Seizure of Sailboat Disallowed

In the recent decision of A.G. Ontario v. Kittiwake Sailboat, 2015 ONSC 6106 Justice Corbett of the Superior Court of Justice of Ontario disallowed a proposed seizure of a sailboat by the Attorney General of Ontario (“AG Ontario”) under the Civil Remedies Act (“CRA”).

The facts of this case are simple. On August 4, 2013, Valentin Chygyrynskyy was seen operating his sailboat in Toronto harbour. The sailboat struck a moored powerboat. Then Mr. Chygyrynskyy was observed falling out of his boat into the water. Mr. Chygrynskyy swam to shore with the aid of a flotation device thrown to him by his passenger. The police Marine Unit was dispatched and helped Mr. Chygyrynskyy from the water. Mr. Chygyrynskyy provided two breath samples.  His readings were 158 mgs and 147 mgs of alcohol per 100 ml of blood.  Mr. Chygyrynskyy was charged with offences related to impaired operation of a boat. Following these events, the AG Ontario obtained a preservation order and applied for forfeiture of Mr. Chygyrynskyy’s sailboat under the CRA.

The CRA is a “Robin Hood” law conceived as a way to take property from criminals and give the proceeds from its sale to victims. It is a procedure in a civil court and not criminal court. It doesn’t require a charge and conviction in a criminal proceeding. An application can simply be made to a judge in a civil proceeding where the onus of proof is on a balance of probabilities as opposed to the more rigorous standard of beyond a reasonable doubt.

The procedure has its supporters and its critics. The Toronto Star (*1) has reported that:

… an Oshawa couple had a portion of the value of their house seized even though drug possession charges against them were dropped. In Orillia, a landlord who rented rooms to homeless people could lose his property because the province contends that tenants paid rent with money made selling drugs.

Critics point out that because it’s easier to prove a case in civil court than in criminal court, the forfeiture process has become a parallel justice system for weak cases.

The CRA provides in Subsection 8(1) that:

In a proceeding commenced by the Attorney General, the Superior Court of Justice shall, subject to subsection (3) and except where it would clearly not be in the interests of justice, make an order forfeiting property that is in Ontario to the Crown in right of Ontario if the court finds that the property is an instrument of unlawful activity.

An “instrument of unlawful activity” is defined in s.7(1) of the CRA as:

… property that is likely to be used to engage in unlawful activity that, in turn, would be likely to or is intended to result in the acquisition of other property or in serious bodily harm to any person, and includes any property that is realized from the sale or disposition of such property….

“Unlawful activity” is defined in s.7(1) of the CRA to mean:

an act or omission that… (a) is an offence under an Act of  Canada, Ontario or another province or territory of Canada….

Subsection 7(2) provides:

For the purpose of the definition of “instrument of unlawful activity” in subsection (1), proof that property was used to engage in unlawful activity that, in turn, resulted in the acquisition of other property or in serious bodily harm to any person is proof, in the absence of evidence to the contrary, that the property is likely to be used to engage in unlawful activity that, in turn, would be likely to result in the acquisition of other property or in serious bodily harm to any person.

Justice Corbett pointed out that forfeiture is mandatory if the conditions of s. 7(1) are met, unless such an order “would clearly not be in the interests of justice.”  Thus forfeiture will be automatic in all but exceptional cases.

The judge found that the condition in s. 7(1) was met since impaired operation of a sailboat is an offence under the Criminal Code of Canada and therefore is an “unlawful activity” within the meaning of the CRA.

In this proceeding, the onus was on the AG Ontario to show that it was “likely” that the boat would be used for unlawful activity in the future. The court noted that Mr. Chygrynskyy has operated his boat once while impaired.  There was no evidence that he had done so before. The owner also testified that he intended to sell the sailboat since he had health problems. The judge accepted this evidence as credible. The judge found that the AG Ontario had not met its onus to show that it was “likely” that the sailboat would be used in unlawful activity in the future.

The judge also found that the events that gave rise to the court application by the AG Ontario did not cause serious bodily harm to any person.  Thus the AG Ontario did not have the benefit of the presumption in s. 7(2) of the CRA.

