Her Majesty the Queen v. Saikaley
[Indexed as: R. v. Saikaley]
Ontario Reports
Court of Appeal for Ontario
Doherty, Hourigan and L.B. Roberts JJ.A.
May 10, 2017
135 O.R. (3d) 641 | 2017 ONCA 374
Case Summary
Charter of Rights and Freedoms — Search and seizure — Search without warrant
Canada Border Services Agency ("CBSA") officers searched accused's iPhone without warrant during secondary inspection. Police subsequently obtained wiretap authorization and search warrants. Accused conceded that without information obtained during CBSA search, first wiretap was validly authorized and that information learned during CBSA search would not have influenced outcome at trial. Wiretap authorizations and warrants valid even if evidence discovered as result of CBSA search was excised from affidavits and informations to obtain. Later authorizations based on information learned from initial lawful wiretap. No evidence that police asking CBSA to search accused subverted pre-authorization process through bad faith, fraudulent misrepresentation or similar misconduct. Section 8 ground dismissed.
Charter of Rights and Freedoms — Trial within reasonable time
Total delay in pre-Jordan trial being 34 months. Crown not required to accept all steps proposed by defence to expedite trial in absence of evidence Crown acting arbitrarily or in bad faith. Crown took several steps to reduce delay and case particularly complex. Delay exceeding presumptive 30-month ceiling but justified by complexity of case. Alternatively, transitional exceptional circumstance also existing as parties relied reasonably on pre-Jordan law. Case complex, delay was within Morin guidelines, Crown took steps to decrease institutional delay and trial judge finding that accused exaggerating prejudice caused by delay. Accused's rights under s. 11(b) of Charter not violated.
Criminal law — Criminal interest rate — Mens rea
Accused convicted of entering into agreement to receive interest at criminal rate. Accused claiming that he did not know that terms of loan agreements produced effective interest rate of more than 60 per cent per year. Trial judge erring in applying presumption of knowledge under s. 347(3) of Code to reject accused's defence of mistake of fact. Presumption not applying as trial judge acquitted accused of receiving payments of interest at criminal rate. Mens rea of entering into agreement to receive interest at criminal rate requiring knowledge of or wilful blindness to fact that terms of agreement call for effective annual interest rate of over 60 per cent. New trial ordered on these counts.
Criminal law — Criminal organization
Accused being leader of three-man group involved in drug trafficking. Group hierarchical and operating for considerable period of time. Trial judge not misapprehending evidence in convicting accused of criminal organization offences. Verdict not unreasonable.
Criminal law — Forfeiture
Sufficiency of carceral component of sentence not justifying refusal to order forfeiture. Trial judge not erring in imposing forfeiture order and fine in lieu of forfeiture in addition to lengthy prison sentence.
Criminal law — Sentencing — Parole ineligibility period
Accused convicted of conspiracy, drug trafficking, proceeds of crime, firearms and criminal organization offences. Trial judge erring in extending parole ineligibility order under s. 743.6(1.1) of Code to offences which were not criminal organization offences and for which accused received sentence of less than two years' imprisonment. Parole ineligibility order in relation to offences other than criminal organization offences set aside.
Criminal law — Sentencing — Totality
Accused convicted of conspiracy, drug trafficking, proceeds of crime, firearms and criminal organization offences. Trial judge imposing consecutive sentences totalling 19 years. Trial judge erring in application of principles of totality and proportionality and failing to account for overlap among offences. Sentence reduced to 15 years.
Factual Overview
1In 2008 through to 2009, the Royal Canadian Mounted Police (the "RCMP") conducted an investigation, titled "Project A-Wire", into a number of individuals in the Ottawa region suspected to be involved in drug trafficking. The RCMP and the Canadian Border Services Agency ("CBSA") reached an agreement whereby the CBSA agreed to assist the RCMP's Ottawa drug section with their investigation. The appellant, though not initially the target of the investigation, had been identified by the RCMP through surveillance.
2On November 14, 2008, a CBSA intelligence officer created a "lookout", a document identifying the appellant as a person of interest, on the basis of information received from the RCMP that the appellant was involved in an import/export business with a link to narcotics.
3The RCMP became aware that the appellant had left the country and would be returning via the Ottawa International Airport. On November 28, 2008, an RCMP officer wrote an e-mail to a CBSA officer, requesting that the appellant be "flagged" and that his belongings be searched upon his re-entry to Canada.
4On March 18, 2009, the appellant returned to Canada via the Ottawa International Airport, and was directed to attend the customs superintendent's office for a secondary inspection (the "CBSA search"). The officers searched the appellant's iPhone and found a file entitled "O-Due", which was a debt list. A number of the names on the debt list were suspects of interest to the CBSA regarding narcotics. A second file entitled "Shepherd Financial" contained the names of Billy Joe Krieger and Sherri Lynn Newton, both already on the RCMP drug unit suspects list, together with dollar amounts. This information was forwarded to the RCMP.
