Richards should have been qualified to provide such opinion evidence and that their opinions should not have been considered by Smith J. and should not now be considered by me.

[121]        I find no merit to those submissions.

[122]        While it is true that the provisions of Rule 40A of the Rules of Court apply specifically to the admissibility of expert evidence at trial, it does not follow that expert evidence is not also admissible on interlocutory applications.

[123]        Examples of circumstances where expert opinion evidence is received other than at trial are numerous.  They include:  evidence concerning the law of a foreign country in forum conveniens applications; opinions of value in foreclosure and other insolvency proceedings; and evidence of parenting capabilities in interlocutory family proceedings.  

[124]        While I recognize that the receipt of expert opinion evidence on interlocutory matters is less common than at trial, and also that on without notice applications there is no opportunity to cross-examine a proposed expert on his or her qualifications, that does not itself render an expert report or the opinions expressed inadmissible.

[125]        The position advanced by the defendants is also not supported by the decided cases.

[126]        In Trus Joist (Western) Ltd. v. United Brotherhood of Carpenters and Joiners of America, Local 1598, [1982] 6 W.W.R. 744 (B.C.S.C.) [Trus Joist] (upon which the defendants have relied in their submissions concerning the admissibility of “double hearsay,” as I will later discuss) at page 747 McLachlin J. (as she then was) stated:

The defendant submits that the plaintiff's material is largely hearsay and opinion and hence incapable of supporting its motion.

Rule 51(9) [Cam. 1982, O.C. 2435] states:

"(9) An affidavit may state only what a deponent would be permitted to sate at a trial, except that an affidavit used in an interlocutory application may contain statements as to the deponent's information and belief, provided the source of his information is given."

The rule permits hearsay evidence, provided the source is given.  It does not exclude opinion evidence. The only requirement is that the matters stated be those which a deponent would be permitted to state at trial. Thus, if opinions are given, the expertise of the deponent and the basis upon which his opinions are founded must be set out.

[My emphasis]

[127]        Rule 51(10) of the Rules of Court now provides:

(10)      An affidavit may state only what a deponent would be permitted to state in evidence at a trial, except that, if the source of the information is given, an affidavit may contain statements as to the deponent's information and belief, if it is made

(a)        in respect of an application for an interlocutory order, or

(b)        by leave of the court under Rule 40(52)(a) or 52(8)(e).

[128]        In my view, the present iteration is open to the same interpretation placed upon the former Rule 51(9) with the same result.  The Rule does not exclude the tendering of opinion evidence on interlocutory applications.

[129]        In addition to their complaints about the use of opinion evidence generally, however, the defendants also submitted that Officer Richards’ statement in para. 16(c) of his affidavit sworn November 5, 2007, is inadmissible as a “bare assertion” that ought not to have been adduced by the Director or considered by the Court.  In the impugned sub-paragraph Officer Richards deposed:

Hells Angels Clubhouses provide a social setting for members as well and parties occur routinely at most Hells Angels Clubhouses.  Many of the Clubhouses operate as “booze-cans”, illegally selling liquor without a licence under the pretence of collection “donations”.

[130]        I do not agree that the statement was a “bare assertion” as alleged by the defendants.  It was opinion evidence based upon Officer Richards’ experience identified in paragraph 16 as a preamble to the opinions he expressed in sub-paragraphs 16(a) through 16(e) of that affidavit.

[131]        In addition to all of the foregoing, I find that the allegation that Smith J. should not have received or considered expert evidence was a matter that ought to have been addressed on appeal, not by way of this application to review her order.

(b)        Does the expert opinion evidence adduced by the Director offend the “ultimate issue” rule?

[132]        The defendants submitted that many of the opinions expressed by Detective Loader relate to the “ultimate issue” that had to be decided by Smith J. and will also have to be decided by me, and are thus inadmissible.  They also alleged that Detective Loader and Officer Richards should be considered advocates for the positions advanced by the Director.

[133]        Again, I do not agree.

[134]        The “ultimate issue” before Smith J. was whether to issue the Original Interim Order.  The “ultimate issue” on the Director’s application for a continuing interim preservation order will also be whether the Director has met the burden under the Act to establish that in all the circumstances such an order should be made.

[135]        Neither Detective Loader nor Officer Richards opined on those issues.  They provided opinion evidence concerning the HAMC and, by association, the NHAMC as “criminal organizations” and the role of a clubhouse in relation to both.  That evidence may have constituted some of the evidence relied upon by Smith J. in making the Original Interim Order, but did not in any way dictate the result.

[136]        Also, generally speaking, issues regarding the alleged partiality of an expert witness will be addressed by a judge’s assessment of the weight to be given to the opinions expressed and not, except in egregious circumstances that do not exist in this case, as issues of admissibility.

[137]        I am further satisfied that the defendants’ submissions concerning the opinion evidence of Detective Loader and Officer Richards are an attempt to have me sit in appeal of the decision made by Smith J.  As such, they cannot succeed.

(c)        Can opinion evidence from a lay witness be adduced?

[138]        The defendants have asserted that the affidavits of two other police officers filed in support of the Director’s application for the Original Interim Order contain much objectionable opinion evidence that should not have been adduced by the Director or received by the Court.  They raise the same objections about the admissibility of the same evidence in support of the Director’s application for a continuing preservation order and submit that all such lay opinion evidence should be struck.

[139]        I find that there is some merit to those submissions.

[140]        It is “[a] basic tenet of our law … that the usual witness may not give opinion evidence, but testify only to facts within his knowledge, observation and experience”:  R. v. D.D., 2000 SCC 43, [2000] 2 S.C.R. 275 at para. 49.

[141]        There are, however, two very significant exceptions to that basic rule of evidence.  The first is the expert opinion exception, where an expert may give an opinion based on any combination of facts personally observed and those observed by others:  R. v. Lavallee, [1990] 1 S.C.R. 852, 55 C.C.C. (3d) 97.  The second is the “lay opinion” exception articulated in R. v. Graat, [1982] 2 S.C.R. 819, 2 C.C.C. (3d) 365 [Graat].

[142]        In Graat, the Court held that the conclusory opinion evidence of two police officers that the accused was too impaired to operate a motor vehicle was admissible in evidence – not because of the experience and expertise of the witnesses as police officers in dealing with intoxicated drivers, but because their observations were those that ordinary people could make.  In coming to that conclusion, the Court considered whether:

(1)        the witnesses were in a better position than the trier of fact to form their opinion;

(2)        the conclusion reached was one that persons of ordinary experience are able to make;

(3)        the witness, though not an expert, had the requisite experience to reach the conclusion; and

(4)        the opinions being expressed were only “a compendious way of giving evidence as to certain facts,” where those facts are too subtle or complicated to be narrated as effectively without resort to conclusions.

[143]        That modern approach to the opinions of lay witnesses effectively absorbed and replaced what had previously been “numerous” categorical exceptions to the opinion evidence rule, which included opinions as to facts such as:  the identification of handwriting, persons and things; apparent age; the bodily plight or condition of a person, including death and illness; the emotional state of a person—for example, whether distressed, angry, aggressive, affectionate or depressed; the condition of things—for example worn, shabby, used or new; certain questions of value; and estimates of speed and distance.  See Graat at page 835.

[144]        The specific “lay opinion” objections raised by counsel for the defendants concern the affidavits of Officer Douglas Johnson of the Central Saanich Police Service and Officer Scott Turnbull of the RCMP.  Both officers are now, or have been, members of the CFSEU, but the Director did not seek to have either qualified as experts to give opinion evidence.

[145]        Those parts of the affidavit of Officer Johnson that were relied upon by the Director that are the subject of the defendants’ submissions concerning the giving of objectionable opinion evidence relate primarily to his review of the police files relating to Project Halo and the conclusions he drew from that review.  The defendants also object to his reliance upon those files as “double hearsay,” an issue that I will address in the next section of this judgment.

[146]        Specifically, the defendants submit that paragraphs 12, 38 and 52-54 of Officer Johnson’s affidavit, sworn November 5, 2006, as well as paragraph 14 of Officer Turnbull’s affidavit sworn the same day, consist of or contain inadmissible opinion evidence.