Justice Corbett found that the AG Ontario had not established that the prospective unlawful use of the sailboat would “likely” lead to serious bodily harm to a person stating:

There is some risk that it may.  But that is not the test.  The test is “likely”.  The Crown has not come close to establishing this proposition, which strikes me as rather remote. The Crown has not come close to establishing this proposition, which strikes me as rather remote.  Certainly there is no evidence before me that it is more likely than not that an impaired boater will cause serious bodily injury to a person.  The statistics indicate that the risk for motorists is much smaller than 50%, and as a matter of common sense I would suggest that the risks for persons on a leisure sailboat would be much lower still. The applicant has adduced evidence that forty per cent of fatal boating accidents involve drugs or alcohol.  With respect, that evidence is beside the point.  It may establish that there is elevated risk associated with impaired operation of a boat.  It does not establish that this risk is above 50%, the level required to make serious bodily harm a “likely” consequence.

…I appreciate that this mathematical analysis could be seen to trivialize the risks associated with impaired operation of cars and boats.  That is not the point here.  The probability of serious bodily harm is less than “likely”, but the consequences of that risk being realized are unacceptable.  Impaired driving, whether of cars or boats, is a serious social harm – it creates no benefit to anyone, and may cause disastrous loss to some.  But the seriousness of the consequences does not make those consequences more likely.

The judge commented that the CRA was aimed at organized crime and intentional crime undertaken for personal gain.  It was not aimed at leisure boating. The judge was fortified in this conclusion by the legislative debates when the CRA was enacted.  There was debate of drug trafficking and organized crime, but none of impaired driving. The judge commented on the forfeiture procedure stating:

Forfeiture under the CRA is a confiscation of private property by the state, without compensation.  Where proceeds of crime are confiscated, there is no countervailing interest to balance: criminals can rightly be deprived of the fruits of their criminal activity.  Where property is used for the purpose of committing criminal acts, there may be conflicting values at play.  Where the property is not owned lawfully in the first place, there is a strong argument for confiscation without compensation.  Where the property is owned and used legitimately by its owner, but also happens to be used in connection with a crime, the case for confiscation without compensation becomes more problematic.  The Legislature recognized these issues when it used the strong language it did to define “instruments of unlawful activity” as it did: the strict interpretation of this provision is consistent with the Legislature’s goals to make this powerful remedy available to fight organized crime, drug crimes, and other similar activities.

The owner of the sailboat had been unrepresented. The court had, however, appointed a lawyer to assist the owner and the court with some of the issues, an amicus curiae. The amicus curiae had raised an interesting issue as to whether the application of the CRA to a sailboat was constitutional, given the federal government’s exclusive jurisdiction over navigation and shipping.  The judge noted that it was not necessary for him to decide this constitutional issue to dispose of this case, and declined to do so. This issue was left to be decided in a future case.

The application by the AG Ontario to seize the vessel was dismissed. The sailboat was ordered to be returned to its owner.

The Toronto Star noted that the case had serious implications for those caught driving drunk and, had it been successful, could have led to more widespread seizure of cars and trucks. (*2)

Endnotes

(*1)http://www.thestar.com/news/gta/2014/09/04/boat_crash_on_lake_ontario_leads_to_key_test_of_civil_forfeiture_law.html

(*2) http://www.thestar.com/news/gta/2015/10/01/judge-rejects-seizure-of-sailboat-after-drunken-accident.html.  “This decision makes it a lot more challenging to seize property if it’s not property that’s inherently illegal or property that has a proven track record of being used illegally resulting in injury to others,” said Justin Safayeni, who was appointed by the court to oppose the Attorney General. “Certainly there’s been a trend to the expansive use of these powers, and this decision — at least for the time being — seems to dial it back.”

FMCSA Target Date for ELDs Rule Now October 30, 2015

 On March 12, 2014, the Federal Motor Carrier Safety Administration (“FMCSA”) announced a Supplemental Notice of Proposed Rulemaking (“SNPRM”) to mandate electronic logging devices. The development of the Electronic Logging Device mandate is part of the transportation reauthorization bill MAP-21 ("Moving Ahead for Progress in the 21st Century") that was signed into law in 2012.

In its simplest form, an electronic logging device — or ELD — is used to electronically record a driver’s Record of Duty Status (“RODS”), which replaces the paper logbook some drivers currently use to record their compliance with Hours of Service (“HOS”) requirements.

“Electronic Logging Devices” sync with a truck’s engine to capture power status, motion status, miles driven and engine hours. Additionally, the FMCSA uses the term “ELD data” to mean each data element captured by an ELD that is compliant with the specified requirements and that would be available to authorized safety officials during roadside inspections and as part of on-site or other reviews. The following data elements are the specific items that makeup the ELD dataset:

Date 


Time 


CMV location 


Engine hours 


Vehicle miles 


Driver or authenticated user identification data 


Vehicle identification data 


Motor carrier identification data 


The mandate will apply to all drivers who are currently required to keep paper RODS. Drivers who are required to keep RODS for eight or more days out of every 30 days must use an ELD. While drivers that fall under the HOS exemption (i.e. short haul drivers operating within a 100- mile radius or non-CDL drivers operating within a 150-mile radius) are not required to have an ELD, the mandate is estimated to affect approximately 3.1M trucks and 3.4M drivers according to the FMCSA.