5On May 20, 2009, the RCMP obtained an authorization under s. 186 of the Criminal Code, R.S.C. 1985, c. C-46 for the interception of communications of several persons, including the appellant (the "first wiretap authorization"). Two more authorizations were obtained on July 13 and September 10, 2009. These additional authorizations allowed for the police to intercept communications in two of the appellant's vehicles, as well as "house probes" (the "second wiretap authorizations"). The police also obtained judicial authorizations for general warrants authorizing "sneak and peeks" of certain locations, and search warrants authorizing seizures.
6On November 5, 2009, RCMP officers executed a number of search warrants. The first was on a vehicle driven by Christopher Kaizer. In the course of earlier surveillance, the surveillance team had witnessed a black bag being placed in Mr. Kaizer's vehicle while he was in the company of the appellant and another associate, Andrew Wall, in the vicinity of 1380 Prince of Wales Drive, an apartment rented by the appellant (the "rental apartment"). The search of Mr. Kaizer's vehicle revealed a substantial quantity of hashish, and Mr. Kaizer was arrested.
7Other members of the surveillance team followed the appellant and Mr. Wall to a bar previously owned by the appellant's father, known as "Rick's Place" or the "Raven's Nest". The appellant and Mr. Wall were arrested behind the building.
8The appellant was searched and found to be in possession of cannabis resin and currency, which were seized. A search of the appellant's vehicle resulted in officers discovering CDN$5,620, one gram of cocaine, 20 grams of marijuana, seven grams of hashish and keys to a storage locker at the rental apartment. The RCMP then searched the bar, which resulted in drugs, drug paraphernalia and Canadian currency being seized.
9CDSA search warrants were executed on the appellant's home, a residence located on Kerry Hill Crescent in Ottawa (the "residence"), and the rental apartment. The search of the residence resulted in officers locating a loaded Glock 23 mm handgun, two tasers/stun guns, knives, ammunition and CDN$128,310. In the rental apartment, officers located large quantities of hashish, cocaine, Novocaine, marijuana, CDN$4,720, US$300, drug packaging, weigh scales and drug paraphernalia, along with an Enfield .38 revolver.
10The appellant was formally charged with 60 offences on March 18, 2010. He was charged with numerous offences arising out of the drug investigation, including several counts of trafficking in controlled substances, possession for the purpose of trafficking and simple possession. He was further charged with several related counts alleging he committed the drug offences as part of a conspiracy to traffic controlled substances. He was also charged with numerous weapons offences related to the Glock handgun, the taser/stun guns and the Enfield revolver. There were also a number of proceeds of crime offences charged arising out of the searches of the appellant's residence, vehicle and rental apartment, and various unrelated extortion and criminal interest rate offences arising out of the appellant's money lending business. Finally, the appellant was charged with committing offences as part of a criminal organization.
11Prior to the commencement of his trial, the appellant sought a stay of the charges against him on the basis that he had not been tried within a reasonable period of time, contrary to s. 11(b) of the Charter. The application was dismissed.
12The appellant also challenged the admissibility of evidence that was directly the product of the execution of judicial authorizations, or derivative of the same, pursuant to s. 8 of the Charter. The appellant argued that his right to be secure from unreasonable search and seizure was breached by the warrantless CBSA search and that, without the disclosure of the information in his iPhone, he would not have been included as a target in the judicial authorizations which were granted. This application was also dismissed.
13The appellant was tried before a judge alone between January 7 and February 13, 2013, and was convicted of 40 counts on the indictment, six of which were stayed based on the rule from R. v. Kienapple, 1974 CanLII 14 (SCC), [1975] 1 S.C.R. 729. He was acquitted of other related offences and certain other charges were withdrawn at the commencement of trial.
14The appellant was sentenced to 19 years' imprisonment, with a parole ineligibility order under s. 743.6(1.1) and (1.2) of the Criminal Code as a result of the appellant's convictions on the criminal organization offences, thereby prohibiting him from applying for parole for 9.5 years. The trial judge also imposed a forfeiture order in the amount of $53,000 in relation to cash seized from the residence, and a fine in lieu of forfeiture in the amount of $1,296,293.37 with five years to pay, or a further five years' imprisonment to be served consecutively to the jail term imposed at trial, in the event of default.
Issues
15The issues raised on appeal and a summary of our conclusions on each issue are as follows:
(i) Did the application judge err in dismissing the appellant's s. 11(b) Charter application to stay the charges for unreasonable delay?
No. The law on s. 11(b) applications has been fundamentally altered by the Supreme Court of Canada's decision in R. v. Jordan, 2016 SCC 27, released after the dismissal of the appellant's application. Under this new legal test, the delay in this case was in excess of the presumptive ceiling. However, the case was particularly complex and the delay was justified on that basis. In addition, the parties reasonably relied upon the state of the law prior to the release of Jordan. Therefore, the transitional exceptional circumstance applies, and the appeal of the dismissal of the s. 11(b) application must also fail on that basis.