[147]        The impugned paragraphs in Officer Johnson’s affidavit state:

12.       I base my belief regarding the NHAMC and 805 Victoria Road in the following three paragraphs upon knowledge I have gained through reading police files which are detailed in the body of this affidavit.  The following summarizes my beliefs based in part on the facts set out in this affidavit:

a.         I believe that the NHAMC is a criminal organization as defined in s. 467.1 of the Criminal Code of Canada.  I believe that the building located at 805 Victoria Road in Nanaimo, BC (“the Clubhouse”). is the clubhouse for the NHAMC.  I believe that the Clubhouse is an instrument of illegal activity for the material benefit of members of the NHAMC.

b.         I believe that the NHAMC has run an ongoing “booze can” at the Clubhouse.  I believe that some of the major purposes of the Clubhouse include functioning as a “booze can” and as a safe haven for the planning of unlawful activities, and that the building has been designed and renovated to this end.  I believe the material benefits from the booze can and other unlawful activities planned and conducted at the Clubhouse benefit the members of the NHAMC and the HAMC at large.

c.         I believe that forfeiture of the Clubhouse will prevent this property from continuing to serve as an instrument of unlawful activity.

38.       I believe the preceding reports and video recordings support my opinion that some members of the NHAMC were involved in an assault on Ian Brimacombe at the Clubhouse in the course of an expulsion from the NHAMC.  The Clubhouse was used as a safe place to conduct the assault in secrecy.  My belief is that this use is among the purposes of the Clubhouse.  I believe that should similar circumstances arise, the NHAMC would use the Clubhouse as a secure and private place to plan and conduct assaults.

52.       Based on the information I have received through my extensive review of police investigation reports and records as well as my own observations, some of which I have recorded in this affidavit, I believe that the HAMC is a nationwide criminal organization, and that the NHAMC is a full participant in the unlawful activities of that organization.  I believe that Angel Acres Ltd has allowed and continues to allow the NHAMC to use the Clubhouse to facilitate the unlawful activities of the HAMC in Nanaimo and elsewhere, both in the planning and operational stages.

53.       I further believe that individual members of the NHAMC have in the past used the Clubhouse to facilitate the planning and commission of unlawful activities both in Nanaimo and elsewhere.  I believe that the members of the NHAMC are likely to continue using the Clubhouse in that fashion as long as it is available for them to do so.

54.       In addition, I believe that Angel Acres Ltd. and the NHAMC have allowed unlawful activities, including but not limited to the possession of controlled substances, assaults, the possession of restricted weapons and the continuous operation of a booze can, to occur on the premises.  I believe that such unlawful activities will continue to be allowed on the premises so long as the Clubhouse is available for that use.

[148]        Paragraph 14 of Officer Turnbull’s affidavit, with which the defendants also have taken issue, states:

14.       From the physical set up, equipment, available supplies and overall observations during the course of this investigation I believe that at the time of the search, the Clubhouse was selling and keeping for sale liquor without a license contrary to the LCLA.

[149]        In a similar vein, the defendants submitted that paragraph 9(h) of Officer Turnbull’s affidavit, in which he concluded that the bar equipment found during the Project Halo search of the Clubhouse in December of 2003 was “similar and consistent with items I have previously observed in licensed liquor establishments,” constituted inadmissible opinion evidence.

[150]        I agree that many of the “beliefs” expressed by Officer Johnson in his affidavit constitute inadmissible opinion evidence.  Since he was not qualified as an expert concerning the HAMC or NHAMC, he crossed the line into objectionable opinion evidence when expressing opinions concerning the extent to which the Clubhouse may have played a role in any specific unlawful activity, or the extent to which the HAMC or NHAMC may have benefited from such activity.

[151]        Specifically, I find that the following “beliefs” expressed by Officer Johnson constitute inadmissible opinion evidence:

(1)        ”… the Clubhouse is an instrument of unlawful activity for the material benefit of the NHAMC …”;

(2)        [the Clubhouse functions] as a “… safe haven for the planning of unlawful activities …”;

(3)        “… the material benefits of the booze can and other unlawful activities planned and conducted at the Clubhouse benefit the members of the NHAMC and the HAMC at large …”;

(4)        “The Clubhouse was used as a safe place to conduct the assault [of Ian Brimacombe] in secrecy …”; and

(5)        “… the HAMC is a nationwide ‘criminal organization’ and the NHAMC is a full participant in the unlawful activities of that organization.”

[152]        I do not find the balance of the impugned paragraphs of Officer Johnson’s affidavit to be inadmissible.  I also do not find that either sub-paragraph 9(h) or paragraph 14 of Officer Turnbull’s affidavit are inadmissible.

[153]        As to the significance of the Director having adduced, through Officer Johnson, some inadmissible opinion evidence in support of the application for the Original Interim Order, I am satisfied that having done so does not affect the validity of that order. 

[154]        Admissible expert evidence that was largely (if not completely) to the same effect as the inadmissible evidence Officer Johnson was adduced by the Director and accepted by Smith J.  Excising the offending opinions would not undercut the factual foundation for the Original Interim Order.  Further, the tendering, receipt and consideration of the impugned evidence should have been addressed through appeal, not by way of an application to set aside the Original Interim Order.

[155]        When considering the Director’s application for a continuing interim preservation order, I will give no weight to the opinions of Officer Johnson that I have found to be inadmissible.

(d)        Can “double hearsay” be adduced?

[156]        The defendants’ submissions concerning “double hearsay” adduced by the Director in support of the application for the Original Interim Order also related to Officer Johnson’s affidavit sworn November 5, 2007. 

[157]        As I noted when discussing the defendants’ submission concerning opinion evidence, much of Officer Johnson’s evidence was derived from his review of the police files relating to Project Halo, and the conclusions that he drew from that review. 

[158]        There is no question that Officer Johnson had no firsthand knowledge of what occurred during the Project Halo investigation.  At paras. 7-10, the officer disclosed that:

7.         The facts compiled for this affidavit were based upon criminal investigations.  I believe that the evidence gathered has been done in compliance with statute and in good faith.  The investigations were, if appropriate, forwarded to Crown Counsel for charge approval and prosecution.  Crown Counsel has withdrawn some of the criminal charges regarding the allegations that followed these investigations.

8.         Where I state that I have based my belief upon information in police reports, I believe the information stated to be true.  I rely upon police reports because they were compiled by peace officers giving, receiving, or relaying the information acting in execution of their duties as peace officers.  They were under a legal and moral obligation to relate only the truth in relation to that information.

9.         The information which I believe to be true includes, but is not limited to, police reports, data from police information networks such as the Canadian Police Information Center (“CPIC”) and the Police Information Retrieval System (“PIRS”).

10.       Unless otherwise specified, all addresses in this document are located in the City of Nanaimo, British Columbia, Canada.

[159]        While the officer’s evidence as to the Project Halo investigation obviously consists of hearsay for which he identified the sources, the defendants have submitted that Officer Johnson also impermissibly included double hearsay in his affidavit evidence by recounting as “factual” statements from both cooperative and uncooperative lay participants in the Project Halo investigation as proof that crimes had been committed by some of the defendants, including crimes allegedly committed at or near the Clubhouse. 

[160]        The defendants submitted that such double hearsay was inadmissible and should neither have been adduced by the Director nor considered by Smith J. in granting the Original Interim Order.

[161]        In support of these “double hearsay” submissions, the defendants rely upon a discussion of hearsay and double hearsay by McLachlin J. in Trus Joist (to which I earlier referred) at page 747, in which she stated:

The paragraphs of Mr. Downing’s affidavit objected to as being opinion are 9, 10 and 11. At the beginning of paragraph 9 he deposes:

“I have been engaged in selling the plaintiff's products to architects, owners, and contractors in the British Columbia construction industry for approximately 8 years.”

The statements of opinion which follow in paragraphs 9, 10 and 11 all concern matters which one would expect a person experienced in that industry to know. It is clear that the opinions expressed are based on that expertise and the observations which the deponent has made about conduct in the industry in the course of his experience in it. I conclude that the evidence contained in these paragraphs is admissible.

It is further contended that paragraphs 7 and 8 of Mr. Downing's affidavit violate R. 51(9) in that they contain hearsay twice removed, that is, that the source of information given by the deponent was stating not what he knew to be the fact from his own experience, but what he had heard from another. I accept the oft-stated view that double hearsay is not receivable in affidavits tendered on interlocutory applications: R. v. Licence Commrs. of Point Grey (1913), 18 B.C.R. 648, 5 W.W.R. 572, 14 D.L.R. 721 (C.A.), Fraser and Horn, The Conduct of Civil Litigation in British Columbia (1978) vol. 3, p. 691; McLachlin and Taylor, British Columbia Practice, 2nd ed. (1979), p. 1786…

[162]        I agree that, to the extent that Officer Johnson purported to rely upon double hearsay in order to infer, from statements of both cooperative and uncooperative lay participants in the Project Halo investigation, that crimes had been committed by some of the defendants, and then further inferred that such crimes had been committed by members of the NHAMC at or near the Clubhouse, such evidence was not only objectionable as double hearsay but also inadmissible as opinion evidence.

