COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Fercan Developments Inc., 2016 ONCA 269

DATE: 20160414

DOCKET: C59112

Laskin, LaForme and Pardu JJ.A.

BETWEEN

Her Majesty the Queen

Appellant

and

Fercan
    Developments Inc., GRVN Group Inc.

and FirstOntario Credit
    Union Limited

Respondents

Croft Michaelson, Q.C., and Kevin Wilson, for the appellant,
    Her Majesty the Queen

Brian Greenspan and Naomi Lutes, for the respondent,
    Fercan Developments Inc.

William Friedman and Patrick Bakos, for the respondent,
    GRVN Group Inc.

Robert Malen and Robert Drake, for the respondent,
    FirstOntario Credit Union Ltd.

Louis P. Strezos, for the intervener, the Criminal
    Lawyers Association

Heard: November 30, 2015

On appeal from the cost awards of
    Justice Peter C. West of the Ontario Court of Justice, dated January 21, 2015,
    with reasons reported at 2014 ONCJ 779 and at 2015 ONCJ 695.

H.S. LaForme J.A.:

A.

Introduction

[1]

The Crown is no ordinary litigant. It has the power to enforce
    legislation like the forfeiture provisions of the
Controlled Drugs and
    Substances Act
, S.C. 1996, c. 19 (the
CDSA
), underlying this
    appeal. In addition, the Crown has discretion to decide whether or not to
    exercise these powers. This discretion is generally impervious to review and is
    derived from the Crowns independence. However, where the Crown fails to
    exercise its discretion in a fair and objective manner, corrective action may
    be necessary to protect the integrity of the criminal justice system:
Krieger
    v. Law Society of Alberta
, 2002 SCC 65, [2002] 3 S.C.R. 372, at paras.
    42-49.

[2]

After 36 days of evidence, multiple motions, and comprehensive written
    and oral submissions, the application judge dismissed the Crowns application to
    forfeit two properties under s. 16 of the
CDSA
. The Crown abandoned
    its application against one of the respondents after 31 days of evidence. The application
    judge found that the evidence overwhelmingly led to the conclusion that the
    other two respondents were innocent of any complicity or collusion in relation
    to the designated-substance offences committed at the properties. After hearing
    an application for costs brought by all three respondents, the application
    judge ordered costs of almost $1 million against the Crown.

[3]

The Crown appeals the cost awards and argues that they should be quashed
    or, in the alternative, reduced. This appeal examines the jurisdiction of the
    Ontario Court of Justice to make these awards of costs against the Crown, the
    test to be applied when assessing the conduct of the Crown for purposes of
    awarding these costs, whether the Crowns conduct met the test, and how such
    costs should be quantified.

B.

Background

(1)

The respondents and their properties

[4]

There are three respondents on this appeal: Fercan Developments Inc.
    (Fercan), GRVN Group Inc. (GRVN), and FirstOntario Credit Union Limited
    (FirstOntario). Vincent DeRosa was the sole shareholder, director, and
    officer of Fercan. Nicola DeRosa was the sole shareholder, director, and
    officer of GRVN.

[5]

Fercan owned the former Molson Brewery plant, which comprised
    approximately 450,000 square feet of space situated on 35 acres of land, in
    Barrie, Ontario (the "Fercan Property"). The Fercan Property was
    purchased on October 1, 2001, for $8 million, by another company owned by
    Vincent. Vincent was interested in selling the chattels acquired with the
    property (valued at between $3 million and $10 million) and in setting up a
    water bottling operation. Some parts of the Fercan Property were leased out to
    commercial tenants as well. Fercan obtained ownership of the property in 2003.

[6]

FirstOntario is one of the largest credit unions in Ontario. FirstOntario
    regularly provided loans to companies owned by Vincent to finance real-estate
    acquisitions. In September 2003, FirstOntario loaned funds that Fercan used to
    pay off a mortgage held by the original vendors of the Fercan Property.
    FirstOntario obtained a first-ranking mortgage for $3 million on the Fercan
    Property.

[7]

Before advancing funds to Fercan, FirstOntario conducted extensive due
    diligence. The due diligence included multiple visits to the Fercan Property,
    reviewing Fercans loan application and supporting documents, reviewing
    Fercans relevant leases, obtaining an appraisal of the Fercan Property,
    obtaining an environmental assessment, and reviewing the fire departments
    inspection of the Fercan Property. FirstOntario also obtained two collateral
    mortgages on other properties owned by Fercan and two guarantees as additional
    security.

[8]

GRVN owned a residential property in Phelpston, Ontario (the "GRVN
    Property"). The GRVN Property was purchased by Vincent on July 29, 2002,
    and then sold to GRVN on January 30, 2009. Vincent purchased the GRVN Property
    as a home for his brother, Robert DeRosa, and Roberts family. GRVN also owned
    a number of other properties, including an auto mechanic shop in St.
    Catharines, Ontario, and a farm in the Niagara Region.

(2)

CDSA

offences and subsequent investigations

[9]

In January 2004, two indoor grow operations were discovered by the
    police at the Fercan Property in parts of the property that had been leased. The
    application judge noted that the grow operations were massive and highly
    sophisticated. He also concluded that those in charge of the grow operations
    took extensive steps to hide them and prevent anyone from inadvertently finding
    them.

[10]

The
    police conducted three investigations (Project Plants, Project 3D, and Project
    Birmingham) over the following years. In October 2010, the police found 10
    pounds of marijuana and evidence of a dismantled grow operation at the GRVN
    Property. A number of people were charged and convicted in relation to the grow
    operations, including Robert, who was Vincent and Nicolas brother.

[11]

Robert
    was connected to both the grow operations found at the Fercan Proerty and the
    drugs found at the GRVN Property. Robert was hired as a property manager for
    the Fercan Property. His responsibilities included leasing space, collecting
    rents, and ensuring that tenants needs were met. He used his position to
    ensure that the grow operations remained hidden. Furthermore, Robert lived at
    the GRVN Property when drugs were discovered there.

[12]

Vincent,
    Nicola, Fercan, and GRVN were never charged in relation to the grow operations at
    the Fercan Property or the drugs found at the GRVN Property.

C.

The
CDSA
Forfeiture Provisions

[13]

Sections
    16-22 of the
CDSA
create a regime for the forfeiture of
    offence-related properties and provide safeguards for innocent third-parties
    not implicated in the underlying offences.

[14]

Section
    14 permits the Crown to obtain a restraint order for any offence-related
    property, on an
ex parte
basis

if necessary. Under s. 16(1),
    subject to certain provisions discussed below, a court shall order forfeiture
    of a property if satisfied that a person has been convicted of a designated
    substance offence, that the property at issue is offence-related property, and
    that the offence was committed in relation to that property.

[15]

This
    ability to forfeit offence-related properties advances three objectives. First,
    it punishes offenders by taking away property used in the commission of designated-substance
    offences. Second, it deters future offences by imposing costs on anyone who
    either uses or permits their property to be used in the commission of designated-substance
    offences. Third, it ensures that the forfeited property is no longer available for
    the commission of offences:
R. v. Gisby
, 2000 ABCA 261, 271 A.R. 303,
    at paras. 19-23; and
R. v. Craig
, 2009 SCC 23, [2009] 1 S.C.R. 762, at
    paras. 16-17.

[16]

This
    forfeiture regime may apply to property owned by individuals who have never
    been convicted of or even charged with a designated-substance offence:
Craig
,
    at para. 41. However, s. 16 is subject to ss. 18-19.1. These provisions give
    effect to the common sense proposition that property owners who acted
    reasonably, were unaware of and not involved in any criminal activity, and did
    not profit from any illegal acts should not be subject to punishment or loss:
Ontario
    (Attorney General) v. 8477 Darlington Crescent,
2011 ONCA 363, 333 D.L.R.
    (4th) 326, at para. 100.

[17]

Section
    19(3), which was the focus of the underlying forfeiture application, permits a
    judge to return offence-related property to any person who is lawfully entitled
    to it and who appears innocent of any complicity or collusion in respect of the
    underlying designated-substance offence.