The rule will take effect two years following its publication, the date by which fleets, owner-operators and drivers must be using electronic logging devices that satisfy the rule’s requirements.

The FMCSA had targeted Sept. 30 as the publication date. However, The rule was sent from the FMCSA to the White House’s Office of Management and Budget (“OMB”) on July 28 for its required approval. In its report issued this week, the DOT says it now expects the OMB to clear the rule Oct. 26, paving the way for the agency to publish the rule Oct. 30.

Certification of compliance with the new rules will be self-administered by ELD providers. Essentially, the FMCSA will be offering various test parameters for use to determine compliance and will facilitate a registry for companies to sign up with.

In writing the ELD rule, the FMCSA is aware of the possible cost burden on fleets. While it recognizes that there is a net-benefit from the paperwork savings alone, it doesn’t want to saddle drivers and fleets with trucking technology that is not affordable. To address those ELD cost concerns, the FMCSA has provided that smartphones, tablets, and rugged handhelds can be used so long as the system as a whole meets ELD requirements, including a hardwired connection to the truck’s engine.

The ELD regulation, along with a related rule penalizing carriers, shippers and third parties for coercing drivers to violate federal truck safety laws, has the potential to reshape the trucking and shipping business in a big way. In the short-term, the number of available trucks and drivers could drop as the rule is implemented over the next two years and beyond.

The Owner-Operator Independent Drivers Association has long been opposed to the mandated use of electronic logging devices. It argues that research fails to prove that the electronic devices improve highway safety or hours-of-service compliance over the use of paper logs. The devices cannot distinguish off-duty not-driving and on-duty not-driving activities, thereby rendering the devices useless in determining actual compliance with the regulations.

Some drivers applaud the rule and think ELDs should be required on every truck. They compare it to a rule requiring employers to use electronic time clocks rather than handwritten time cards to prevent payroll fraud. They argue that electronic logbooks provide accountability and compliance to the trucking industry. Many interest groups also support the initiative. The American Trucking Association supports the use of ELDs as does the Trucking Alliance, a group representing a number of carriers.

No official cost-benefit analysis for ELDs has been conducted in Canada. In the U.S. the FMCSA expects a net benefit of $800 million. According to the American Transportation Research Institute truck drivers in serious violation of hours of service regulations are 45% more likely to be involved in an accident than those who are in compliance. There was also a 90% greater risk of collision for drivers with patterns of non-compliance. It has been estimated that truck drivers will benefit by realizing a net gain in available driving/on duty time of 30 to 120 minutes per seven day cycle, translating into $2000 in annual earning potential. It is estimated that, for small trucking companies of fifty trucks or less, the staff costs savings will be over $3000 per month. The benefit to the government is reduced healthcare, infrastructure and other costs associated with the safer highways, as well as reduced costs of inspections. (*1)

Endnotes:

(*1) Canadian Trucking Alliance, Briefing Note “Benefits-Costs of Electronic Logging Devices for Driver Hours of Service,” January 2014.

Seminal Warehouse Decision

Human sperm is “property”. So sayeth the British Columbia Court of Appeal. In this seminal decision the Court had to decide whether human sperm was property and thus “goods” for the purposes of the Warehouse Receipt Act, R.S.B.C. 1996, c. 481 (the “WRA”).

Lam v. University of British Columbia, 2015 BCCA 2 involved a class action brought by men who had cancer and before undertaking radiation treatment deposited their frozen sperm at the University of British Columbia’s Andrology Laboratory. In May 2002, it was discovered that the freezer had suffered a power interruption which damaged or destroyed the stored sperm. The Court of Appeal acknowledged that it was a hard and emotional decision. The University charged little for its services and faced a significant exposure; the class members potentially lost the opportunity to procreate and were faced with a provision that denied them compensation.  At paragraph 32 of the decision the Court stated: “Although the result likely will be disquieting for one side or the other, the task of the courts is to determine the legal rights of the parties.”