[163]        I do not, however, find that excising the whole of that inadmissible evidence would remove the factual underpinnings of the Original Interim Order.  Also, issues concerning the tendering, receipt and consideration of the impugned evidence should have been addressed on appeal, not by way of this application to set aside the Original Interim Order.

[164]        I will give no weight to inadmissible double hearsay evidence when considering the Director’s application for a continuing preservation order.

(e)        Conclusion.

[165]        I have determined that the defendants have failed to establish that the Original Interim Order should be discharged by reason of the state of the pleadings at the time it was granted or by reason of any material deficiencies in the evidence adduced in support of the original application.

[166]        The defendants have accordingly failed to establish that the Original Interim Order should be discharged.

[167]        It follows that the Director is not precluded from applying for a continuing preservation order pending the trial of this action.

D.  The Director’s Application for a Continuing Preservation Order

[168]        In addition to the evidence relied upon to obtain the Original Interim Order, the Director has filed new evidence in support of an application for a continuing preservation order pending the trial of this action.

[169]        Of greatest significance to the issues now to be decided is new evidence concerning the layout and contents of the Clubhouse observed during the Director’s execution of the Original Interim Order and subsequent seizure of some of those contents by either the Director or the supervising solicitor pursuant to the provisions of the Original Interim Order on November 9, 2007. 

[170]        Specifically, the new affidavit evidence filed by the Director establishes that:

(1)        The physical layout of the Clubhouse inside and out is essentially the same as it was in December of 2003 when the Project Halo search warrant was executed by the police.

(2)        Surveillance cameras are set up to allow occupants to observe the area surrounding the Clubhouse, and the main doors are heavily constructed.

(3)        There were two baseball bats hanging on the wall inside the entrance, but no other evidence of baseball equipment.

(4)        There was a bar set up in an area on the main floor which, at the time of the execution of the Original Interim Order, disclosed the existence of:

(a)        “a large sliding door commercial style refrigerator stocked with a variety of alcoholic drinks including beer and wine coolers, lined up and organized by make and type”;

(b)        two cash drawers, one of which contained more than $700 in cash and the other which contained more than $200 in cash;

(c)        notebooks on the counter that “appeared to contain records of bar tabs run up by individuals”;

(d)        a computer station set up behind the bar;

(e)        on a shelf in the bar area, two pieces of wood similar to baseball bats and a leather implement known as a “sap”. 

(5)        There was no liquor license posted or found in the Clubhouse.

(6)        There was a “show garage” on the main floor of the Clubhouse which contained three Harley Davidson Motorcycles registered in the names of the defendants Raymond Bradley Cunningham, Lawrence Dean Bergstrom and Keith Dean Jones.

[171]        Other items found and taken into possession by the Director or by the supervising solicitor included:  articles of apparel identified as “support wear,” articles of apparel identified as “colors,” three safes and their contents (including cash), computers, and various documents.  The continued possession of all these contents by either the Director or the supervising solicitor was disputed when these cross-applications were filed.

[172]        However, as I noted when recording the background to these applications, during some of the many adjournments of the hearing of these applications, the parties entered into the Minutes of Settlement (attached as Schedule 2 to this judgment) concerning most of these contents pending the trial or other disposition of this proceeding.

[173]        As a consequence of those Minutes of Settlement and the consent order entered to give effect to them, the only issues that I must now address in considering the Director’s application for a continuing preservation order under s. 8 of the Act relate to:

(1)        The Clubhouse and Lot 7 (the property upon which the Clubhouse is situated) and the contents of the bar;

(2)        Lot 8 (which is adjacent and to the rear of Lot 7), which the Director submits facilitates the access to and use of the Clubhouse; and

(3)        The three Harley Davidson Motorcycles registered in the names of the defendants Raymond Bradley Cunningham, Lawrence Dean Bergstrom and Keith Dean Jones. 

[174]        I intend to proceed to the determination of the Director’s application by considering:

(1)  the provisions of the Act that now govern the threshold test to be met by the Director when seeking to obtain an interim preservation order; and

(2)  the evidence adduced by the Director and the defendants concerning the property that remains a subject of this application

to determine whether the Director has met the burden of proving that a continuing interim preservation order should be made with respect to the property still in issue.  

[175]        If it is established that a continuing interim preservation order should issue, I will then determine what order should be made having regard to the totality of the evidence and the applicable provisions of the Act.

(1)  What is now the threshold test that must be met by the Director under the Act before an interim preservation order can be made?

[176]        I have framed this question using the word “now” because of the amendments to the Act that were made in 2008, after the Original Interim Order was granted by Smith J.

[177]        The amendments specifically relevant to the Director’s application for a continuing interim preservation order are that:

(1)        “instrument of unlawful activity”  as defined in s. 1 was amended to now provide:

“instrument of unlawful activity” means property that

(a)        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 serious bodily harm to a person, or

(b)        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;

[Emphasis added]

(2)        s. 8(5) was amended to now provide:

8(5)      Unless it is not in the interests of justice, the court must make an interim preservation order applied for under this section if the court is satisfied that one or both of the following constitute a serious question to be tried:

(a) whether the whole or the portion of the interest in property that is the basis of the application under subsection (1) is proceeds of unlawful activity;

(b) whether the property that is the basis of the application under subsection (2) is an instrument of unlawful activity.

[Emphasis added]

(3)        s. 15 was amended to now provide:

15 (1)   The director may commence proceedings under this Act by originating application or action.

(2)        All proceedings under Parts 2 and 3 are in rem and not in personam

[Emphasis added]

[178]        The amendments to s. 8(5) are of the greatest significance to the determination of what threshold test must now be met by the Director when applying for an interim preservation order.

[179]        The previous threshold test of a “reasonable grounds to believe,” as discussed by Smith J. in the granting of the Original Interim Order as well as in Tse and Peterson was, at least to some extent, based upon criminal law search and seizure concepts, notwithstanding that the ultimate standard of proof under the Act is the civil law standard of proof on a balance of probabilities.

[180]        The new threshold test in s. 8(5) requiring the Director establish a “serious question to be tried” is obviously derived from the civil law test for the granting of interlocutory injunctive relief, that being the first prong of the test that must be met by an applicant before the Court will be required to determine whether the balance of convenience favours the granting of the relief sought.  

[181]        As to that first prong analysis, in RJR MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, 111 D.L.R. (4th) 385 [RJR] at 337-338, Justices Cory and Sopinka observed:

What then are the indicators of “a serious question to be tried”?  There are no specific requirements which must be met in order to satisfy this test.  The threshold is a low one.  The judge on the application must make a preliminary assessment of the merits of the case. …

Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial.  A prolonged examination of the merits is generally neither necessary nor desirable.

[182]        I see no reason why the phrase “a serious question to be tried” in s. 8(5) of the Act should not be interpreted in a manner that is consistent with the decision of the Supreme Court of Canada in RJR.  That is so because the relief available to the Director under the Act is in the nature of injunctive relief relating to the preservation of property pending the determination of the merits of a claim at trial.

[183]        In both Tse and Peterson, this Court determined that the previous threshold test of a “reasonable grounds to believe” was a “relatively low” one.

[184]        I have concluded that the deliberate change from criminal law concepts to civil law ones in the present iteration of s. 8(5) of the Act must be interpreted as lowering the threshold test that must now be met by the Director when applying for an interim preservation order under the Act.  What was formerly a “relatively low” test is now even lower.

(2)  Has the Director met the burden of establishing that a continuing interim preservation order should be made with respect to property still in issue?

[185]        I will address this question by separately addressing each of the remaining properties for which a decision is necessary.

(a)        The Clubhouse and Lot 7

[186]        The defendants filed affidavits from numerous individuals who are not members of either the NHAMC or the HAMC, all deposing that they previously regularly attended at the Clubhouse and that the alleged illegal bar there either provided gratuitous alcohol to them or was funded by donation.

[187]        These affiants also all deposed that they witnessed no narcotic use, other criminal activity or the planning of illegal activity during their attendances at the Clubhouse and did not feel intimidated or threatened while there.  They further deposed that they believed the security measures employed at the Clubhouse were for the protection of expensive motorcycles in an area prone to crime and drug use.

[188]        That evidence must be considered in light of the evidence adduced by the Director concerning alleged unlawful activity at the Clubhouse.