[18]

The
CDSA
provides concurrent jurisdiction to the Ontario Court of Justice and
    the Superior Court in respect of forfeiture applications. In some cases, the
CDSA
does make distinctions between superior and provincial courts. For instance,
    only a superior court judge may issue a restraint order under s. 14. However, s.
    16 provides that a forfeiture application may be heard by a court and that
    term refers to both provincial and superior courts:
R. v. Nguyen
, 2011
    BCCA 471, 285 C.C.C. (3d) 13, at para. 15. Therefore, the
CDSA
does
    not draw a distinction between the two courts for an application under s. 16.

D.

Proceedings Below

(1)

Proceedings to vary restraint orders

[19]

The
    Crown obtained
ex parte
restraint orders on the Fercan Property on
    September 21, 2010, and on the GRVN Property on April 11, 2011. Fercan applied to
    vary the restraint order to permit it to sell the Fercan Property, pay off
    FirstOntarios mortgage and some other expenses, and to deposit the balance of
    the proceeds with the Seized Property Management Directorate
[1]
pending the disposition of the
    forfeiture application. This application was dismissed by Mulligan J. on March
    23, 2012:
R. v. Fercan Developments Inc.,
2012 ONSC 2365.

[20]

FirstOntario
    subsequently applied, in June 2012, to vary the restraint order on the same
    terms. That application was also dismissed by Mulligan J. on August 22, 2012:
R. v. FirstOntario Credit Union Limited,
2012 ONSC 4808.

[21]

The
    Crown aggressively resisted both applications and stated that it had serious
    concerns about the relationship between Fercan and FirstOntario. In the Crowns
    opinion, the Fercan Property was over-encumbered and the timing of
    FirstOntarios mortgage was suspicious. The Crown also argued that it was not
    for the Crown to investigate, inquire and determine whether FirstOntarios
    interest was in good faith and whether they were an innocent third party. Justice
    Mulligan relied on the fact that the Crown was not willing to concede that
    FirstOntario was innocent of any complicity or collusion when dismissing both
    applications.

[22]

It
    is worth nothing that, initially, the Crown did not contest the validity of
    FirstOntarios security interest. Though the Crown reserved the right to change
    its position, it stated that it would inform FirstOntario of any such change.
    However, the Crown never did that but began questioning FirstOntarios interest
    only when Fercan brought an application to vary the restraint order.

[23]

After
    Fercans application was dismissed, on March 30, 2012, counsel for FirstOntario
    wrote to the Crown and offered to satisfy any concerns [the Crown] may have.
    The Crown never took FirstOntario up on that offer.

[24]

During
    Fercans first application, the Crown stated that it would seek production
    orders to understand the relationship between FirstOntario and Fercan. The
    Crown delayed and only obtained the production order on June 21, 2012.
    FirstOntario provided all of the evidence requested by August 2012.

[25]

Moreover,
    FirstOntario included most of the information sought by the Crown in the record
    for its application before Mulligan J. The Crown admitted that it had not
    reviewed the materials provided by FirstOntario, even as it took the position
    that FirstOntarios complicity was a live issue.

[26]

On
    August 31, 2012, FirstOntario obtained a judgment for possession of the Fercan
    Property, with Fercans consent, so that it could participate in the forfeiture
    application.

(2)

The forfeiture application

[27]

In
    May 2011, more than seven years after the discovery of the grow operations at
    the Fercan Property, the Crown brought an application in the Ontario Court of
    Justice to forfeit both the Fercan and GRVN Properties. The application was
    heard over 36 non-consecutive days between October 1, 2012, and June 18, 2013.

[28]

The
    respondents sought a ruling as to which party bore the onus under s. 19(3) of
    the
CDSA
. The application judge determined that the onus remained with
    the Crown throughout the forfeiture proceedings. Therefore, it had the burden
    of showing that the respondents did not appear innocent of any complicity or
    collusion:
R. v. Fercan Developments Inc.
, [2013] O.J. No. 748 (the
    Onus Decision). This decision was not appealed.

[29]

The
    Crown suddenly abandoned its application for forfeiture of FirstOntarios
    interest in the Fercan Property on the thirty-first day of the proceeding. The
    Crown never provided a satisfactory explanation for this decision. It
    suggested, without any supporting evidence, that Fercan had misled FirstOntario.
    The Crown also suggested that it abandoned its application because of the due
    diligence evidence produced by FirstOntario during the proceedings. However,
    the application judge concluded that the vast majority of that evidence had already
    been provided to the Crown during the application before Mulligan J.

[30]

Ultimately
    the application judge dismissed the Crowns application:
R. v. Fercan
    Developments Inc
., 2013 ONCJ 826 (the Forfeiture Decision). The
    application judge concluded that, even though the properties were
    offence-related properties within the meaning of the
CDSA
, the Crown
    had not demonstrated complicity or collusion on the part of either respondent.
    Crucially, the application judge concluded that even if the onus under s. 19(3)
    lay with the respondents, the evidence
overwhelmingly
leads to the conclusion that Fercan and GRVN, or the directing minds of those
    corporations, are innocent of any complicity or collusion (emphasis added). The
    Crown did not appeal this decision either.

(3)

The costs application

[31]

After
    the application judge dismissed the forfeiture application, the respondents
    sought costs against the Crown. This was decided in two separate stages by the application
    judge with separate reasons.

[32]

First,
    the application judge decided the issue of the respondents entitlement to
    costs against the Crown. He concluded that the Crowns decision to commence the
    forfeiture application, its treatment of FirstOntario, and its intransigent
    hardball attitude throughout the proceedings amounted to a marked and
    unacceptable departure from the reasonable standards expected of the
    prosecution or Crown misconduct. Therefore, he concluded that the
    respondents were entitled to costs:
R. v. Fercan Developments Inc.
,
    2014 ONCJ 779 (the Entitlement Decision).

[33]

Second,
    the application judge decided the amount of costs. He awarded costs to
    FirstOntario in the amount of $297,347, and to Fercan and GRVN in the amount of
    $570,000:
R. v. Fercan Developments Inc.
, 2015 ONCJ 695 (the Quantum
    Decision). The Crown appeals the costs awards.

[34]

I
    will discuss the application judges reasons in greater detail later on in
    these reasons.

E.

Leave to Appeal

[35]

Section
    676.1 of the
Criminal Code
, R.S.C. 1985, c. C-46, provides that any
    party who is ordered to pay costs may appeal the order or the quantum with
    leave. The Crown raises significant issues that should be considered on their
    merits by this court. Therefore, I would grant leave to appeal.

F.

The issues

[36]

Before
    turning to the issues raised by the appellant, I note a few principles
    regarding costs in criminal proceedings to place the present appeal in context.

[37]

Although
    they are rare, cost awards have a long and established history as a criminal
    law remedy:
R. v. 974649 Ontario Inc.
, 2001 SCC 81, [2001] 3 S.C.R.
    575, at para. 80 (
Dunedin
). In
Canada (Attorney General) v.
    Foster
(2006), 215 C.C.C. (3d) 59, at paras. 62-69, this court outlined
    three circumstances where costs may be awarded against the Crown: (i) where
    there has been a
Charter
violation; (ii) where there has been Crown
    misconduct; and (iii) where there are exceptional circumstances.

[38]

In
    this case, the application judge awarded costs on the basis of Crown
    misconduct. Therefore, these reasons address only that basis for awarding costs.

[39]

The
    Crown submits that the application judge committed four errors. Specifically,
    the Crown argues that the application judge: (i) did not have the jurisdiction
    to award costs in this case; (ii) erred in his conclusion about the applicable
    test; (iii) erred in finding that the conduct of the Crown met the applicable test;
    and (iv) awarded an amount that was excessive.

[40]

I
    will examine each of the alleged errors in order. As I will explain, I conclude
    that the application judge had the jurisdiction to award costs, identified the
    correct test, and did not commit any reviewable error. I would, therefore,
    dismiss the appeal.

G.

Analysis

(1)

Did the application judge have the power to award costs against the
    Crown?

[41]

Jurisdiction
    refers to a collection of attributes that enable a court to issue an
    enforceable order or judgment. A court will have jurisdiction if it has
    authority over the persons in and the subject matter of a proceeding, and has
    the authority to make the order sought:
Canada (Attorney General) v. TeleZone
    Inc.
, 2010 SCC 62, [2010] 3 S.C.R. 585, at para. 44.

