Control

Constructive Possession

R. v. Nixon, 2007 CanLII 5530 (ON SC)

i. “Control” for the purposes of constructive possession

[8] With respect to the first issue, the judge held as follows:

Without any identification, however, without a suitably matching signature and without the key, [the bank supervisor] would not have permitted Mr. Evans [sic] to go to the box. In fact, without the key, it would have been impossible for him to open the box, that is, to exercise control over it; and without identification or matching signature, the bank employees would not have permitted him to gain any other kind of control or possession over the box or its contents.

Later in her ruling, the judge considered the definition of “control” for the purposes of constructive possession as set out in R. v. Savory (1996), 1996 CanLII 2001 (ON CA), 94 O.A.C. 318 (C.A.). In Savory, the Court of Appeal held as follows at paras. 7-8:

Control for the purpose of constructive possession does not require that the accused did in fact exercise control over the object in question. In R. v. Terrence (1980), 1980 CanLII 74 (ON CA), 55 C.C.C. (2d) 183 (Ont. C.A.), aff’d (1983), 1983 CanLII 51 (SCC), 4 C.C.C. (3d) 193 (S.C.C.), the Supreme Court accepted that control means power or authority over the object in question. Similarly, in R. v. Chambers (1985), 1985 CanLII 169 (ON CA), 20 C.C.C. (3d) 440 (Ont. C.A.), the court held that the right to grant or withhold consent to drugs being stored in a bedroom was sufficient to constitute control. Again, control is established if there is the right to grant or withhold consent. It is not necessary that the consent in fact be granted or withheld.

The trial judge’s recharge on control was consistent with the above authority. She correctly asked the jury to determine whether the appellant was able to exercise a directing, guiding or restraining power over the drugs. It was not necessary for the jury to find that the appellant did in fact exercise a directing, guiding or restraining power over the drugs.

After considering this definition, the judge continued as follows:

The test for constructive possession can thus be expressed as the ability to “exercise a directing, guiding or restraining power over the drugs”. In this case, Mr. Nixon was arrested prior to the bank officials satisfying themselves that he was in fact the person entitled to exercise control over the safety deposit box…No key whatsoever was found in his possession at the bank. Without the key, and assuming for the sake of argument that he was able to satisfy the bank people that he was the person entitled to access the box in question, he would in fact not have had the ability to access the box. [Emphasis added]

a) The Test for “control”

[9] By requiring evidence that Mr. Nixon had the actual ability to gain access to the box on the date of his arrest, the preliminary inquiry judge has misapplied the test for “control”. In my opinion, the phrase “was able to exercise a directing, guiding or restraining power over the drugs” [emphasis added] at para. 8 of Savory should not be strictly interpreted to mean that constructive possession requires the practical ability to gain access to an item. Rather, the right to control an item, independent of the practical ability to do so, is sufficient. Note that at para. 7 of Savory, the court found that “control is established if there is the right to grant or withhold consent.” [Emphasis added]

[10] Similarly, Allen J.A. of the Alberta Supreme Court (Appeal Division) held as follows in R. v. Caldwell (1972), 1972 ALTASCAD 33 (CanLII), 7 C.C.C. (2d) 285, (1972) 5 W.W.R. 150 (cited to C.C.C.) at 290-91:

[W]hile possession under the definition prescribed by the Criminal Code is a matter to be determined on the facts of each case, when the goods in question are not in the physical possession of an accused, in order to constitute constructive possession it must extend beyond quiescent knowledge and disclose some measure of control or right of control over the goods. See Bird J.A., in R. v. Bunyon (1954), 1954 CanLII 423 (BC CA), 110 C.C.C. 119 at p. 123; Cartwright J. (as he then was) in Beaver v. The Queen (1957 CanLII 14 (SCC), 118 C.C.C. 129) at p. 140; O’Halloran J.A. in R. v. Colvin and Gladue (1942), 1942 CanLII 245 (BC CA), 78 C.C.C. 282, (1943) 1 D.L.R. 20, (1942) 3 W.W.R. 465; and Roach J.A. in R. v. Lou Hay Hung (1946), 1946 CanLII 118 (ON CA), 85 C.C.C. 308, (1946) 3 D.L.R. 111, (1946) O.R. 187. [Emphasis added]

[11] This conclusion was adopted by the B.C. Court of Appeal in R. v. Smith (1973), 1973 CanLII 1546 (BC CA), 10 C.C.C. (2d) 384, and was recently affirmed by that court in R. v. Fisher (2005), 2005 BCCA 444 (CanLII), 200 C.C.C. (3d) 338 (B.C.C.A.).

[12] Caldwell makes it clear that constructive possession can be established where there is either a “measure of control or right of control”, and therefore that constructive possession does not require the practical ability to control an item at any given time.