[189]        I will not comment at any length upon the expert evidence adduced by the Director concerning the criminal activities or purposes of the HAMC or NHAMC at this preliminary stage of these proceedings.  Detailed consideration of that evidence should await the trial of this action.  For the purposes of this application I am, however, satisfied that the expert evidence of Officers Loader and Richards raises serious questions to be tried, not only with respect to the past use of the Clubhouse to facilitate crime, but also concerning the likelihood of its future use for that purpose.

[190]        In addition, the evidence of an alleged assault having occurred in the Clubhouse in 2002, as well as the evidence of the existence of unregistered firearms in the Clubhouse during the 2003 Project Halo investigation, which has not been refuted, must be read in the context of the expert evidence adduced by the Director as raising serious questions to be tried as to whether the Clubhouse was in the past used as an instrument of unlawful activity.  Although dated, the allegations and evidence remain relevant to the issues that must be determined at the trial of this proceeding.

[191]        Also, and notwithstanding the affidavit evidence filed by the defendants, the evidence adduced by the Director concerning the 2003 Project Halo investigation, coupled with the evidence from the execution of the Original Interim Order in November of 2007, raise compelling inferences about the continued use of the Clubhouse as an illegal, unlicensed “booze can” for the past four years.

[192]        In result, I find that the evidence adduced by the Director establishes a serious question to be tried as to whether the Clubhouse and Lot 7, including the contents of the bar in the Clubhouse, are instruments of unlawful activity.

(b)        Lot 8

[193]        Lot 8 is adjacent and to the rear of Lot 7, and the Director submits that it facilitates access to and the use of the Clubhouse.

[194]        As they relate to an allegation of facilitating access to the Clubhouse, the Director’s submissions are not seriously contested by the defendants.  Further, Lot 8 is a vacant lot and historically Lots 7 and 8 have been treated as one by their owners, notwithstanding their different legal descriptions.

[195]        I find that the Director has established a serious question to be tried as to whether Lot 8 facilitates access to and use of the Clubhouse and thus for unlawful purposes.

(c)        The Three Harley Davidson Motorcycles

[196]        The Director filed new opinion evidence from Officers Loader and Richards to support his contention that the three motorcycles should be made the subject of continuing preservation orders as “instruments of unlawful activity” under the Act.

[197]        Concerning the role of motorcycles in the HAMC, Detective Constable Loader deposed in paras. 10-13 of an affidavit sworn January 4, 2008, that:

10.       In addition to the establishment of a clubhouse in a given area, members of the HA will also “mark their turf” and announce their presence to rival gangs and other members of the criminal community by donning their HA colours and riding their motorcycles from location to location.  These locations are generally those that are liquor licenced and known for criminal activity such as drug trafficking.  The purpose of attending these locations on motorcycles while wearing colours is simply to announce to everyone present that the HA are in the community and that they either have or will be taking control over criminal activity taking place at that location.  In such instances, the wearing of colours and the use of motorcycles is used as an intimidation tactic.

11.       Over the past six years, I have witnessed the HA organize and participate in a number of “bike runs” and “bike events”.  Many HA members, prospects and hang-arounds have declared themselves and the organization as a group of biker enthusiasts who enjoy riding motorcycles and gathering in various social settings.  Although this may be true to some degree, I have spoken to a number of HA associated persons who have advised me that one of the main purposes for attending events and riding motorcycles in large groups while wearing “colours” is to announce their presence within the community.  This type of announcement is generally directed towards rival gangs and other groups or individuals engaged in criminal activity.  Again, this type of intimidating behaviour is indicative of “marking ones turf” and is a clear indicator that colours and motorcycles are often used by HA members, prospects and hang-arounds to promote and/or facilitate the criminal activities of individual members and/or the organization as a whole.

12.       I have spoken with Detective Gregory Johnson of the Central Saanich Police Service and he has advised me that it is has been a common practice of the HA-Nanaimo chapter to “mark their turf” by travelling from bar to bar while wearing their full regalia (colours).  Detective Johnson further advised me that this is often done upon conclusion of scheduled weekly “church meetings”.

13.       Over the past six years, I have been involved in several investigations in which HA members, prospects and hang-arounds have attempted to intimidate members of rival gangs, justice participants (as defined in Section 2 of the Criminal Code), persons involved in the criminal community and members of the general public by attending specific locations while wearing colours and riding motorcycles.  It is my opinion that HA members, prospects and hang-arounds are mandated to own a Harley Davidson motorcycle in order to contribute to the intimidating force that is often associated to the HA.  I further believe that this intimidating force is required and often utilized to gain territorial control over criminal activity within specific regions.  As such, it can be concluded that a specific type of motorcycle mandated by the HA organization itself can be considered a “tool of the trade” and one that lends some degree of assistance to the facilitation of various criminal activities.

Also, Officer Andrew Richards deposed at paras. 3 and 4 of an affidavit sworn July 11, 2008, that:

3.         As an organized criminal group, the Hells Angels in British Columbia rely on “name-brand recognition” to foster their intimidating reputation, which in turn can serve to enhance their ability to conduct criminal activities.  The “patch” which includes the trademarked death head logo, is typically the most visible example of this as it is openly worn by members of the club and is widely recognized as the symbol of the club.  In the criminal underworld and in some segments of our society, the death head symbol of the Hells Angels identifies the bearer as a member of an international organized crime group and denotes a certain level of criminal sophistication and association to a group known to use violence, including murder, to attain its goals.

4.         Many members of the Hells Angels have stylized versions of the death-head, or the words “Hells Angels” painted on their motorcycles.  It is my belief that these visible reproductions of images indelibly linked to the Hells Angels function as an extension of the patch.  They serve to identify the owner/operator of the motorcycle as a member (or close associate) of the Hells Angels and act as another medium by which club members visibly identify themselves, arguably (and I suggest logically) for the same criminal purposes as the patch.

[198]        The defendants rely on affidavits from non-members of the NHAMC to refute the Director’s allegations that the three Harley Davidson motorcycles are instruments of unlawful activity.  Some of the affiants deposed that they only know the NHAMC as a “group of hard workers and life-long motorcycle enthusiasts” or a “motorcycle club and a group of friends who enjoy getting together, socializing, and going on rides together.”  Many others deposed that the members of the NHAMC are good citizens and that they had never seen their motorcycles used for anything other than pleasure purposes.

[199]        As noted above, when Smith J. granted the Original Interim Order, an “instrument of unlawful activity” was defined by s. 1 of the Act as:

… property that

(a) has been used to engage in unlawful activity that, in turn,

(i) resulted in the acquisition of property or an interest in property, or

(ii) caused serious bodily harm to a person, or

(b) is likely to be used to engage in unlawful activity that is intended to

(i) result in the acquisition of property or an interest in property, or

(ii) cause serious bodily harm to a person.

[200]        On April 18, 2008 that definition was amended so that it now reads:

“instrument of unlawful activity” means property that

(a) 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 serious bodily harm to a person, or

(b) 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;

[Emphasis added]

[201]        Thus, a definition that was once broad is now made even broader by introducing the concept of foresight of consequences as a means of linking alleged past unlawful acts to the prohibited results, rather than requiring proof of actual causation.

[202]        However, in respect of these three motorcycles, there is no evidence that any of the motorcycles were ever used to engage in any unlawful activity and I am not prepared to find that the generic opinion evidence adduced by the Director is sufficient to establish a “serious question to be tried” with respect to any alleged past unlawful use of these specific motorcycles when, if such evidence exists, the Director had more than six months to obtain and adduce it.

[203]        That does not, however, end the inquiry since I must also determine whether the Director has established a “serious question to be tried” concerning the prospective use of these three motorcycles as “instruments of unlawful activity.”

[204]        Of specific import to that issue is the present inclusion of the word “may” in place of the phrase “is intended to” in clause (b) of the amended definition of “instrument of unlawful activity” in s. 1 of the Act.

[205]        Because of those amendments the Director is now only required to raise a serious question to be tried as to whether the three motorcycles are, in future, “likely to be used to engage in unlawful activity” that “may” result in the acquisition of property or an interest in property or cause serious bodily harm to a person.  The Director is no longer required to establish the actual intention of the owners of those motorcycles is either to acquire property or cause harm.

[206]        Notwithstanding that very low threshold test, I have, however, concluded that the evidence filed on this application does not establish a “serious question to be tried” concerning the prospective use of these three specific motorcycles as “instruments of unlawful activity” under the Act.

[207]        I reach that conclusion because I cannot, on the basis of the evidence adduced, find anything that differentiates these three motorcycles from any other Harley Davidson motorcycles owned by any other members of the HAMC or the NHAMC in British Columbia.  The evidence adduced by the Director is simply too lacking in specificity to mandate the seizure of these three motorcycles.