(ii) Did the trial judge err in dismissing the appellant's s. 8 Charter challenge to the admissibility of the evidence?
No. The admissibility or inadmissibility of the evidence obtained through the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.) searches had no impact on the validity of the wiretaps and other search warrants, the admissibility of the evidence obtained from them and the outcome of the trial.
(iii) Did the trial judge err in convicting the appellant of entering into criminal interest rate agreements?
Yes. The trial judge erred in applying the deeming provisions of s. 347(3) of the Criminal Code and in failing to consider whether the appellant had the requisite mens rea of knowingly entering into loan agreements to receive interest at a criminal rate. A new trial on these counts is required.
(iv) Did the trial judge err in unreasonably convicting and/or misapprehending the evidence in relation to the following convictions: the criminal organization offences, extortion, the firearms offences, the conspiracy and substantive drug offences, and the proceeds of crime offences?
No. The convictions were all amply supported by the evidence and were not unreasonable. Nor were they the product of any misapprehension of the evidence.
(v) Did the trial judge err in sentencing the appellant?
Yes. The Crown conceded that the appellant should have received credit for pre-sentence custody and restrictive bail conditions at the rate of 1.5 days, amounting to 30 days. The trial judge also erred in imposing a global sentence of 19 years and in applying a parole ineligibility order to all of the offences for which the appellant was convicted.
(vi) Did the trial judge err in imposing the forfeiture order and fine in lieu of forfeiture?
No. The trial judge made a factual finding that the appellant was the head of a criminal organization involved in the trafficking of drugs, and that his income from sources unrelated to the designated offences could not reasonably account for his property. There was no error in those findings and the onus was therefore on the appellant to establish that the property was not the proceeds of crime. The appellant did not meet this onus. Contrary to the submission of the appellant, it would have been an error in law for the trial judge to rely upon the sufficiency of the carceral component of the sentence to justify a refusal to order forfeiture.
Analysis
(i) Section 11(b) Application
(a) Decision of the Application Judge
16The appellant was arrested and released on November 5, 2009. However, he was told he would be charged on a later date. The appellant was ultimately charged on March 18, 2010. His wife was also charged with weapons offences, arising from the discovery of the Glock in their residence.
17The s. 11(b) application was heard by Parfett J., who on August 28, 2012 dismissed the application. The application judge reviewed the applicable legal principles pursuant to R. v. Morin, 1992 CanLII 89 (SCC), [1992] 1 S.C.R. 771 and R. v. Askov (1990), 1990 CanLII 45 (SCC), 75 O.R. (2d) 673. She concluded that the anticipated delay of 34 months was of sufficient length to justify a more in-depth analysis of the causes of the delay.
18As required by the law as it stood at that time, the application judge categorized the delay. She found that the total inherent delay was 19 months, and that this delay was not unreasonable given the complexity of the case and volume of the evidence. With respect to the institutional delay, she determined that it totalled 12 months, which she also found was not unreasonable.
19The application judge attributed one month of delay to the defence. There was considerable argument on the issue of the delay attributable to the Crown. The defence argued that significant delay was caused by the Crown's insistence in proceeding against the appellant's wife. The appellant contended the charges against the wife were weak and if the Crown had withdrawn the charges against the wife prior to the preliminary hearing dates being set, the appellant would have chosen a trial in the Ontario Court of Justice.
20The application judge found that this argument had "significant validity". She stated that the Crown ought to have known the strength of its case by the time of the pre-trial conferences in the Ontario Court of Justice in order to hold meaningful resolution discussions. She noted that it took until the second day of the preliminary inquiry before the Crown realized it was unlikely to get a committal on the charges with respect to the wife, and withdrew the same. The application judge was of the view that a decision at an earlier date by the appellant to waive the preliminary hearing or to proceed to trial in the Ontario Court of Justice would have resulted in a considerable saving of time.
21Notwithstanding these findings, the application judge concluded:
. . . Unfortunately, there is no evidence before me of the extent of time that could have been saved had the Crown decided earlier to withdraw charges against the Applicant's wife. The court cannot speculate concerning what decision the Applicant would actually have made had the charges been withdrawn earlier, nor can it speculate concerning how much time would have been saved. The court can only make a decision based on the evidence before it and there is no such evidence.
22As a result, the court did not attribute delay to the Crown for its failure to withdraw the charges against the appellant's wife earlier in the process.
23The application judge attributed a total of 1 month to Crown delay. This delay was primarily the result of the decision of the Crown not to accept a proposal by defence counsel to streamline the pre-trial process in the Ontario Court of Justice. However, the application judge concluded that defence counsel's lack of availability was such that a shortened procedure would only have saved approximately one month.