[13] This conclusion accords with common sense: if a person could not be held to possess an item unless she had the practical ability to gain access to it, then a person who had (for example) lost her car keys would be said not to possess her car or its contents until the keys were found. Likewise, anyone who was locked out of his house would be said not to possess its contents. By contrast, if constructive possession includes either the actual ability to gain access or the right to do so, possession would continue uninterrupted in both cases.

[14] “Control” therefore does not require proof that Mr. Nixon had the practical ability to gain access to the contents of the box on the date of his arrest – rather, it is sufficient for the Crown to show that he had the right to control the contents of the box on September 2, the date on which he is charged with having possessed the items.

Effective Control

Rahim v. Canada (Citizenship and Immigration), 2008 FCA 87 (CanLII)

[17] In Huang, the shares of the corporation in question were held in trust for the applicant, Ms. Huang, by her father. The visa officer held that the applicant’s father had “all authority” over the shares in question in his capacity as trustee and, therefore, Ms. Huang did not control those shares. Lemieux J. found that in reaching this decision, the visa officer adopted a de jure control test. Lemieux J. stated that the de jure test is the proper test to determine control of a corporation for income tax purposes, citing the income tax cases of Buckerfield’s Limited v. Canada (Minister of National Revenue, [1965] 1 Ex. C.R. 299 and Duha Printers, seemingly as implicit authority for the proposition that the same test should be applied with respect to the matter of control of shares for the purposes of the definition of business experience in subsection 88(1) of the Regulations. Lemieux J. went on to find that the visa officer was justified, based on the evidence before him, in concluding that Ms. Huang did not control the shares in question and that any ambiguity in the trust documentation counted against her, since she had the burden of satisfying the visa officer that she met the requirements of the Act and the Regulations.

[18] In my view, the cases cited by Lemieux J. as authority for the de jure control test with respect to the determination of who, if anyone, controls a corporation for income tax purposes do not provide authority for the proposition that a de jure control test is applicable with respect to the determination of whether a person controls shares for the purposes of the definition of business experience in subsection 88(1) of the Regulations. With respect, income tax legislation and immigration legislation are based upon significantly different considerations. Moreover, the tests in Buckerfield’s and Duha Printers deal with control of a corporation, whereas the test to be applied under the applicable provisions of the Regulations deals with control of shares of a corporation.

[19] The Court referred the parties to the decision of this Court in Cloutier v. Canada (Minister of National Revenue), [1987] 2 F.C. 222; 1986 F.C.J. No. 778, a decision that interpreted the concept of control of shares in the context of the Unemployment Insurance Act, 1971, S.C. 1970-71-72, c. 48 and the Unemployment Insurance Regulations, C.R.C., c. 1576. In that case, the issue was whether Mr. Cloutier retained control over certain shares that he had deposited in trust to provide security for a loan that he had received. Marceau J.A. held, at paragraph 5, that in the context of the particular provision of that legislation, control could be interpreted as effective control, which he described as follows:

… effective control, which means control that can be freely exercised and is not impeded by circumstances independent of the person having control.

Applying this test, Marceau J.A. found that while the shares were the subject of the trust arrangement, Mr. Cloutier was not free to deal with them and accordingly, he did not have effective control of them.

[20] In my view, the effective control test in Cloutier is consistent with the language of the definitions of business experience and percentage of equity that are found in subsection 88(1) of the Regulations, as well as the purpose of the provisions of the Regulations which deal with immigration by entrepreneurs. Accordingly, I adopt this definition. I would also add that both counsel at the hearing agreed that this definition was appropriate.

Application - Huang

[21] While the decision in Huang is not under review, I would observe that the application of the effective control test to the facts in that case would likely have produced the same result. In that case, the evidence established that Ms. Huang was unable to deal with the shares that were held in trust for her and as a result, I do not believe that she would have met the effective control test.

[24] In the present circumstances, Mr. Rahim has always been in a position to have the shares of the corporation transferred to him by revoking the trust. His power to do so is unfettered and can be freely exercised. While he caused those shares to be held in trust for a reason, at any time he wishes to do so, he can cause those shares to be transferred to himself and registered in his name. Mr. Rahim’s circumstances are, in this important respect, fundamentally different from the circumstances of Mr. Cloutier, who could not deal with his shares without first repaying the loan in respect of which those shares stood as security, and Ms. Huang, who had no apparent ability at all to gain control of the shares that were held in trust for her. Accordingly, I am of the view that Mr. Rahim has, and has always had, effective control over the shares of the corporation that are held in trust for him by Mr. Ali and has, therefore, demonstrated that he meets the requirement of control of a percentage of equity of the qualifying business in subsection 88(1) of the Regulations.