[208]        If I am wrong in that analysis, I am also satisfied that, given the wholly generic evidence adduced by the Director, it would not be in the “interests of justice” to allow the continued seizure of these three motorcycles.

[209]        I will more fully discuss the ambit of the phrase “interests of justice” in the next section of this judgment when considering issues relating to a continuing interim order in relation to the Clubhouse.  However, for the purpose of considering that phrase in relation to these three motorcycles, I note that:

(1)        these three motorcycles only became the subject of the Original Interim Order by happenstance because they were in the Clubhouse when the Original Interim Order was executed; and

(2)        the Director has not sought interim preservation orders concerning motorcycles owned by other members of the NHAMC, even though the evidence which the Director relies upon would also apply to all of those motorcycles.

[210]        In those circumstances, an order continuing the seizure of these specific motorcycles would be arbitrary.  In my opinion, such arbitrary law enforcement would not be in the interests of justice.

[211]        I accordingly direct that the three motorcycles be released to their owners.

(3)  What continuing preservation order should be made concerning the Clubhouse, Lot 7 and Lot 8?

[212]        Given that the Director has established a serious question to be tried with respect to the Clubhouse as well as Lots 7 and 8, the only remaining issue to be resolved is whether it would not be in the “interests of justice” to make the order sought by the Director concerning the continued preservation of those properties pending trial.

[213]        As far as I am aware, no decision under the Act has yet either interpreted the phrase “unless it is not in the interests of justice” in s. 8(5) of the Act or considered its application in relation to the otherwise mandatory provisions of that section.

[214]        The Director submitted that the phrase “interests of justice” in s. 8(5) of the Act should be interpreted to include the public’s interest in the administration of justice, and other broad societal interests, in addition to the interests of the parties to the litigation or others who may be affected by it and the orders sought.

[215]        In making those submissions, counsel for the Director specifically relied upon the decisions of our Court of Appeal in Haldorson v. Coquitlam (City), 2000 BCCA 672, 149 B.C.A.C. 197 [Haldorson] at para. 5, and in R. v. Butler, 2006 BCCA 476, 231 B.C.A.C. 303 [Butler].

[216]        Haldorson involved an application to reinstate an appeal that would otherwise have been dismissed due to delay.  The Court determined that the consideration of the “interests of justice” in that context should include the public interest in ensuring finality in the litigation process.

[217]        Butler was concerned with an application for the appointment of counsel to conduct his appeal under s. 684(1) of the Code that provides:

684. (1) A court of appeal or a judge of that court may, at any time, assign counsel to act on behalf of an accused who is a party to an appeal or to proceedings preliminary or incidental to an appeal where, in the opinion of the court or judge, it appears desirable in the interests of justice that the accused should have legal assistance and where it appears that the accused has not sufficient means to obtain that assistance.

[218]        In allowing the accused’s application, Rowles J.A. observed, at para. 5:

[5]  In Re Regina and Bernardo (1997), 105 O.A.C. 244, 121 C.C.C. (3d) 123, Doherty J.A., for the Court, made the following useful observations about the way in which phrase “interests of justice” found in s. 684(1) of the Criminal Code may be interpreted (at 131):

16.  The phrase "the interests of justice" is used throughout the Criminal Code.  It takes its meaning from the context in which it is used and signals the existence of a judicial discretion to be exercised on a case-by-case basis.  The interests of justice encompass broad based societal concerns and the more specific interests of a particular accused. 

[My emphasis]

[219]        I agree with the Director’s submission that the consideration of the “interests of justice” under s. 8(5) of the Act should include more than the interests of the parties to the litigation.

[220]        Although Haldorson and Butler were decided in very different contexts, both establish that a consideration of the interests of justice will usually require the exercise of judicial discretion not only in assessing the competing interests of the parties, but also in assessing and balancing any identifiable societal interests in the matter under consideration.

[221]        The interests of the Director in the continued seizure of the Clubhouse as well as Lots 7 and 8 are obvious.  The Director seeks to preserve the property in its present state pending the trial of his claims under the Act, so that if ultimately successful, the property will be available for forfeiture without diminution of value.

[222]        The defendants’ interests in precluding the continued seizure of the Clubhouse are also obvious.  They have rights of ownership which have existed for many years, have already been denied any use of their property for more than a year, and will continue to suffer that loss of use for a further considerable period of time before this case will finally be resolved at trial.  If they are successful at trial in resisting the Director’s assertions, they will receive no recompense for the loss of the use of their property.

[223]        The societal interests that are engaged by this dispute are also fairly easily identified.  The right to own property and the freedom to enjoy it without state interference is one of the hallmarks of a free and democratic society.  On the other hand, no property owner has the right to use his, her or its property for illegal purposes and cannot do so with impunity.

[224]        If this case was not concerned with the alleged prospective use of the Clubhouse as an instrument of unlawful activity I would have been inclined to find that the interests of justice would not require the granting of a continuing interim preservation order on terms similar to those in the Original Interim Order, which effectively allowed the complete seizure of the Clubhouse and its contents by either the Director or the supervising solicitor.  

[225]        The alleged unlawful activity upon which the Director relied to obtain the Original Interim Order occurred many years ago and it is, in my view, significant that the prosecution of the Project Halo investigation that formed the primary basis for the Director’s without notice application was eventually stayed.  Further, the existence of the alleged “booze can” operation was known to the authorities for many years and could have been, but never was, addressed through far less invasive remedies available to the Province of British Columbia under the Liquor Control and Licensing Act, R.S.B.C. 1996, c. 268.

[226]        I also agree with the submissions of counsel for the defendants that s. 8(3) of the Act should be considered when determining whether the nature or scope of an interim preservation order sought by the Director is disproportionate to the ultimate relief to which he may be entitled after a trial.

[227]        That is so because, as noted above, s. 8(3) provides:

8(3) On application under subsection (1) or (2), the court may make one or more of the following orders for preservation of property or the whole or a portion of an interest in property:

(a)  an order restraining the disposition or transmission of the property or the whole or the portion of the interest in property;

(b)  an order for the possession, delivery to the director or safekeeping of property;

(c)  an order appointing a person to act as a receiver manager for property or the whole or a portion of an interest in property;

(d)  an order for the disposition of the property or the whole or the portion of the interest in property in order to better preserve the value of the property or the whole or the portion of the interest in property;

(e)  for the purpose of securing performance of an obligation imposed by an order made under Part 2 of this Act or under this Part, an order granting to the director a lien for an amount set by the court on property or the whole or the portion of an interest in property;

(f)  any other order that the court considers just for the preservation of

(i) the property or the whole or the portion of an interest in the property,

(ii) the value of the property or of the whole or the portion of an interest in the property, or

(iii) the rights of creditors and other interest holders;

(g)  any other order that the court considers appropriate in the circumstance.

[228]        In my view, it would be wrong to read s. 8(5) of the Act as mandating the Court to make the specific order sought by the Director if a serious issue to be tried is established with respect to particular property.  To do so (as urged by the Director) would ignore the panoply of options specifically enumerated and made available to the Court under s. 8(3) to preserve the property for purposes proportionate to the relief sought and the extent of the unlawful acts alleged.

[229]        I accordingly conclude that the Court’s consideration of the interests of justice in s. 8(5) should include an assessment of the type and scope of preservation order that is appropriate under s. 8(3), having regard to the relief that may ultimately be available to the Director.

[230]        If, for example, the only issue that remained for consideration in this case was whether the Clubhouse was being used to operate an illegal “booze can,” I am satisfied that a preservation order denying any use of the Clubhouse by the defendants whatsoever pending trial would be excessive and thus not in the interests of justice.  An order restraining the defendants from selling liquor without a license, coupled with an order restraining the disposition of Lots 7 and 8 and requiring the defendants to keep the Clubhouse insured for its full value pending trial, would be sufficient in those circumstances to protect the Director’s legitimate interests.

[231]        An alleged illegal bar operation is not, however, the only matter that must eventually be addressed at the trial of this proceeding.  

[232]        The Director has raised very serious issues to be tried about alleged continuing high-level unlawful activity emanating from or otherwise involving the use of the Clubhouse by the HAMC and the NHAMC.

[233]        Although the Act is relatively new legislation, there has been some judicial consideration of its purposes and I am satisfied that those purposes must be considered as part of the public interest component in determining whether the interests of justice require the continued seizure of the Clubhouse pending trial.