At the time they deposited their sperm for storage, the men signed a Bank Facility Agreement (“Facility Agreement”).  It required depositors to pay a deposit fee, an annual storage fee and a withdrawal fee, all of which were fairly modest.  The agreement also stated:

4.         WITHDRAWAL OF THE SPECIMEN

You may at any time upon:

(a)   payment of the Withdrawal Fee;

(b)   delivery by your physician to us of 45 days prior written notice of withdrawal; and

(c)   delivery to us of such withdrawal forms or releases as we require;

require us to deliver to your physician within the 45 day notice period any part or all of the Specimen…. 

….

7.         LIMITATION OF OUR LIABILITY

By signing this Agreement you agree that neither we nor our successors or assigns nor any of our governors, directors, officers, employees or agents will be liable to you or anyone else for any destruction of, damage or alteration to or misuse of your Specimen for any reason whatsoever, including:

(a)   the improper testing of your Specimen;

(b)   improper freezing of your Specimen;

(c)   improper maintenance and/or storage of your Specimen in a frozen state; or

(d)   improper withdrawal and/or delivery of your Specimen.

This exclusion of our liability extends to any damage, misuse or impropriety caused by or resulting from any malfunction of our freezing equipment (whether for causes within our control or not) or from any failure of utilities, strike, cessation of services or other labour disturbances or any failure or similar occurrence in our or any other laboratory or from any fire, earthquake or other acts of nature beyond our control, or caused by or resulting from any act, omission or negligent conduct on the part of us or our successors or assigns or any of our governors, directors, officers, employees or agents.

The University relied on the exclusion of liability in clause 7. The respondents raised s. 2(4) of the WRA which allows a warehouse to insert in a receipt any term or condition that is not contrary to the Act and does not impair the warehouser’s obligation to exercise the care and diligence in regard to the goods as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances. The University argued that the sperm were not “goods” and thus this limiting section of the WRA was not applicable and the University could therefore exclude liability without breaching the WRA.

The trial judge held that the University was precluded from relying upon the exclusion clause in the Facility Agreement by virtue of the WRA.

The judge concluded that the parties did not contemplate the application of the WRA at the time the men signed the Facility Agreement because the issue was not raised until well into the litigation.  He also observed that at the time the WRA was enacted it was not intended to apply to the storage of sperm because “technology for the storage of sperm was not in use and the common law did not recognize that sperm or body parts could be property”(*1).

The trial judge referred to several fairly recent cases that concluded sperm is property: Yearworth v. North Bristol NHS Trust, [2009] EWCA Civ 37; Kate Jane Bazley v. Wesley Monash IVF Pty Ltd, [2010] QSC 118 (T.D.); C.C. v. A.W., 2005 ABQB 290 (CanLII); J.C.M. v. A.N.A., 2012 BCSC 584 (CanLII), and concluded(*2):

[41]      These cases did not consider whether the term “property”, as used in legislation, could include sperm. They were concerned with whether the common law now regards stored sperm or embryos as property. That distinction is of no consequence to the analysis I must make in this case. Courts in a variety of jurisdictions have come to the conclusion that stored sperm is property. I agree with the conclusion arrived at in these cases. The frozen sperm at issue in this case is the property of the class members. The sperm was ejaculated, frozen and stored for the purpose of using it for conception. Applying the current state of the law of property to the definition in the WRA leads to a conclusion that frozen is “goods”.

 The judge continued his analysis stating (*3):

[42]      The next step in the analysis is to ask if the purpose of the provisions in the WRA justifies the application of those provisions to the new definition of property. One of the purposes of the WRA was to codify the common law of bailment. Under the common law, a bailee is required to exercise the same care and diligence with respect to the bailed goods as a careful and vigilant person would exercise over his own similar goods in like circumstances. Sections 2(4) and 13 of the WRA effectively accomplish that. There is no reason why these provisions should not be applied to property that can be stored for reward which was not contemplated at the time the legislation was enacted. The purpose of requiring bailees to exercise adequate care and diligence applies equally to all kinds of property that can be stored for reward.

[43]      The other step in the [Côté] analysis is to ask if the legislative provision in question is sufficiently general to permit its application to things unknown at the time of enactment. As I have already noted, the definition of goods is broad and inclusive. In other words, the provision is sufficiently general to apply to things unknown at the time of passage. There is no reason not to apply the provisions of the WRA to goods which fall within the current understanding of “all property other than things in action, money and land.”