[42]

Before
    the application judge, the Crown conceded that a provincial court hearing a
CDSA
forfeiture application has the jurisdiction to award costs in appropriate
    circumstances. The Crown resiles from that position before this court and
    argues that the application judge could not award costs in this case. Though the
    Crown challenges the jurisdiction of the application judge generally, its
    submissions raise only one question: did the application judge have an implied
    power to award costs in this case?

[43]

I
    conclude that the application judge had an implied power to award costs in the
    circumstances of this case. In explaining my conclusion, I will first discuss
    the principles governing implied powers, then discuss their application here,
    and finally address some of the arguments raised by the Crown.

(a)

Principles governing implied jurisdiction

[44]

As
    a statutory court, the Ontario Court of Justice does not have any inherent
    jurisdiction and derives its jurisdiction from statute. It is well established
    that a statutory court or tribunal enjoys both the powers that are expressly
    conferred upon it and, by implication, any powers that are reasonably necessary
    to accomplish its mandate:
Dunedin
, at para. 70. The jurisprudence has
    recognized that statutory courts possess certain implied powers as courts of
    law:
R. v. Romanowicz
(1999), 45 O.R. (3d) 506 (C.A.), at paras.
    59-60. In addition, powers may be implied in the context of particular
    statutory schemes as well.

[45]

This
    court recently considered the doctrine of jurisdiction by necessary
    implication in
Pierre v. McRae
, 2011 ONCA 187, 104 O.R. (3d) 321. Justice
    Laskin, at para. 34, noted that a power or authority may be implied: (i) when
    the jurisdiction sought is necessary to accomplish the objects of the
    legislative scheme and is essential to the statutory body fulfilling its
    mandate; (ii) when the enabling act fails to explicitly grant the power to
    accomplish the legislative objective; (iii) when the mandate of the statutory
    body is sufficiently broad to suggest a legislative intention to implicitly
    confer jurisdiction; (iv) when the jurisdiction sought is not one which the
    statutory body has dealt with through use of expressly granted powers, thereby
    showing an absence of necessity; or (v) when the legislature did not address
    its mind to the issue and decide against conferring the power to the statutory
    body.

[46]

Whether
    a statutory court is vested with the power to grant a particular remedy depends
    on an interpretation of its enabling legislation:
ATCO Gas & Pipelines
    Ltd. v. Alberta (Energy & Utilities Board)
, 2006 SCC 4, [2006] 1
    S.C.R. 140, at para. 36. When ascertaining legislative intent, a court is to
    keep in mind that such intention is not frozen in time. Rather, a court must
    approach the task so as to promote the purpose of the legislation and render it
    capable of responding to changing circumstances:
Dunedin
, at para. 38.

[47]

Furthermore,
    as in any other statutory interpretation exercise, courts need to consider the
    legislative context when interpreting the legislation at issue:
ATCO Gas
    & Pipelines Ltd.,
at para. 49.

[48]

Finally,
    I note that the power being conferred does not have to be absolutely necessary.
    It only needs to be practically necessary for the statutory court or tribunal
    to effectively and efficiently carry out its purpose:
Dunedin
, at
    para. 71.

(b)

Application judge had an implied power to award costs

[49]

I
    conclude that a provincial court hearing a
CDSA
forfeiture application
    has an implied power to award costs in appropriate circumstances. I come to
    that conclusion for three reasons.

[50]

First,
    that power is derived from the authority, possessed by every court of law, to
    control its own process. The Crown accepts, correctly in my view, that a superior
    court has the ability to award costs pursuant to its power to control its own
    process. That power is part of a superior courts inherent jurisdiction:
Canada
    (Attorney General) v. Pacific International Securities Inc.
, 2006 BCCA
    303, 209 C.C.C. (3d) 390, at para. 28. This court in
R. v. Chapman
(2006), 78 O.R. (3d) 778, at para. 16, recognized that, pursuant to the power
    to control its own process, a superior court can order parties to pay costs for
    frivolous or abusive proceedings or in cases involving misconduct.

[51]

A
    statutory court also has the power to control its own process. That power is
    necessarily implied in a legislative grant of power to function as a court of
    law:
R. v. Cunningham
, 2010 SCC 10, [2010] 1 S.C.R. 331, at para. 19.

[52]

The
    Supreme Court of Canada has discussed the power of statutory courts to control
    their process in
Cunningham
and in
Ontario v. Criminal Lawyers
    Association of Ontario
, 2013 SCC 43, [2013] 3 S.C.R. 3. Other than noting
    that this power cannot contravene explicit statutory provisions or
    constitutional principles like the separation of power, the court did not
    discuss the outer limits of a statutory courts ability to control its own
    process in either decision. However, in both cases, the court treated a
    statutory courts ability to control its own process as largely parallel to a
    superior courts ability to control its own process.
[2]

[53]

Therefore,
    even though a provincial court does not have any inherent jurisdiction, it does
    have the authority to control its own process. Though that power comes through
    an implied grant of power rather than inherent jurisdiction, I see no reason
    why a provincial courts authority to control its own process should not
    provide the same power to award costs.

[54]

Second,
    the breadth of a provincial courts mandate under the
CDSA
suggests
    that it has an implied power to award costs. Under the
CDSA
, a
    forfeiture application may be heard in either the Superior Court or the Court
    of Justice. As noted, in certain specific circumstances the
CDSA
draws
    distinctions between provincial and superior courts. However, it draws no
    distinction of any kind in respect of their role when hearing a forfeiture
    application under s. 16. The two courts function is equal in all ways.
    Therefore, it follows that Parliament intended that the power of the two courts
    should also be equal.

[55]

Third,
    given the statutory context in which a provincial court hears forfeiture
    applications, this implied power is reasonably necessary for it to discharge
    its mandate in a fair and efficient manner. I agree with the respondents that, in
    light of the Superior Courts power to award costs, depriving the Ontario Court
    of Justice of that power is undesirable. Without this power a contest would likely
    arise as to which court the application for forfeiture should be brought in,
    depending on whether the costs issue was deemed relevant by the Crown. A
    contest like this would frustrate the scheme of the forfeiture provisions and
    could not have been intended by Parliament.

[56]

Denying
    jurisdiction to provincial courts in this case would result in unfairness to a
    respondent. By commencing an application in the provincial court, the Crown
    would deprive respondents of the ability to obtain costs where they would
    otherwise be entitled to them. Furthermore, when proceeding in a provincial
    court, the Crown would never have to worry about potential cost consequences
    even if it engages in severe misconduct. This would undermine the efficacy of forfeiture
    applications heard in provincial courts.

[57]

The
    Crown submits that a respondent could bring an application in the superior
    courts for costs of a proceeding heard in the provincial court. Assuming that
    such an option is available, it is insufficient to permit the
CDSA
forfeiture
    regime to operate efficiently. An applicant would be forced to bring a new
    application before a new judge and to re-litigate at least part of their case. Bifurcating
    proceedings in this manner is undesirable and should be avoided in all but
    exceptional cases:
R. v. Caron
, 2011 SCC 5, [2011] 1 S.C.R. 78, at
    para. 52;
R. v. Conway
, 2010 SCC 22, [2010] 1 S.C.R. 765, at para. 79.
    Bifurcation negatively impacts the effective and efficient functioning of the
    courts; it is undesirable and inefficient for both the legal system and for
    litigants.

[58]

In
Dunedin
, at para. 82, McLachlin C.J.C. noted that bifurcation may
    render remedies illusory in practice. She noted that courts should be
    reluctant to interpret legislation in a way that would require such
    bifurcation. While
Dunedin
was addressing the availability of costs
    under s. 24(1) of the
Charter
, these concerns are relevant in the
    present case and support the conclusion that a statutory court should be able
    to award remedies when its process has been misused.

(c)

The Crowns submissions

[59]

The
    Crown has presented a number of submissions in support of its position that the
    application judge did not have an implied power to award costs. I address those
    arguments in this section.