[234]        In Ontario (Attorney General) v. Chatterjee, 2007 ONCA 406, 282 D.L.R. (4th) 298 [Chatterjee], the Ontario Court of Appeal considered the purposes of the Remedies for Organized Crime and Other Unlawful Activities Act, 2001, S.O. 2001, c. 28 [the Ontario Civil Remedies Act], in the context of a constitutional challenge to the validity of that legislation.

[235]        The Ontario Civil Remedies Act is substantively very similar to the Act.  As noted by the Court in Chatterjee at para. 18:

[18]      … the Ontario Civil Remedies Act [CRA]falls within a larger national and international framework of civil forfeiture schemes that operates in addition to conviction-based confiscation laws.  Manitoba, Saskatchewan, British Columbia and Alberta have all recently enacted civil forfeiture schemes that are similar to Ontario’s (Alberta’s has not yet been proclaimed in force), and Quebec recently placed a civil forfeiture bill before the National Assembly.  As well, the United Kingdom, Ireland, South Africa, the Commonwealth of Australia and five of the Australian states have recently enacted non-conviction-based civil forfeiture statutes.  Most of these jurisdictions already had in place conviction-based regimes as part of their criminal law.

[236]        At paras. 20 and 21 the Court went on to consider the purposes of the Ontario Civil Remedies Act and held:

[20]  The application judge correctly noted that the first step in the assessment of a law’s validity under ss. 91 and 92 of the Constitution Act, 1867 requires a determination of the true purpose or “pith and substance” of the law.  The application judge examined the purpose clause (Part I) in the CRA, the operative provisions of the CRA and regulations, as well as the extrinsic material surrounding its passage.  The application judge rejected the appellant’s submission that the purpose of the CRA is to punish offenders by seizing and forfeiting their property.  He found that the true purpose of the legislation is, as set out in Part I of the CRA, to require the disgorgement of financial gains obtained through unlawful activities, to compensate victims of crime, and to suppress the conditions that lead to unlawful activities by removing the financial incentives for engaging in such behaviour.

[21]  We agree with the application judge’s assessment of the pith and substance of the CRA….

[237]        At para. 30 the Court further observed:

[30]  It is well established that the suppression of conditions likely to favour the commission of crimes falls within provincial competence…

[238]        In British Columbia (Director of Civil Forfeiture) v. Cheung, 2008 BCSC 824 [Cheung], Metzger J. adopted that reasoning by the Ontario Court of Appeal when assessing the purposes of the Act.  In doing so, he also relied upon Smith J.’s without notice decision in this case granting the Original Interim Order.  At para. 11 of Cheung, Metzger J. stated:

[11]  The purpose of [the Act] is the suppression of conditions likely to favour commission of crimes and to impose civil consequences for property that is found to have been acquired as a result of, or to have been used in the course of, unlawful activity by making such property the subject of a forfeiture order to the government and to provide compensation for victims of unlawful activity:  Ontario (Attorney General) v. Chatterjee (2007), 282 D.L.R. (Ont. C.A.), at paras. 18, 19 and 30; British Columbia (Director of Civil Forfeiture) v. Angel Acres Recreation and Festival Property Ltd., [2007] B.C.J. No. 2475, at para. 19.

[239]        Based upon Chatterjee and Cheung, the present state of the law in British Columbia is that one of the purposes of the Act is the suppression of conditions likely to favour the commission of crimes.

[240]        That purpose must, in my view, be considered when determining whether or not it would not be in the interests of justice to make the continuing preservation order sought by the Director with respect to the Clubhouse and Lots 7 and 8 pending the trial of the Director’s claims.

[241]        The Director has adduced a significant body of evidence in support of the assertion that one of the reasons for the existence of the HAMC and the NHAMC is the pursuit of profit from crime, and that the Clubhouse is important to their ability to do so.  Also, while Feurst J.’s decision in Lindsay does not conclusively establish that the HAMC is a criminal organization in Canada, it does establish that in a given case the evidence adduced may be capable of so proving beyond a reasonable doubt.

[242]        The evidence filed by the defendants also establishes that the legitimate use and enjoyment of the Clubhouse that would be denied to them by a continuing interim preservation order in terms similar to the Original Interim Order is as a place to enjoy social gatherings, play pool and store some motorcycles from time to time.

[243]        My consideration of the totality of the evidence and my balancing of the interests of the parties leads me to conclude that the societal interest in the suppression of conditions likely to favour the commission of crime weighs heavily in favour of the continuing interim preservation order sought by the Director.

[244]        While I considered the possibility that a restraining order that would prohibit the transfer or encumbrance of the Clubhouse and Lots 7 and 8 might appropriately address the preservation of the value of these properties pending trial, I am satisfied that such an order would not address the important societal interests identified in Chatterjee and Cheung.

[245]        I have accordingly determined that the interests of justice do require that an order that is largely in the terms sought by the Director for his continued possession of the Clubhouse and its contents (other than those covered by previous agreements) should be made.

[246]        I recognize that the order sought is a broad one that precludes any use or enjoyment of the Clubhouse or its contents by the defendants.  I am, however, not only satisfied that a less restrictive order would not adequately address the public’s interest in the suppression of conditions likely to favour the commission of crime, but also that the loss of enjoyment and use of the Clubhouse for legitimate purposes should be subordinated to the purposes identified in Chatterjee and Cheung.

[247]        I do, however, note that the Ontario Court of Appeal’s constitutional decision in Chatterjee has been appealed to the Supreme Court of Canada, which has recently heard argument and reserved its judgment in the case. 

[248]        Given the importance of the public interest component identified in Chatterjee and Cheung that I have relied upon in determining that a continuing interim preservation order substantially in those terms sought by the Director should be made, it is obvious that the Supreme Court of Canada’s judgment in Chatterjee has the potential to significantly alter the balances of interest upon which my conclusions have been based.

[249]        I have accordingly determined to make a continuing interim preservation order in the terms outlined below with the intention that it will remain in effect until the trial of this proceeding, but with liberty to the parties to apply to vary the order after the Supreme Court of Canada’s judgment in the Chatterjee appeal is delivered.

[250]        Subject to possible variation, the continuing interim preservation order pending the trial of this action will be as follows:

(1)        The plaintiff may retain possession of, restrict entry to and from, preserve and manage the land and structures situated at 805 Victoria Road, Nanaimo, British Columbia and that property having a legal description of PID 006-637-167, Lot 8, Block 5, Section 1, Nanaimo District Plan 2009 (collectively the “Property”) and the contents of the Property (the “Remaining Contents”) that was taken into possession by the plaintiff or the independent supervising solicitor pursuant to the Original Interim Order WITH THE EXCEPTION OF:

(a) those contents that are the subject of the Minutes of Settlement entered into between the parties attached as Schedule 2; and,

(b) the three Harley Davidson motorcycles registered in the names of the defendants Raymond Bradley Cunningham, Lawrence Dean Bergstrom and Keith Dean Jones

in accordance with the terms of this order or until the further order of this Court.

(2)        While the plaintiff maintains possession of the Property, no person shall enter or remain on the Property without the express permission of the plaintiff or his solicitor or as otherwise set out in this order.

(3)        No person shall in any way alter, remove or destroy, or permit the alteration, removal or destruction of anything affixed to, attached to or contained in the Property, except as provided by the order of this Court.

(4)        All persons are hereby prohibited from disposing of, or otherwise dealing with or encumbering any interest in the Property or the Remaining Contents, in any manner whatsoever, except as provided in this order, or as may be further ordered by this Court.

(5)        The plaintiff may do or direct the completion of anything he considers advisable for the ongoing management or operation of the Property, including but not limited to:

(a)        Providing security at the Property at all times to prevent unlawful activities or harm to any member of the public, including but not limited to placing security personnel in the Property;

(b)        Assuming control of any security systems in place at the Property and making any changes necessary to facilitate the preservation of the Property and the Remaining Contents;

(c)        Securing movable items of the Remaining Contents at alternate locations;

(d)        Altering any part of the Property to ensure compliance with environmental, industrial, labour or property standards and by-laws of any kind;

(e)        Paying taxes, utility charges, insurance or other charges associated with the management of the Property;

(f)         Conducting building and safety inspections;

(g)        Making repairs and improvements to the Property which are immediately necessary to maintain its economic value.

(6)        In the event of a claim pursuant to a policy of insurance in respect of the Property or the Remaining Contents, the registered owners shall concurrently give notice of such claim to the insurer and the plaintiff, and in the event of a payment made in respect of a claim pursuant to a policy of insurance in respect of the relevant property, such payment be paid into the British Columbia Supreme Court to stand in the place of the Property as if it were the Property or the Remaining Property as the case may be, pending further order of the Court.