The judge observed that the thrust of the University’s argument was that it is an offence under the Assisted Human Reproduction Act, S.C. 2004, c. 2, to sell human sperm.  If a warehouser were to issue a negotiable receipt or a transferrable non-negotiable receipt for frozen human sperm, the sperm could be sold, creating a conflict between the WRA and the Assisted Human Reproduction Act.  The judge rejected the University’s argument. The judge found that the fact that sperm cannot be purchased does not prevent it from falling within the definition of ‘goods’ in the WRA. It simply reflects the fact that sperm, like other classes of property, is subject to control or regulation by other statutory provisions. If sperm is property that can be stored and for which a receipt can be issued, then it falls within the definition of ‘goods’ in the WRA.(*4)

The judge dealt with how section 7 of the Facility Agreement breached the provisions of the WRA, stating at paragraph 90:

On a plain reading of clause 7, it is clear that it is directly contrary to s. 13 of the WRA. As previously noted, s. 13 imposes liability on a warehouser for the loss of or injury to goods caused by the warehouser’s failure to exercise the care and diligence that a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances. Clause 7 attempts to shield the Andrology Lab from the same liability that s. 13 assigns to it as a warehouser. Clause 7 excludes the Andrology Lab from liability for any acts, omissions or negligent conduct, and covers a wide variety of circumstances including freezer malfunction, labour disturbances, or conduct of its employees. The clause is patently contrary to s. 13. It does not merely provide a limitation of damages in a manner similar to the warehouse receipt in Evans Products.

The judge recognized that while the WRA did not permit exclusion of liability, limiting liability is allowed. The University could simply have stated in its Facility Agreement that its liability was limited to $50 per deposit.

The Court of Appeal agreed with the findings of the trial judge and dismissed the appeal. It acknowledged at paragraph 95 of its decision that “Historically, there was no property interest in the human body, dead or alive. Save for the despicable period of history when slavery and ownership of humans was legally recognized, ownership of the human body has been eschewed.” The Court, however, agreed with the comments of Madame Justice Russell in the J.C.M. decision (*5) that “jurisdiction developments in medical science now require a re-analysis of the common law’s treatment of and approach to the issue of ownership of parts or products of a living human body, whether for present purposes (viz. an action in negligence) or otherwise.”

The Court of Appeal recognized that defining human sperm as “property” under the WRA in this case could widen the available remedies to Mr. Lam and the class members, stating at paragraph 94:

For example, Mr. Lam arranged to freeze his sperm as he was about to receive cancer treatment that could leave him infertile. He froze his sperm as a contingency plan for having children of his genetic make-up should he no longer be able to produce viable sperm. If someone broke into the lab and stole the sperm, could he or she be charged with theft? Theft is a crime against property. Could Mr. Lam have donated his sperm to a sperm bank if he chose not to have his own children? What would happen if Mr. Lam had died? Would he be able to leave his sperm to his family or someone else in a will? Could he leave it to a sperm bank in his will? These are all questions that may arise if human sperm is generally classified as property.

The Court of Appeal cautioned against using this decision as a basis for determining the property interests that a person can have in human sperm, stating at paragraphs 113 and 114:

The nature and scope of property interests that a person can have in human sperm need not be decided on the facts of this case. This case, unlike for example, J.C.M. v. A.N.A., 2012 BCSC 584 (CanLII), does not deal with competing property interests in human sperm. This case considers whether Mr. Lam, a cancer patient, has ownership of the sperm he produced, such that he can contract for its storage to enable his personal use of the sperm at a later date. If so, the sperm is property, as something must be property if it is capable of being owned. There may also exist things that are property that cannot be owned, but that is not something that needs to be decided in the context of this case… Ownership of body parts must be contextual, and often limited by legislation because of public policy reasons. No one would argue that if a cancer patient cut her hair and stored it for the purpose of later making a wig after treatment that she did not “own” her hair in that context. On the other hand, legislation prevents the selling of sperm and organs such as kidneys, but does not prevent their donation. The prohibition on sale does not necessarily mean the legislation is inconsistent with ownership. It has provided limits to ownership in some contexts.

For warehousemen this decision is germane to the issue of exclusion and limitation of liability and how this is dealt with in contract in relation to legislation in place in each province. The decision is not anticipated to sow the seeds of discontent in the industry.

Endnotes

(*1) Paragraph 21 Lam v. University of British Columbia, 2009 BCSC 196

(*2) Paragraph 41

(*3) Paragraphs 42 and 43

(*4) Paragraph 49

(*5) J.C.M. v. A.N.A., 2012 BCSC 584 referring to comments in Yearworth v. North Bristol NHS Trust, [2009] EWCA Civ 37