Can the State seize my assets?

There is nothing civil about civil forfeiture (ie the State’s ability to seize one’s property). It represents a serious intrusion into our private lives and the enjoyment of our property, both of which are constitutionally protected rights.

The proposed Civil Asset Recovery and Management and Unexplained Wealth Act, 2019 would grant sweeping powers to the State to seize and/or restrict access to one’s assets if such property “is criminal property, terrorist property or an instrumentality of crime.” It would also allow the State to seize “unexplained wealth” and is expressly designed to operate retroactively.

The act provides that if, during the course of a criminal investigation, the DPP “is of the view that there is insufficient evidence to pursue criminal charges for a specified offence but there is sufficient evidence that the property is recoverable property and an application should be made for the recoverable property to be forfeited to the State, he may refer the matter to the agency (established under the act)” (Section 31).

This suggests that civil forfeiture can occur prior to, or even in the absence of, any criminal charges or convictions. This surely cannot be right.

The Canadian Constitution Foundation agrees. In a 2015-2016 report entitled Civil Forfeiture in Canada, it noted that the state “may seek the forfeiture of property belonging to individuals who have not been convicted of committing an illegal act. Other owners subject to forfeiture applications may lose their property merely for being suspected of and yet never charged with committing an illegal act. And still others might be completely innocent third parties.”

It also creates a legislative anomaly. “Recoverable property” is defined in relation to criminality. Yet it seems that property can indeed be recoverable despite any finding of criminality.

Then, despite that insufficiency of evidence to pursue criminal charges, the Civil Asset Recovery and Management Agency is empowered to obtain an ex-parte property restriction order from the High Court to seize, take control of, or otherwise manage the asset in question (which could include bank accounts, real property and even businesses). The affected person(s) are then served with the property restriction order which expires 90 days from the date of issuance, unless varied by the High Court or converted into a civil asset forfeiture order “which removes the legal ownership in the property and vests it in the State” (Section 44 (2).

The standard of proof under the act is also lower. For criminal matters the standard is beyond a reasonable doubt; however, since the act provides for orders
in rem (ie against property) the standard is lowered to a balance of probabilities.

Put simply, it is much easier for the State to seize your assets.

Consider the Canadian case of Mihalyko, which exemplifies the draconian nature of civil forfeiture laws. David Mihalyko was broke and in desperate need of gas for his truck. He sold two Oxycontin tablets (which had been legally prescribed to him) to an undercover police officer for CAN$60. He was subsequently arrested and pleaded guilty to the charge of trafficking a controlled substance. He received a conditional sentence of nine months.

The state, however, was not done. It seized his truck (valued at $7,500) and cellphone, as they were “instruments of unlawful activity.” The chambers judge refused to allow the seizures, as they would “not be in the interests of justice.” The Saskatchewan Court of Appeal, however, overturned the judge’s finding and upheld the seizures.

Another vexing aspect of the act are the provisions concerning “unexplained wealth.” The act would require people to explain the source of their wealth if the State “reasonably suspects” that the “total wealth of the respondent exceeds the value of his lawfully obtained wealth” (Section 58 (1)). As with the orders set out above, similar interim and final orders are then available to the State for such "unexplained wealth."

The problem with such provisions is the potential for abuse and the disproportionate impact on lower-income individuals. There are many low-income earners who mostly deal in cash, or who may be in a precarious position (squatters and vulnerable workers come to mind). Their ability to explain their “wealth” may not be as simple as it seems. They would then be liable to pay the difference between their “total wealth” and their “lawfully obtained wealth.”

To be clear, the civil forfeiture provisions set out within the act are well-intentioned and might help uncover the proceeds of crime, terrorist financing and ill-gotten gains arising from corruption, but they would also disproportionately affect, and intrude upon, our constitutionally protected rights. As the constitutional encroachments do not minimally impair the rights in question, the act is arguably unconstitutional and should be viewed with caution.