[60]

First,
    the Crown notes that Parliament has enacted provisions in the
Criminal Code
that expressly provide the ability to award costs in certain limited
    circumstances. According to the Crown, that precludes a finding that the
    application judge had an implied power to award costs in this case. In effect,
    this is an argument based on the maxim
expressio unius est exclusio
    alterius
(to express one thing is to exclude another). Because
    Parliament has expressly provided for costs in certain cases, the Crown submits
    that the power to award costs is explicitly excluded in all other cases.

[61]

I
    would reject that argument. As noted by Laskin C.J.C. in
Jones v. A.G. of
    New Brunswick,
[1975] 2 S.C.R. 182, at pp. 195-196, that maxim provides
    at the most merely a guide to interpretation and does not pre-ordain
    conclusions. And, as Rothstein J. observed in
A.Y.S.A. Amateur Youth Soccer
    Association v. Canada (Revenue Agency)
, 2007 SCC 42, [2007] 3 S.C.R. 217,
    at para. 15, reliance on implied exclusion can be misleading and should be treated
    with caution. It is not enough to show that the enacting legislature has
    expressly or specifically addressed a particular matter. A court must be
    convinced that the express provisions are meant to be an exhaustive statement
    of the law concerning a particular matter:
A.Y.S.A.
, at para. 15.

[62]

I
    find the maxim to be of limited assistance in this case. To begin with, the
    maxim does nothing to address the provincial courts power to control its own process.
    Furthermore, as noted, when the
CDSA
forfeiture regime is viewed as a
    whole, an implied power to award costs is necessary for the fair and efficient
    functioning of the regime established by Parliament. Finally, I am not
    convinced that the provisions the Crown relies on are meant to be an exhaustive
    statement on the law concerning costs in criminal proceedings. The provisions
    at issue are piecemeal and disparate, and it is well established that costs can
    be awarded on other bases such as inherent jurisdiction or s. 24(1) of the
Charter
.
    I would, therefore, decline to apply any presumption based on implied exclusion.

[63]

Second,
    and related to the first argument, the Crown points out that Parliament and the
    courts have expressly limited the availability of costs in the criminal context.
    The underlying premise seems to be that because costs in criminal proceedings
    are an extraordinary remedy we should infer that Parliament intended to deny
    statutory courts any implied power to award them.

[64]

While
    I accept that costs are rare in criminal proceedings, that fact justifies
    establishing an appropriately high threshold for awarding costs, an issue I
    will address later on. It does not justify artificially limiting the ability of
    statutory courts to control their own process and ensure that they are able to
    discharge their mandates in a fair and efficient manner.

[65]

The
    fact that costs are an extraordinary remedy is not a basis for inferring that
    Parliament intended to deny provincial courts the ability to award them. In
R.
    v. Felderhof
(2003), 68 O.R. (3d) 481 (C.A.), at paras. 40-44, Rosenberg
    J.A. emphasized the need to construe provincial courts ability to control
    their process in a generous manner and with regard to their role as a court of
    first instance. And, as noted in
Dunedin
, at para. 80, cost awards may
    be integrally connected to a provincial courts role as a trial court. As
    such, it is far from surprising that provincial courts may have the power to
    award costs when it is reasonably necessary for them to discharge their
    mandate.

[66]

Third,
    the Crown submits that a power to award costs is not necessary for statutory
    courts hearing forfeiture applications. Therefore, the Crown argues, it cannot
    be an implied power granted to the court here. In support of its position, the
    Crown refers to decisions rendered by superior courts which have concluded that
    provincial courts do not have the power to award costs:
R. v. Gunn
,
    2003 ABQB 314, 15 Alta. L.R. (4th) 109;

and
R. v. Xanthopoulos
(2000), 14 C.C.C. (3d) 562 (Ont. S.C.). The Crown also argues that because
    statutory courts have other powers to control their own process (for instance,
    the power to hold persons before them in contempt or the power to enter a stay
    of proceedings) they do not need the power to award costs.

[67]

With
    respect, the decisions cited by the Crown apply an inappropriately high
    threshold for finding that an implied power exists. Statutory courts have a
    number of powers (such as the authority to appoint
amicus
, to enter a
    stay of proceedings, to prohibit publication of information identifying a
    witness or party, or to deny audience to an agent) that are not strictly
    speaking necessary for the criminal justice system to function or exist. These
    are powers they exercise as guardians of the rule of law, to protect the
    integrity of their process, and to ensure that they function as courts of law:
Romanowicz
,
    at para. 60;
Cunningham
, at para. 19.

[68]

In
    my opinion, the power to award costs falls into the same category. While it is
    not strictly necessary for provincial courts to simply exist or function, it is
    necessary to permit them to respond appropriately when their process has been
    offended. The ability to award costs is integrally connected to a courts
    control of its own process and denying statutory courts a power to award costs
    may deprive them of the only effective remedy to control their process and
    recognize the harm incurred when that process has been abused:
Dunedein
,
    at para. 81.

[69]

This
    case exemplifies that necessity. Here, the application judge could award costs
    or take no action whatsoever. The power to hold someone in contempt or to enter
    a stay of proceedings, alternatives suggested by the Crown, were not possible here
    as the need for a response was not apparent before the end of the forfeiture
    application. Having found that the Crown had demonstrated a marked and
    unacceptable departure from the standards expected of the prosecution, the
    application judge could award costs or simply fail to respond to an offence
    against the courts process. In these circumstances, the power to award costs
    was reasonably necessary for the court to protect the integrity of its process,
    to denounce the abuse that had occurred, and to deter future misconduct.

(2)

Did the application judge apply the wrong test for determining when
    costs should be awarded against the Crown?

[70]

The
    application judge held that costs are appropriate where there has been a
    marked and unacceptable departure from the reasonable standards expected of
    the prosecution. The Crown argues that this test applies when awarding costs
    against the Crown under s. 24(1) of the
Charter
only. The correct
    standard to apply, it says, is narrower and is conduct that is reprehensible, a
    serious affront to the authority of the court, or serious interference with the
    administration of justice.

[71]

I
    disagree. In my opinion, the application judge identified the correct standard:
    in the context of a forfeiture application under the
CDSA
, a court can
    award costs when there has been a marked and unacceptable departure from the
    reasonable standards expected of the prosecution. I come to this conclusion for
    three reasons. First, contrary to the Crowns position before us, that standard
    accurately captures the degree of misconduct required outside the
Charter
context. Second, given the interests at play in a
CDSA
forfeiture
    application, the marked and unacceptable departure standard is an appropriate
    threshold. Third, the standard gives effect to both the objectives behind
    restricting costs in criminal proceedings and the rationale employed when awarding
    them.

(a)

The standard of misconduct for cost awards generally

[72]

I
    acknowledge that courts, when making brief references to the requisite Crown
    misconduct outside the
Charter
context, have characterized the threshold
    in a few different ways. For example, in
R. v. M. (C.A.)
, [1996] 1
    S.C.R. 500, at para. 97, the court described the necessary Crown misconduct as
    oppressive or improper and the circumstances required as remarkable. In
Quebec
    (Attorney General) v. Cronier
(1981), 63 C.C.C. (2d) 437 (Que. C.A.) at pp.
    449 and 451, the court described the necessary misconduct as reprehensible.

[73]

However,
    contrary to the Crowns submissions, the courts rendering these decisions were
    not providing an exhaustive or definitive explanation of the requisite degree
    of misconduct. In my opinion, the jurisprudence, viewed as a whole, does not
    support the Crowns position that a standard higher than marked and
    unacceptable departure applies outside the
Charter
context.

[74]

For
    instance, in
R. v. Ciarniello
(2006), 81 O.R. (3d) 561 (C.A.), Sharpe
    J.A. defined the traditional Crown misconduct rule (that applies outside the
Charter
context) as follows: It is only where the accused can show a marked and
    unacceptable departure from the reasonable standards expected of the
    prosecution that a costs order will be made. In
R. v. Ontario (Review
    Board)
, 2009 ONCA 16, 240 C.C.C. (3d) 181, at para. 62, Simmons J.A. held
    that a trial judge erred in awarding costs because the appellant in that case
    had not demonstrated a marked and unacceptable departure from the reasonable
    standards expected of it. Justice Simmons explicitly stated that she was
    applying this test when considering the inherent jurisdiction of a superior
    court to award costs in criminal cases: para. 64.