(7)        A copy of this order shall be filed and registered in the Land Title office for the Land Title District of British Columbia in which the Property is located, against the title to the Property.

[251]        The parties are also at liberty to speak to any further specific terms that may be necessary to give effect to this continuing interim preservation order.

“Davies J.”

SCHEDULE 1

TERMS OF THE ORIGINAL INTERIM ORDER MADE NOVEMBER 7, 2007

THIS COURT ORDERS that

For Possession and Preservation of the Property

1.         The Plaintiff may immediately take possession of, restrict entry to and from, preserve and manage the land and structures situated at 805 Victoria Road, Nanaimo, British Columbia (the “Property”) and the contents of the Property (the “Contents”) in accordance with the terms of this order for a period no more than 30 days from the date the Plaintiff takes possession of the Property, or until the further order of this court.

2.         The execution of this order may proceed:

a.         despite the absence of any one or more of the Defendants from the Property at the time of the service of the order; and

b.         if no person appearing to be in control of the Property is present at the time the order is executed.

3.         While the Plaintiff maintains possession of the Property, no person shall enter or remain on the Property without the express permission of the Plaintiff or his solicitor or as otherwise set out in this Order.

4.         No person shall in any way alter, remove or destroy, or permit the alteration, removal or destruction of anything affixed to, attached to or contained in the Property, except as provided by the Order of this Court.

5.         All persons are hereby prohibited from disposing of, or otherwise dealing with any interest in the Property or the Contents, in any manner whatsoever, except as provided in this order, or as may be further ordered by this Court.

6.         The Plaintiff may do or direct the completion of anything he considers advisable for the ongoing management or operation of the property including but not limited to:

a.         Providing security at the Property at all times to prevent unlawful activities or harm to any member of the public, including but not limited to placing security personnel in the Property;

b.         Assuming control of any security systems in place at the Property and make any changes necessary to facilitate the preservation of the Property and Contents;

c.         Securing movable items of the Contents at alternate locations;

d.         Altering any part of the Property to ensure compliance with environmental, industrial, labour or property standards and by-laws of any kind;

e.         Paying taxes, utility charges, insurance or other charges associated with the management of the Property;

f.          Conducting building and safety inspections;

g.         Managing or redirecting deliveries made to the Property; and

h.         Making repairs and improvements to the Property which are immediately necessary to maintain its economic value.

7.         Except as provided in this order, no mortgage, hypothecation, charge, transfer or conveyance of any interest or any other encumbrance whatsoever, or agreement to sell, option, mortgage, hypothecate, charge, transfer, convey or encumber, shall be entered into in respect of, or be registered against the Property or the Contents and further, any such mortgage, hypothecation, charge, transfer or conveyance of any interest or any other encumbrance whatsoever, or agreement to sell, option, mortgage, hypothecate, charge, transfer, convey or encumber shall be deemed to be null, void and of no effect.

8.         No extension or increase of indebtedness or agreement to extend or increase indebtedness pursuant to any existing mortgage, hypothecation, charge, transfer or any other encumbrance whatsoever shall be made in respect of the Property or the Contents and further, any such extension or increase of indebtedness or agreement to extend or increase indebtedness pursuant to any existing mortgage, hypothecation, charge, transfer or any other encumbrance made in respect of the Property shall be deemed to be null, void and of no effect.

9.         No judgment, charge or writ of execution issued or filed on or after the date of this order shall attach, bind or be registered against the Property or the Contents and any such judgment, charge or writ of execution purporting to attach, bind or be registered against the Property or the Contents is deemed to be null, void and of no effect.

10.       In the event of a claim pursuant to a policy of insurance in respect of the Property or the Contents, the Registered Owners shall concurrently give notice of such claim to the insurer and the Plaintiff, and in the event of a payment made in respect of a claim pursuant to a policy of insurance in respect of the relevant property, such payment shall be applied firstly to the payout or discharge of the Mortgage and the remainder to be paid into the British Columbia Supreme Court to stand in the place of the Property as if it were the Property, pending assignment in this action pursuant to the Civil Forfeiture Act (“CFA”), or further order of the Court.

11.       Upon execution of this order, a copy of this order may be filed and registered in the Land Title office for the Land Title District of British Columbia in which the Property is located, as against the title to the Property.

12.       The Property may not be sold without leave of this court or the written consent of all parties.

13.       If the Property is sold during the course of this Order, the proceeds of sale less the amount in respect of outstanding principal, interest and penalties payable to discharge the Mortgage, any taxes due and owing at the time of sale and the reasonable realty or legal fees directly related to the sale of the property, which is defined as the net proceeds, must be paid into the British Columbia Supreme Court and stand in the place of the Property: and further that the net proceeds are restrained to the same extent as the Property, and are subject to forfeiture pursuant to the Civil Forfeiture Act as if the net proceeds are that Property.

Police Enforcement

14.       Peace officers given notice of this Order are authorized to assist the Plaintiff in ensuring compliance with this Order in any way reasonably necessary to protect the safety of individuals and the public and to preserve the Property, including but not limited to by providing a forcible entry into the Property and the removal from the Property of any persons not authorized to be there by this Order.

Inspection of Premises and Contents

15.       Nicholas Mosky of Waddell Raponi Law firm, Victoria, BC (herein after referred to as an “Independent Supervising Solicitor”) be appointed to supervise the execution of this order, and that John Waddell, Q.C. be appointed as his delegate.  The delegate of the Independent Supervising Solicitor may, with the permission of the Independent Supervising Solicitor, do anything that is assigned to the Independent Supervising Solicitor in this order.

16.       Counsel of record for the Plaintiff who are employed with the Legal Services Branch, Ministry of Attorney General (hereinafter the “Plaintiff’s Solicitor”) be designated as the Plaintiff’s Solicitor.

17.       Upon execution of this order, the Plaintiff’s Solicitor, or his delegate, shall make his best effort to cause a filed copy of the Writ of Summons and Statement of Claim, this Order and copies of the Notice of Motion and all Affidavits filed herein to be served upon the Defendants who are present at the Property, if any (an “attending Defendant”), or the person appearing to be in control of the Property.

18.       After the time of entry to the Property and after vacation from the Property of all occupants, the Independent Supervising Solicitor, as an officer of the Court, will identify himself and his relationship to the order to any of the Defendants present at that time or at any time thereafter or anyone purporting to act on their behalf a copy of this Order and will, as necessary:

a.         Explain the meaning and effect of this Order in plain language;

b.         Advise the Defendants or anyone purporting to act on their behalf that they have the right to obtain legal advice and that if they so choose to seek legal advice, no entry into the Property by the Plaintiff would commence until a period of time not to exceed two (2) hours has elapsed (the “Waiting Period”);

c.         Advise the Defendants or anyone purporting to act on their behalf that they have the right to claim solicitor-client privilege and a privilege against self incrimination against any items that are seized;

d.         Advise the Defendants or anyone purporting to act on their behalf that if they disobey this order that they may be guilty of contempt of Court and be sent to prison or fined or both, and,

e.         Advise Defendants or anyone purporting to act on their behalf that they have the right to apply to the Court to set aside the Order upon 2 days notice to the Plaintiff.

19.       During the Waiting Period the Independent Supervising Solicitor may enter the Property alone or with any of the following:

a.         a Defendant, the Defendant’s solicitor, or the person appearing to be in control of the Property, for the purpose of accepting from that person documents or materials over which the person wishes to assert privilege;

b.         any persons the Independent Supervising Solicitor considers necessary for safety and security purposes, including police officers; and/or

c.         a person assigned as a videographer or photographer to make a record of the condition of the Property at the time of his entry.

20.       If the Independent Supervising Solicitor enters the Property during the Waiting Period, he may take control of documents over which the Defendants or anyone purporting to act on their behalf wishes to assert a claim of solicitor-client privilege.

21.       If the attending Defendants or a person appearing to be in control of the Property refuses or is unable to open the locks on any filing cabinets or safes located inside the Property, the Independent Supervising Solicitor or the Plaintiff may engage and direct a locksmith to unlock or open the locks, and may, if necessary, remove the locked item from the Property to have it opened.

22.       After the Waiting Period has passed, the Independent Supervising Solicitor shall allow:

a.         an Independent Supervising Solicitor and/or delegate;

b.         the Plaintiff and the Plaintiff’s Solicitor; and,

c.         a Videographer or photographer as designated by the Plaintiff

to enter the Property so that the Plaintiff’s Solicitor and/or his delegate can search for, inspect, list, photograph, record by video, photocopy or make such other copies as are reasonable of all documents and articles which may be subject to forfeiture pursuant to the CFA or which the Plaintiff’s Solicitor or his delegate believes in good faith to be subject to forfeiture pursuant to the CFA.  In order to preserve or copy any of the contents of the Property which may be subject to forfeiture, the Plaintiff may remove any item from the Property until further Order of this Court.

