COURT OF APPEAL FOR ONTARIO
RE: HER MAJESTY THE QUEEN (Respondent) – and – GIOVANNI D’ANDREA (Appellant)
BEFORE: LASKIN, CHARRON and LANG JJ.A.
COUNSEL: Brian H. Greenspan for the appellant
Shelley Hallett for the respondent
HEARD: June 2, 2004
On appeal from the conviction entered on July 11, 2002 by Justice John F. McGarry of the Superior Court of Justice, sitting without a jury, and from the sentence imposed by McGarry J. on September 23, 2002.
E N D O R S E M E N T
1Mr. D’Andrea appeals from his conviction for fraud and from the sentence imposed of two years less a day.
Issues
2Mr. D’Andrea raises three issues on appeal:
Whether the trial judge misapprehended the appraisal evidence;
Whether the trial judge failed to properly consider Mr. D’Andrea’s allegedly honest belief in the value of the property; and
Whether the trial judge failed to properly consider the imposition of a conditional sentence.
Misapprehension of the Appraisal Evidence
3Any misapprehension of the appraisal evidence is not relevant because Mr. D’Andrea’s guilt or innocence did not turn on the value of the property. In any event, the trial judge carefully considered the four expert property appraisals. He gave clear, cogent reasons for accepting, with one adjustment, the Lansink appraisal. The other appraisals suffered from various weaknesses that the trial judge identified, including the use of this very sale as a comparable (when only 50% of the property was sold), the use of other inappropriate comparables, the questionable use of adjustments, and, in one case, a personal attack on the author of the Lansink appraisal, an attack that the trial judge found only served to undermine the other appraiser’s credibility.
4In the end, after reviewing all appraisals, the trial judge accepted the adjusted Lansink valuation of $3.7 million as consistent with the $3.6 million value cited in the shareholder agreement, and the $1.8 million price offered for 50% of the property. Not only was the trial judge entitled to come to that conclusion on the evidence, but we agree with that conclusion.
- Honest Belief in the Value
5The Crown was not required to prove that the accused did not have an honest belief as to the property’s value; it was required to prove that the accused committed a prohibited act – an act of deceit, falsehood, or other fraudulent means – and that the prohibited act caused a deprivation evidenced by economic loss, or risk of economic loss. Those are the elements of fraud: R. v. Theroux, [1993] 2 S.C.R. 1175, 79 C.C.C. (3d) 449 (S.C.C.).
6Accordingly, the accused’s belief that the price was a reasonable one, or that it was a good price for the investors, was irrelevant. In any event, the trial judge heard and considered Mr. D’Andrea’s evidence that he honestly believed the value of the property fell within the $1.8 million range, that he believed he was contributing his construction expertise for the other $1.8 million, that he believed the offer was a reasonable one in all the circumstances, and that he believed it was in the interests of the investors to accept the offer. The trial judge also considered all the other evidence on this point, including the accused’s planning of this transaction and its structure, and the accused’s familiarity with land assembly and development. In the end, whatever his other beliefs, the accused acknowledged that he not only received his interest in the $1.8 million purchase price, but also received a 50% interest in the company that owned the property.
7Mr. D’Andrea knew that $1.8 million was paid for a 50% interest in the property. That knowledge flowed inevitably from his knowledge that the real estate commission was based on a $3.6 million selling price and from his negotiations over the terms of the shareholders’ agreement. He knew he had a conflict. He retained a separate lawyer to close the sale and concealed his planned ongoing involvement with the property.
8Based on this, the trial judge found that the accused, who owed a fiduciary duty to the investors, and who knew he stood to benefit from the transaction to the detriment of the other investors, was under an obligation to disclose to those investors both the particulars of the sale and his ongoing involvement in the development. He did not do so, even when directly and repeatedly asked.
9In addition to this deliberate deception, the trial judge found the investors were not only left with the risk of economic harm, but that they also lost, at a minimum, ownership of the 50% of the property that was not sold to the vendors. They suffered a deprivation.
10In comprehensive and thorough reasons, the trial judge found that the Crown had established the elements of fraud. There was ample evidence to support that finding. We see no error – overriding, palpable, or otherwise.
- Consideration of a Conditional Sentence
11At the sentencing hearing, the defence suggested an upper reformatory term to be served as a conditional sentence and the Crown requested a penitentiary term. The trial judge imposed the maximum reformatory term of two years less one day.
12In deciding that a conditional sentence was inappropriate, the trial judge considered that this was a “sizeable” fraud, that it exhibited both planning and sophistication, that the accused breached a fiduciary duty to his fellow shareholders, that he intended to benefit himself personally, that he lied about his ongoing involvement with the development, and that he continued for some time to conceal that involvement. In imposing a reformatory term, he took into account all the mitigating circumstances, including the appellant’s efforts at restitution, his previously good character, and his contributions to the community. While the trial judge did not accede to defence counsel’s request for a conditional sentence, he rejected the Crown’s suggestion of a penitentiary term and imposed the maximum reformatory term. In our view, the sentence was demonstrably fit.
13In the result, the appeal from conviction is dismissed, leave to appeal sentence is granted, and the sentence appeal is dismissed.
Signed: “John Laskin J.A.”
“Louise Charron J.A.”
“Susan E. Lang J.A.”