[75]

Appellate
    courts in other provinces have also held that the same standard should apply in
    both the
Charter
and the non-
Charter
context. In
R. v.
    Sweeney
, 2003 MBCA 127, 179 C.C.C. (3d) 225, at para. 48, Philip J.A.
    stated that the marked and unacceptable departure standard will apply whether
    costs are awarded against the Crown as a
Charter
remedy or under the
    courts inherent jurisdiction. This proposition was also adopted in
R. v.
    Taylor
, 2008 NSCA 5, 261 N.S.R. (2d) 247, at paras. 47-48 and 54.

[76]

Finally,
    it bears noting that the marked and unacceptable departure standard represents a
    stringent threshold. It will generally require that the Crown exhibit a
    flagrant or marked departure from the norm:
R. v. Singh
, 2016 ONCA
    108, at para. 40.

[77]

Based
    on a review of the jurisprudence noted above, I do not accept the Crowns
    submission that a test higher than the marked and unacceptable departure
    applies outside the
Charter
context.

(b)

Cost awards in
CDSA

forfeiture applications

[78]

The
    marked and unacceptable departure standard was an appropriate one for the
    application judge to apply given the interests at play in a
CDSA
forfeiture application.

[79]

As
    noted in
R. v. Balemba
, 2009 CanLII 28396 (Ont. S.C.), a
CDSA
forfeiture
    proceeding is different from routine criminal cases. In particular, it is
    important to note that forfeiture applications can target innocent third parties
    who have never been charged with a criminal offence. The involvement of third
    parties is particularly important because there is some authority for the
    proposition that a lower threshold should apply when Crown misconduct is in
    respect of innocent bystanders.

[80]

For
    instance, in
Ciarniello
, where the Crown infringed the
Charter-
protected
    rights of an innocent bystander, this court concluded that a threshold lower
    than the Crown misconduct rule should apply. Justice Sharpe gave several
    reasons for that conclusion: (i) a third-party is less likely to incur the
    expenses of litigating than an accused; (ii) compensation is more important
    when the successful litigant is a bystander to a criminal prosecution; and
    (iii) a bystander has less procedural protections than an accused and,
    therefore, it is appropriate to apply greater controls over the Crowns
    conduct.

[81]

Though
    Sharpe J.A. articulated those concerns in the
Charter
context, they
    have some resonance here as well. As noted, the
CDSA
forfeiture regime
    provides a number of protections for bystanders. These protections are meant to
    ensure fair treatment of innocent third parties:
R. v. Connolly,
2007
    NLCA 5, 262 Nfld. & P.E.I.R. 281, at para. 62;
8477 Darlington
    Crescent,
at para. 100. As noted in
1431633 Ontario Inc. v. Canada
    (Attorney General)
, 2010 ONSC 266, 250 C.C.C. (3d) 354, at para. 30,
    Parliament did not intend to achieve its objectives under the
CDSA
at
    the expense of innocent third parties. This fact was recognized in
Maple
    Trust Co. v. Canada (Attorney General)
, 2007 BCCA 304, 221 C.C.C. (3d)
    505, at para. 26, where the court referred to the
CDSA
s objective of
    attaching the interests of those implicated in
CDSA
offences while
    protecting the rights and interests of innocent third parties.

[82]

In
Connolly
, a case involving forfeiture provisions in the
Criminal
    Code
, the court applied the marked and unacceptable departure standard
    when awarding costs. The court concluded that the Crown exhibited a marked and
    unacceptable departure when it ignored the impact of its actions on an innocent
    third party. Significantly, the court applied this standard without finding any
Charter
violations.

[83]

I
    agree with the application judge that the third-party concerns identified in
    this context, absent an infringement of a
Charter
-protected right, do
    not justify applying a standard lower than marked and unacceptable departure.
    However, in my opinion, given those concerns, the standard should not be any
    higher in a
CDSA
forfeiture application involving uncharged third parties.

(c)

Objectives underlying cost awards

[84]

Finally,
    the marked and unacceptable departure standard aligns with both the objective behind
    restricting costs in most criminal cases and the rationale for awarding them in
    the rare cases where they are available.

[85]

In
    respect of the objective for restricting the availability of cost awards, the
    following passage from
R. v. Robinson
, 1999 ABCA 367, 250 A.R. 201, at
    para. 29, is frequently cited for the applicable rationale:

The reasons for limiting costs are that the Crown is not an
    ordinary litigant, does not win or lose criminal cases, and conducts prosecutions
    and makes decisions respecting prosecutions in the public interest. In the
    absence of proof of misconduct, an award of costs against the Crown would be a
    harsh penalty for a Crown officer carrying out such public duties.

[86]

That
    rationale  namely that the Crown makes decisions and acts in the public
    interest  justifies restricting the availability of costs against the Crown in
    ordinary circumstances. However, when the Crown displays a marked and
    unacceptable departure it is no longer acting with regard to the public
    interest and, consequently, should no longer be shielded from cost
    consequences.

[87]

Furthermore,
    the marked and unacceptable departure standard gives effect to the purpose
    behind awarding costs in the limited circumstances where such awards are available.
    As noted in
R. v. Munkonda
, 2015 ONCA 309, 126 O.R. (3d) 691, at para.
    145, costs are awarded where an accused should not suffer the grievous
    financial burden that arose from systemic problems that were beyond their
    control and to which they had in no way contributed.

[88]

It
    is trite to note that a respondent in a forfeiture application will have little
    control over the Crowns conduct. In fact, courts will generally permit the Crown
    to operate with significant latitude. As noted in
R. v. Anderson
, 2014
    SCC 41, [2014] 2 S.C.R. 167, at paras. 37-51, prosecutorial discretion
    defined broadly as including a wide range of prosecutorial decision-making  is
    entitled to significant deference and can be reviewed only for abuse of
    process.

[89]

In
    other words, if the Crown demonstrates a marked and unacceptable departure
    either by commencing a forfeiture application or during such an application  a
    respondent will be exposed to costs for reasons beyond its control. That is
    exactly the kind of situation where a respondent should not be forced to bear a
    grievous financial burden imposed on it.

(3)

Did the application judge err in finding that the conduct of the Crown
    met the test for awarding costs?

[90]

The
    Crown submits that, even if the application judge identified the correct test,
    he erred by concluding that the Crowns conduct demonstrated a marked and
    unacceptable departure. For the reasons that follow, I conclude that the
    application judge did not err in finding that the Crowns conduct justified a
    costs award.

[91]

I
    pause to note that a decision to award costs and setting the quantum of costs is
    entitled to significant deference. As a discretionary order, an appellate court
    should interfere only if the judge below applied incorrect principles of law,
    made a palpable and overriding error in assessing the facts, or if patent
    injustice would otherwise result:
R. v. Cole
, 2000 NSCA 42, 183 N.S.R.
    (2d) 263, at para. 15;
R. v. Griffin
, 2011 ABCA 197, 510 A.R. 142, at
    para. 21.

[92]

I
    will first summarize the application judges reasons for concluding that the
    Crowns conduct demonstrated a marked and unacceptable departure. Then I will
    consider the Crowns arguments and explain why I reject them.

(a)

Reasons of the application judge

[93]

As
    noted, the application judge found that the Crowns conduct towards all three
    respondents demonstrated a marked and unacceptable departure. He criticized both
    the Crowns decision to initiate the forfeiture proceedings and the Crowns
    conduct during the proceedings.

[94]

The
    application judges reasons can be summarized as follows:

·

Meritless Application:
The Crown commenced an
    application that was meritless from the start. It had very little evidence
    connecting either Fercan or GRVN to the grow operations; any evidence it did
    have was extremely speculative. On the other hand, there was a lot of evidence
    that would rebut any inference advanced by the Crown. Choosing to commence an
    application against innocent, third-party bystanders and ignoring the
    weaknesses in the Crowns case demonstrated a marked and unacceptable
    departure.

·

Hardball Attitude:
The decision to commence the
    forfeiture application demonstrated an intransigent, hardball attitude, which
    continued throughout the hearing. For instace, the Crown took the position that
    it was not required to provide full disclosure of the evidence relating to the
    two grow operations to Fercan, GRVN, or FirstOntario, who had never been
    charged, even though such disclosure would have been provided to an accused
    person.