23.       The Independent Supervising Solicitor shall remove and secure in the possession of his law firm

a.         any material that appears to be subject to solicitor-client privilege; and

b.         any computers located on the Property,

until further Order of this Court or until the presentation of his report to the Court.  The Independent Supervising Solicitor should provide a receipt to the Defendants of all materials and computers taken from the Property.

24.       After the Independent Supervising Solicitor is satisfied that he has caused all materials that appear to be the subject to solicitor-client privilege to be removed from the Property, he shall turn control of the Property over to the Plaintiff and his solicitor.

25.       The Independent Supervising Solicitor shall review and make copies of the materials he takes into his possession for privilege, and within 14 days of the carrying out of this Order, prepare and deliver to the parties a list of those materials wherein the nature of the documents is described in a manner that, without revealing information that is or could potentially be privileged, will enable the parties to assess the validity of the claim of privilege.

26.       The Independent Supervising Solicitor must prepare a report on the execution of this order which is to be filed with the court within 21 days following the execution of this order.

27.       The Independent Supervising Solicitor is granted leave to apply for directions from the Court.

28.       If the parties believe that any of the documents listed by the Independent Supervising Solicitor are not privileged, they may apply to the court to determine the status of those documents.

Prohibited Actions

29.       Without leave of the Court, no person may commence legal proceedings for things occurring under the authority of this order against:

a.         The Independent Supervising Solicitor, his delegates or his law firm;

b.         Any tradesperson, workman or other party hired to put into effect any term of this order; or

c.         Any police officer or their employer for actions undertaken in the lawful execution of their duties while assisting in the execution of this order.

30.       If an action is approved by the Court against the Independent Supervising Solicitor, his delegates, law firm or agents during the execution of this order, they shall be indemnified by Her Majesty the Queen in Right of the Province of British Columbia.

Order Management

31.       The Plaintiff must serve a copy of the Writ of Summons and Statement of Claim, this order, and the supporting materials on the Defendant Angel Acres Recreational and Festival Property Ltd. by leaving it at the registered office of the corporate defendant at the law offices of Mont and Walker, located at 505-495 Dunsmuir Street, Nanaimo BC before or during the Waiting Period.

32.       In order to give effect to this order, any person who is ordered to do or not to do something shall not act personally, through others acting on his behalf, or on his instructions, or with his encouragement or acquiescence, or in any other way.

33.       The Plaintiff shall post a copy of this Order on the main entrance to the Property.

34.       The court file in relation to this action is sealed until the execution of this order and the service of this order on the Defendant Angel Acres Recreation and Festival Property Ltd., or 4pm Friday November 9, 2007.

35.       Any party may apply to vary any term of this Order on 2 days notice to the other parties.

36.       The judge who heard this application remains seized of any application to vary this order.

SCHEDULE 2

MINUTES OF SETTLEMENT

Procedures Regarding the Documents

1.         The Defendants’ Solicitor, or a solicitor designated by the Defendants’ Solicitor, and a representative from the Defendant Angel Acres Recreation and Festival Property Ltd. shall attend at 805 Victoria Road, Nanaimo, British Columbia (the “Victoria Road Property”) to identify all documents that potentially fall within the ambit of the obligation to produce under Rule 26 (the “Documents”).

2.         The Defendants’ Solicitor, or a solicitor designated by the Defendants’ Solicitor, shall ensure that the Documents are secured and delivered to the offices of Cook Roberts LLP.

3.         The Defendants’ Solicitor, or a solicitor designated by the Defendants’ Solicitor, may review the Documents to identify those documents for which a claim to privilege from production is asserted on the basis that the documents are subject to solicitor/client privilege (the “Privileged Documents”).  The Defendants’ Solicitor, or a solicitor designated by the Defendants’ Solicitor, shall segregate the Privileged Documents from the remainder of the Documents (the “Non- Privileged Documents”).  Once the Privileged Documents have been segregated, the Plaintiff’s Solicitor, or a solicitor designated by the Plaintiff’s Solicitor, may attend at the offices of Cook Roberts LLP to review all of the Documents except for the Privileged Documents, for the purpose of identifying documents that may constitute “instruments of unlawful activity” as that term is defined in the Civil Forfeiture Act, S.B.C. 2005, c. 29 (the “Instrument Documents”).

4.         The Plaintiff’s Solicitor, or a solicitor designated by the Plaintiff’s Solicitor, shall separate the Instrument Documents from all other Non-Privileged Documents.  The Plaintiff’s Solicitor, or a solicitor designated by the Plaintiff’s Solicitor, shall immediately prepare and deliver to the Defendants’ Solicitor an inventory of all documents identified as Instrument Documents.

5.         The Defendants’ Solicitor shall ensure that the Instrument Documents are safeguarded and preserved in a secure location pending further order of this Court.

6.         The Defendants’ Solicitor shall ensure that no person has access to the Instrument Documents except under the direct supervision of the Defendants’ Solicitor or another lawyer designated by him.

7.         The Defendants’ Solicitor shall ensure that no person is permitted to copy, print, or make note of the contents of any Instrument Document, other than in a manner agreed to between the Defendants’ Solicitor and the Plaintiff’s Solicitor, without leave of this Court.

8.         The Non-Privileged Documents shall be listed in accordance with the Rules of Court, with a separate category for those Non-Privileged Documents identified as Instrument Documents.

9.         The Defendants’ Solicitor may return to the Defendants any documents that are not privileged and that are not Instrument Documents.

Possession and Safekeeping of the Colours

10.       The Plaintiff’s Solicitor shall transfer possession to the Defendants’ Solicitor of all colours, patches, and all other Hells Angels Motorcycle Club-related regalia (collectively, the “Colours”) obtained by the Plaintiff as a. result of the seizure of the Victoria Road Property on or after the 9th day of November, 2007.

11.       The Defendants’ Solicitor shall safeguard and preserve the Colours in a secure location pending further order of this Court.

Possession and Safekeeping of the Support Wear

12.       The Plaintiff shall maintain possession of all Hells Angels Motorcycle Club- related support wear (the “Support Wear”) obtained by the Plaintiff as a result of the seizure of the Victoria Road Property on or after the 9th day of November, 2007.

13.       The Plaintiff shall safeguard and preserve the Support Wear in a secure location pending further order of this Court.

14.       The Plaintiff’s Solicitor shall prepare and deliver an inventory of the Support Wear to the Defendants’ Solicitor.

Payment of Monies Into Court

15.       The Plaintiff’s Solicitor shall pay into Court all monies obtained by the Plaintiff as a result of the seizure of the Victoria Road Property on or after the 9th day of November, 2007.

SCHEDULE 3

TERMS OF CONSENT ORDER IMPLEMENTING MINUTES OF SETTLEMENT

ON THE APPLICATION of the Plaintiff without a hearing and by consent:

THIS COURT ORDERS that:

1.         Counsel for the defendants shall be permitted to file with the Registrar of this Court, at Victoria, his letter of undertaking on the following terms:

I undertake that I will, upon the Independent Supervising Solicitor Nicholas Mosky (‘the ISS’) delivering to me as counsel for the defendants in this action, all documents, computers, storage media and other items of personal property obtained by the ISS as a result of the seizure of the clubhouse of the Nanaimo Hells Angels Motorcycle Club at 805 Victoria Road, Nanaimo, British Columbia on or after the 9th day of November 2007, (‘the ISS Property’):

a) safeguard and preserve the ISS Property in a secure location pending a further order of this court;

b) not permit any person to have access to the ISS Property except under the direct supervision of counsel for the defendants or another lawyer designated by him, and always upon the terms of this undertaking;

c) not permit any person to copy, print, or make note of the contents of any document, or of any electronic document, file, or information stored on or contained in any computer or storage medium that forms part of the ISS Property, other than in a manner agreed to between counsel for the defendants and counsel for the plaintiff, without leave of the Court.

2.         Upon counsel for the defendants filing the above letter of undertaking with the Registrar of the Supreme Court at Victoria and providing a copy of the letter of undertaking to the ISS and counsel for the plaintiff, the ISS shall deliver to counsel for the defendants the ISS Property.

3.         Within 30 days of the ISS delivering the ISS Property to counsel for the defendants, the ISS shall deliver to the Court a report confirming that the ISS Property has been so delivered.