·

Treatment of FirstOntario:
The Crowns position
    that it had serious concerns about FirstOntario was based on a fundamental
    misunderstanding about its relationship with Fercan. It maintained that
    position, without any supporting evidence and without reviewing the evidence
    available to it, during the two applications before Mulligan J. Forcing
    FirstOntario to go through the forfeiture proceedings, and to endure the
    associated costs, also demonstrated a marked and unacceptable departure from
    the reasonable standards expected of the prosecution.

[95]

The
    Crown raises a number of arguments before us in support of its position that
    the application judge erred. I address those in turn.

(b)

Arguments about onus

[96]

In
    the Crowns submissions, the application judges decision to award costs resulted
    from him misunderstanding the applicable onus. In essence the Crown is
    attacking the application judges conclusion that the onus resided with the
    Crown at every stage of the forfeiture application. However, as noted, the
    Crown did not appeal the Onus Decision. It is not open to this court to
    consider the validity of that decision, and the Crown cannot collaterally
    attack the validity of that ruling:
R. v. Wilson
, [1983] 2 S.C.R. 594,
    at p. 599.

[97]

However,
    to the extent that the Crown argues that their belief about the applicable onus
    made it reasonable for them to commence the forfeiture applications, I would
    reject that submission. The application judges decision to award costs did not
    rest on his earlier ruling about onus. Rather, he concluded that when all of
    the evidence available to the Crown before the beginning of the proceedings is
    considered as a whole, it should have been obvious that the application could
    not succeed. Specifically, as he noted at para. 322 of the Forfeiture Decision,
    given my findings of fact in relation to the evidenceeven if I had ruled in
    favour of the Crown that the onus under section 19(3) of the
CDSA
was
    on the lawful ownerit is my view that the evidence overwhelmingly leads to the
    conclusion that Fercan and GRVN, or the directing minds of those corporations, are
    innocent of any complicity or collusion in relation to the designated substance
    offences.

[98]

Furthermore,
    at para. 131 of his Entitlement Decision, the application judge emphasized that
    the Crown had an obligation to assess whether there was any evidence of
    complicity or collusion irrespective of the applicable onus.

[99]

In
    this case, there simply was no credible or persuasive evidence supporting the
    Crowns position that GRVN, Fercan, or their principals were involved in any
CDSA
offences. Therefore, contrary to the Crowns submission, the application
    judges understanding about the onus did not play a significant role in his
    decision to award costs and the Crowns belief about the onus did not make its conduct
    any less unreasonable.

(c)

The application was meritless

[100]

Central to the
    application judges decision was his conclusion that the Crowns application
    was meritless from the start. The Crown argues that it advanced evidence that
    could support a finding that Fercan and GRVN were complicit in the drug-related
    offences.

[101]

The application
    judge did not ignore the potential evidence advanced by the Crown. However, as
    the application judge correctly noted, the Crown only ever pointed to a few
    pieces of evidence that, only when considered in complete isolation, might
    provide some support for the Crowns position. The Crowns case essentially
    hinged on the fact that Vincent and Nicolas brother, Robert, was implicated in
    the grow operations.

[102]

The application
    judge recognized, and did not ignore, this fact. However, he concluded that any
    inferences advanced by the Crown were speculative at best and easily rebutted
    by evidence that the Crown had access to even before the application was
    commenced.

[103]

For instance, the
    Crown argued that Vincent must have known about the grow operations at the
    Fercan Property given their size and sophistication. However, that position was
    simply untenable. There were a number of people who worked at the Fercan
    Property on a daily basis, and even some who lived there, who were completely
    unaware of the grow operations. There was evidence that fire inspections had
    been conducted at the Fercan Property, that the police had come to the property
    to arrest an employee of one of the tenants for smuggling drugs, and that the
    local police conducted training for their sniffer dogs at the property. The
    grow operations were not discovered during any of these activities.

[104]

Furthermore, the
    evidence revealed that Vincent visited the Fercan Property on Saturday mornings
    only. He would spend about an hour there, and only ever visited a few, limited
    parts of the Fercan Property.

[105]

The Crown knew
    about this evidence before they commenced the application and, in fact, called
    a number of witnesses who presented this evidence. As correctly noted by the
    application judge, all of this evidence eliminated the Crowns theory of a
    common sense inference of knowledge, which it continued to rely on.

[106]

During the
    forfeiture proceedings, the Crown also argued that there was excessive hydro
    and water usage at the Fercan Property. However, that assertion was rebutted by
    evidence provided by the Crowns own witnesses and was, once again, information
    the Crown knew about.

[107]

The Crown also
    argued that the only reason the Fercan Property was purchased was to house the
    grow operations. However, that position was also completely untenable based on
    the evidence.

[108]

As noted, the
    Fercan Property was purchased for $8 million. The chattels that came with the
    property, which another of Vincents company acquired and was then able to sell
    at a profit, were valued at up to $10 million. Fercan also took on a number of
    commercial tenants and made considerable investments to establish a water
    bottling business at the Fercan Property. The evidence clearly established that
    there was a valid commercial objective behind the purchase of the Fercan
    Property. All of this was clearly established by the financial records obtained
    by the police in the course of their investigations.

[109]

As noted by the
    application judge, the police carried out three separate investigations after
    discovering the grow operations in 2004. However, despite all of their
    investigations and despite a number of different individuals pleading guilty
    and providing further evidence about the grow operations; the police never had
    reasonable and probable grounds to charge Fercan, GRVN, or their principals.

[110]

As the
    application judge noted, the reasonable and probable grounds standard is far
    less onerous than the balance of probabilities on which the Crown needed to
    prove its case in the forfeiture application. Despite that dearth of evidence,
    the Crown chose to commence its application to forfeit the Fercan and GRVN
    Properties.

[111]

The Crown, while
    advancing an alternate theory in support of its application, argued that
    Vincent had delegated so much authority to Robert that the latter was a
    directing mind of Fercan. The Crown argued that this made Fercan complicit. The
    application judge noted that this theory arose after the evidence had been
    completed. It was advanced without an evidentiary foundation, as the Crown did
    not lead any evidence about the nature of the corporation, its structure, its
    corporate policy, and its policies respecting delegation. In fact, the evidence
    called during the forfeiture hearing contradicted this theory.

[112]

After reviewing
    all of the evidence at issue, the application judge summarized his conclusion
    as follows: The Crowns position was wholly and completely unsupported by the
    evidence in the possession of the Crown and was not based on any proper or
    thorough review of the witnesses statements. That conclusion is supported by
    the record.

[113]

This was not a
    weak but tenable case that was simply rejected at the end of the day. This was
    a case where any reasonable assessment of the evidence available to the Crown would
    have demonstrated the hopelessness of success. And, more to the point, it is a
    case where any reasonable assessment of the evidence should have caused the
    Crown to reconsider their conviction that Fercan, GRVN, or their principals
    were at all implicated in the grow operations. The only way to maintain that
    conviction would be to view certain facts in complete isolation and to
    completely ignore the wealth of evidence rebutting the Crowns position. That,
    in my opinion, discloses a marked and unacceptable departure.

(d)

Conduct towards FirstOntario

[114]

The application
    judge concluded that the Crowns conduct towards FirstOntario was another
    instance of a marked and unacceptable departure. The Crown argues that it acted
    appropriately. I agree with the application judges conclusion. The Crowns
    conduct towards FirstOntario may be the most troubling aspect of this case.

[115]

The Crowns
    concerns about FirstOntario were misplaced from the very beginning and were
    based on a misunderstanding of its relationship with Fercan. For instance, the
    Crown thought that the Fercan Property was overleveraged because of collateral
    mortgages in favour of FirstOntario and the rate of interest on those
    mortgages. Those concerns were later shown to be completely misplaced. In fact,
    the Crown admitted that it had simply misunderstood the nature of a collateral
    mortgage. And they failed to understand that the actual rate of interest on the
    mortgages was only prime plus 1% and that the mortgages, in line with industry
    practice, simply listed a fluctuating interest rate on a collateral mortgage at
    24%.

[116]

These
    misunderstandings could have been removed if the Crown had gained a proper
    understanding of the documents they had been reviewing. Instead, the
    misunderstanding festered and the Crowns misplaced suspicions became even more
    entrenched.

[117]

Despite an
    avowed desire to get to the truth, the Crown never accepted FirstOntarios
    offer to answer any questions and allay any concerns the Crown may have, delayed
    in getting a production order to obtain documents they said that they needed,
    and then delayed even further in reviewing the evidence provided. Despite that,
    and without fully reviewing FirstOntarios disclosure, the Crown expressed
    serious doubts to Mulligan J. about the validity of FirstOntarios security
    interests.

[118]

Significantly,
    the Crown completely abandoned its opposition to FirstOntarios interest near
    the end of the forfeiture application. It implied that this concession came
    about due to new information. However, the Crown had not obtained any new
    information. The concession came after FirstOntario had called its evidence,
    all of which was contained in the materials provided to the Crown in July 2012
    in response to the production order, and in FirstOntarios materials filed with
    its application before Mulligan J.  It was clear that the Crown had not
    reviewed this material, despite advising Mulligan J., in two variation hearings,
    that the Crown had serious concerns regarding FirstOntarios complicity and
    collusion with the designated-substance offences.

[119]

If the Crown had
    appropriately reviewed and understood the information available to it,
    FirstOntario would not have been forced to participate in the forfeiture
    proceedings. The Crowns conduct towards FirstOntario was in sharp contrast to how
    it treated a mortgagee at the GRVN Property. The Crown permitted the GRVN
    Property to be sold and a mortgage on that property paid out, presumably after
    concluding that there was no evidence of collusion or complicity. There was
    similarly no real evidence of collusion or complicity on the part of
    FirstOntario. However, the Crown, without justification, questioned its
    security interest and motives, forced it to participate in a lengthy forfeiture
    application, and then, without explanation, simply dropped its opposition at
    the last possible minute.

[120]

The application
    judge did not err in concluding that the Crowns conduct towards FirstOntario
    displayed a marked and unacceptable departure.

(e)

Responsibility for costs incurred

[121]

The Crowns
    position on appeal is founded on two overarching arguments. First, the Crown asserts
    that it did not misapprehend the evidence available to it and was merely
    advancing its position appropriately. As noted, I cannot agree with this
    submission.

[122]

Second, the
    Crown argues that the consequences suffered by the respondents were not its
    responsibility. Rather, they were just the necessary consequences of the
    legislative scheme created by Parliament and, therefore, the Crown should not
    be held responsible.

[123]

In my opinion,
    the Crowns position reflects an abdication of its responsibilities that cannot
    be condoned. Crown prosecutors play an undeniably important role in the
    administration of justice. It is well established that they play a quasi-judicial
    role as ministers of justice:
Boucher v. The Queen
, [1955] S.C.R.
    16, at p. 25. They must act in the interests of the community to see that
    justice is properly done:
R. v. Power
, [1994] 1 S.C.R. 601, at p. 616.

[124]

When discharging
    their role, Crown counsel have an obligation to ensure that the power of the
    state is used only in pursuit of impartial justice:
Oniel v. Marks
(2001), 141 O.A.C. 201 (C.A.), at para. 67. Crown counsel must discharge their role
    with the utmost integrity and sound judgment, remaining open to the possibility
    of the innocence of the accused and avoiding tunnel vision:
R. v. Delchev
,
    2015 ONCA 381, 126 O.R. (3d) 267, at paras. 64-65. Though these principles were
    articulated in the context of criminal prosecutions, they remain relevant in proceedings
    like this one.

[125]

I cannot agree
    with the Crowns position that it should bear no responsibility for the costs
    incurred by the respondents who were all innocent, third-party bystanders in
    this case. When the Crown commenced the underlying forfeiture application, it
    exercised the coercive power of the state and forced the respondents to
    participate in a lengthy and onerous proceeding to defend their legitimate
    property interests. In my opinion, the Crown had some obligation to ensure that
    it was using this power in the public interest and to advance the interests of
    justice. It failed to discharge that obligation.

[126]

The consequences
    could have been avoided if the Crown had reviewed the evidence available to it
    in a reasonable fashion. Its failure to do so imposed considerable costs on the
    respondents who, on any reasonable view of the evidence, were innocent,
    third-party bystanders. The Crown cannot simply disclaim all responsibility for
    the consequences that flowed from its decisions.

[127]

Before
    concluding on this issue, I note that nothing in these reasons suggests that
    mere errors on the part of Crown counsel should attract sanction from the
    courts. Crown counsel must often act in challenging circumstances and make
    difficult judgment calls. As noted in
Henry v. British Columbia (Attorney
    General)
, 2015 SCC 24, [2015] 2 S.C.R. 214, at para. 70, [c]rown counsel
    will, from time to time, make good faith errors and it will not advance the
    public interest to expose them to sanctions for any and every error.

[128]

This, however,
    is not a case of inadvertent or good faith errors. The Crown fell short of the
    applicable standard by failing to properly consider the evidence available to
    it, by commencing a completely meritless application, and by taking an unjustifiably
    hardline attitude with all three respondents and refusing to consider the
    simple fact that there may be no collusion in this case. The Crowns failure to
    discharge its obligations was constant and continuing, and it imposed
    considerable costs on the respondents.

[129]

Thus, overall, the
    application judges conclusion that the Crowns conduct rose to the level of a
    marked and unacceptable departure is reasonable. I am not persuaded that there
    is any basis to interfere with his decision and I would dismiss this ground of
    appeal.

(4)

Did the application judge order excessive costs and should there be a
    reduction?

[130]

The Crowns
    final ground of appeal is that the application judge erred by awarding costs
    that were excessive. The Crown makes three submissions in support of this
    ground of appeal.

[131]

First, by
    analogy to the civil costs regime, the Crown argues that costs should have been
    awarded on the partial indemnity scale. The application judge accepted that as
    the starting point, but then erred by awarding substantial indemnity costs.

[132]

Second, the
    Crown submits that the application judge erred by using the beginning of the
    proceedings as the starting point for his costs calculation. The application
    against Fercan and GRVN was not always meritless; in particular, until the Onus
    Decision, the legal onus lay with the respondents. In relation to FirstOntario,
    the Crown did not receive relevant materials from it until June 2012;
    therefore, no costs should be awarded for proceedings that occurred before that
    point in time.

[133]

Finally,
    according to the Crown, the application judge never considered whether the
    hourly rates claimed by respondents counsel were reasonable. He simply
    accepted them at face value.

[134]

In varying
    degrees, I disagree with each of the Crowns submissions and would reject them
    all. In explaining my conclusion, I will first explain the governing
    principles. I will then summarize the application judges reasons and, finally,
    will provide my reasons for dismissing the Crowns submissions.

(a)

Governing Principles

[135]

This court
    recently addressed the quantification of costs in a criminal proceeding in
Singh.
Although
Singh
involved the quantification of costs awarded under
    s. 24(1) of the
Charter
, the principles articulated by Pardu J.A.
    provide valuable guidance in this case.

[136]

First, it is an
    error to rely on the civil costs regime in a criminal proceeding. At para. 48
    in
Singh
, Pardu J.A. explains that costs awarded in criminal
    proceedings serve a very different purpose. In civil proceedings, costs
    partially indemnify a litigant, encourage settlement, deter frivolous
    proceedings, and discourage unnecessary steps. Costs against the Crown in
    criminal proceedings are meant to discipline and deter misconduct.
    Indemnification, although it remains a valid consideration when quantifying
    costs, is much less significant:
Singh,
at para. 66.

[137]

Second, when
    quantifying costs, a judge must keep in mind that the costs will be paid out of
    the public purse:
Singh,
at paras. 56-57. Therefore, the objective
    must be to provide a reasonable portion of the costs incurred by the
    respondents.

[138]

Third, in
Singh,
at para. 57,  Pardu J.A. notes that the precise calculation is a task for
    the judge to undertake while taking into account the following factors:

·

the nature of the case and the legal complexity of the work done;

·

the length of the proceedings;

·

the nature and extent of the Crowns misconduct;

·

the impact of the misconduct on the rights of the innocent third-parties;
    and

·

the conduct (or lack thereof) of the innocent third-parties.

(b)

Reasons of the application judge

[139]

After a thorough
    review of the jurisprudence, the application judge concluded that costs awarded
    in criminal proceedings are quantified on a reasonableness basis, i.e. have
    the costs been reasonably incurred and do they reflect what is proper and
    appropriate given the complexity and significance of the proceedings.

[140]

The application judge
    identified a number of other considerations that must be kept in mind: (i) the
    quantum of costs will depend on the specific circumstances of the case; (ii)
    costs must be paid from the public fund and the Crown should not be viewed as a
    limitless deep pocket; and (iii) the court should set the quantum that will
    effectively denounce any Crown misconduct and deter future misconduct.

[141]

Turning to the
    facts of this case, the application judge found that:

·

The Crown misled Mulligan J. during the two applications to vary
    the restraint order by implying that the Crown had a
prima facie
case
    against FirstOntario when, in fact, the Crown had a fundamental
    misunderstanding of the mortgages  and had not yet reviewed the documentation
    respecting FirstOntarios due diligence.

·

If the Crown had reviewed and assessed the due diligence
    information, they would have consented to the application to vary the restraint
    order and FirstOntario would not have been required to participate in the
    forfeiture proceedings.

·

FirstOntario made attempts to alleviate and prevent costs.

·

The Crowns hardball attitude and conduct resulted in a
    significant number of additional hours of preparation by the respondents
    counsel (for instance only providing disclosure three weeks before the hearing
    and providing additional disclosure throughout the hearing).

[142]

The application judge
    also excluded some of the costs claimed by the respondents because he concluded
    that: (i) Fercan and GRVNs conduct lengthened the proceedings and fees incurred,
    (ii) some of the costs relating to motions before the Superior Court should be
    sought through separate applications; (iii) some of the fees were not generated
    as a result of the Crowns misconduct; (iv) there was unnecessary duplication
    of work between counsel representing Fercan and GRVN; (v) the costs incurred by
    GRVN were excessive given that, at the end of the day, there was only $20,000
    subject to forfeiture after its mortgagee had been paid out; and (vi) in some
    instances, the application judge was unable to discern what fees were generated
    based on the parties bill of costs and therefore could not include them in the
    award.

[143]

The application judge
    found that the reasonable costs of the respondents were as follows:

·

Fercan and GRVN: $589,597.00 in fees and $26,954 in
    disbursements.

·

FirstOntario: $245,000 in fees and $52,347.76 in disbursements.

[144]

He then went on
    to determine what a reasonable quantum would be in the specific circumstances
    of the present case. He noted that the starting point of a criminal costs award
    appears to be partial indemnity, based on prior case law. The quantum increases
    depending on the actual conduct engaged in by the Crown. The more serious the
    Crown misconduct, the more likely the costs award will approach costs on a
    substantial indemnity basis.

[145]

The application
    judge emphasized that, in this case, the Crown was not seeking to forfeit
    property owned by someone convicted of an offence. Fercan, GRVN, and their
    principals had never been charged with any offence related to the grow operations.
    Moreover, the application judge noted that the Crown stood to gain property
    worth more than $7 million if it had been successful.

[146]

While
    acknowledging that the Crown had not infringed any
Charter
rights in
    this case, the application judge concluded that the Crowns conduct still
    deserved denunciation. He concluded that the Crown had a responsibility to pay
    greater heed to a bystanders property rights and to assess whether there is
    any evidence of complicity or collusion on the part of the third party who was
    not charged.

[147]

Finally, the
    application judge accepted the Crowns argument that in criminal cases there
    must be a causal connection between the costs claimed and the impugned
    conduct of the Crown.

[148]

In light of his
    findings, the application judge concluded that FirstOntario should receive
    costs on the substantial indemnity scale. He awarded FirstOntario costs in the
    amount of $297,347 plus HST. The application judge also awarded a total of
    $570,000 plus HST to Fercan and GRVN.

(c)

The costs awarded were reasonable

[149]

Admittedly, the
    application judge erred by relying on the civil costs regime. As noted, costs
    in criminal proceedings are distinct and should not be quantified by analogy to
    the civil costs regime.

[150]

However, the
    application judges overall approach when quantifying the costs awarded was
    correct. He explicitly noted that his task was to award costs that were
    reasonable in the circumstances before him. He correctly focused on a
    constellation of factors aimed at the objectives of some compensation,
    denunciation, and deterrence. These included:

·

the conduct of the Crown and the respondents;

·

the complexity of the proceedings;

·

the matters put in issue;

·

the concessions made, if any;

·

disclosure by FirstOntario;

·

the fact that a cost order would be paid out of public funds;

·

the fact that there are no absolute rules in assessing reasonable
    costs;

·

the fact that the respondents were innocent third-parties; and

·

the outcome of the proceeding that he found was meritless.

[151]

This constellation
    of factors was wholly appropriate in arriving at the cost awards. The factors
    are well rooted in principle, policy, and logic. They meet the aims of
    denunciation and deterrence and an element of compensation for the costs
    incurred by the respondents.

[152]

The three
    arguments advanced by the Crown have failed to identify an error justifying
    appellate intervention. First, as noted, the civil costs regime is not a valid
    analogy. Therefore, the Crowns argument that the application judge should have
    restricted himself to partial indemnity costs must be rejected.

[153]

Second, the
    application judge did not err by using the beginning of the forfeiture
    application as a benchmark when awarding costs. As noted, the Crowns concerns
    about FirstOntario were misplaced from the beginning and rooted in fundamental
    misunderstandings about its security interests. GRVN and Fercan were subject to
    an application that was meritless based on the evidence available to the Crown
    from the very beginning. Furthermore, the application judge was careful to
    award costs that were causally connected to the Crowns misconduct.

[154]

Third, I am not
    convinced that the application judge failed to consider whether counsels
    hourly rates were reasonable. He carefully scrutinized all costs claimed by the
    respondents. Where he found their bill of costs to be unreliable or that the
    costs claimed were either unreasonable or unconnected from the Crowns
    misconduct, he refused to award the costs at issue. The application judge was
    fully aware that the costs awarded had to be reasonable.

[155]

Without a doubt,
    the quantum of costs awarded by the application judge was high. As noted in
Singh
,
    at paras. 53-57, the quantum of costs awarded in criminal proceedings is
    moderated by underlying policy considerations. Costs awarded in criminal
    proceedings are often moderate, and I do not endorse a departure from that practice
    in general.

[156]

However, just as
    clear is the fact that costs awarded by a judge at first instance are afforded
    considerable deference on appeal. In this case, the application judge was
    intimately familiar with the proceedings and the relevant evidence. As noted,
    apart from one inconsequential error, he identified and applied the correct
    principles in quantifying costs.

[157]

Furthermore, in
    the circumstances of this case, I cannot say that the costs awarded were
    excessive. The Crown forced three separate respondents to proceed through a lengthy
    forfeiture application and a number of related motions. As noted by the
    application judge, the forfeiture application was wholly and obviously
    meritless from the beginning. The properties at issue, which the Crown would
    have obtained if successful, were valuable. As such, the objectives of both
    deterrence and denunciation justify a high award in this case and, therefore, I
    cannot conclude that the application judges award was unnecessarily excessive.

H.

Disposition

[158]

For these
    reasons, I would dismiss the appeal. The respondents have asked that this court
    award costs of the appeal. I would require the respondents to file brief
    submissions, addressing both entitlement to costs and the quantum of any costs
    if awarded, within 15 days from the release of these reasons. The Crown should
    file any responding submissions within 15 days after receipt of the
    respondents submissions.

Released: (HSL) April 14, 2016

H.S. LaForme J.A.

I agree John Laskin
    J.A.

I agree G. Pardu J.A.

[1]
A directorate of Public Works and Government Services Canada that manages assets
    seized or restrained under various legislation, including the forfeiture
    provisions of the
CDSA
.

[2]
For the sake of clarity, I am not saying that a statutory courts power to control
    its own process is the same as a superior courts inherent jurisdiction. A
    superior courts inherent jurisdiction is a reserve or fund of authority that
    provides a number of different powers, including the power to control the
    courts process:
Parsons v. Ontario
, 2015 ONCA 158, 125 O.R. (3d) 168,
    at paras. 63-70.