24The application judge concluded that the delay in this matter was sufficient to find there has been some prejudice to the applicant, particularly arising from being on bail for an extended period of time. However, she found: "it is also apparent that the Applicant exaggerated much of the prejudice that he stated he had suffered".
25Applying the guidelines set out in Morin and Askov, the application judge held that the institutional delay in this case was acceptable, and in her view, did not reach the level of breaching the accused's s. 11(b) rights. Moreover, although the accused had suffered some prejudice, it was not sufficient to justify a stay of proceedings. As a result, the application was dismissed.
(b) Jordan Analysis
26Since the commencement of this appeal, the law applicable to s. 11(b) applications has been fundamentally altered by the decision in Jordan. In that case, the Supreme Court of Canada created an entirely new framework for s. 11(b) applications, establishing a ceiling beyond which delay is presumptively unreasonable. In cases tried in a superior court, the ceiling is set at 30 months of net delay.
27The period of total delay is calculated from the date of the charge to the actual or anticipated conclusion of trial. From this figure, defence delay (i.e., delay waived by the defence and delay caused solely by the conduct of the defence) is deducted to produce the net delay: Jordan, at paras. 60-67. In the present case, the parties agree that the net delay is 35 months.
28Given that the net delay is greater than the presumptive ceiling, the onus rests with the Crown to establish that the delay is reasonable because of the presence of exceptional circumstances. Exceptional circumstances consist of discrete events and particularly complex cases: Jordan, at para. 71. The Crown does not rely on any discrete events, but argues that the complexity of this case gives rise to exceptional circumstances.
29The Crown submits that, by any reasonable standard, this case was particularly complex and notes that the appellant conceded the complexity of the case in argument before the application judge. Cases may be considered particularly complex because the nature of the evidence or the nature of the issues require a large amount of trial and/or preparation time: Jordan, at para. 77. According to the Crown, both criteria are satisfied in this case.
30The hallmarks of particularly complex cases are described in Jordan, at para. 77, and include voluminous disclosure, large numbers of witnesses, significant requirements for expert evidence and charges covering a long period of time.
31The Crown relies upon the length and complexity of the investigation, including the surveillance, digital number recorder ("DNR") warrants, production orders and wiretap authorizations. The Crown also points to the voluminous disclosure and argues that the size of the record on appeal speaks for itself (thousands of pages of transcripts, 21 appeal books and supplementary appeal books), thus requiring a significant amount of trial and preparation time.
32The appellant did not strenuously argue that this was not a complex case. Given the charges and nature of the investigation, this is a sensible position. We agree, based on the nature of the issues in this case, the complexity of the investigation and the voluminous disclosure, that this case bears the hallmarks of a complex case as contemplated in Jordan. However, as counsel for the appellant correctly submits, that does not end the matter. The Crown, having initiated what could reasonably be expected to be a complex prosecution, has a positive duty to develop and follow a concrete plan to minimize the delay occasioned by such complexity. Where the Crown has failed to do so, it will not be able to show exceptional circumstances, because it will not be able to show that the circumstances were outside its control: Jordan, at para. 79.
33Similarly, while courts play no supervisory role in decisions of the Crown related to whether to lay multiple charges for the same conduct or to try multiple co-accused together, any delay resulting from the exercise of prosecutorial discretion of this nature must conform to the accused's s. 11(b) right: Jordan, at para. 79.
34The appellant argues that not only did the Crown not have a plan to move this matter forward expeditiously, it exacerbated the delay by (i) insisting on proceeding with the charges against the appellant's wife until the second day of the preliminary hearing; and (ii) declining to accept the offer by the defence to streamline the pre-trial process in the Ontario Court of Justice.
35With respect to the delay occasioned by reason of the charges against the appellant's wife, the appellant notes that he filed a sworn affidavit on the application attesting to the fact that he would have waived his right to a preliminary hearing at any time if the charges against his wife had been withdrawn. Thus, he argues that the Crown's decision to proceed with the charges against this wife had the effect of delaying the proceeding, and that the application judge erred in finding that there was insufficient evidence to make a determination on this point.
36We would reject this argument. On November 21, 2011, the first day of the preliminary hearing, the defence provided to the Crown an affidavit sworn by the appellant's wife, wherein she denied having any possessory or ownership rights in the weapons seized from the residence. Prior to the delivery of that affidavit, there is no evidence that there had been serious discussions between counsel regarding the withdrawal of charges. The parties were able to reach an agreement the next day that provided that the appellant's wife would waive spousal immunity and provide a statutory declaration denying any interest in the weapons and ammunition seized, in exchange for the withdrawal of the charges against her.
37While the Crown must act reasonably and according to a concrete plan in prosecuting a complex case, the Crown should not be forced to abdicate its responsibility to prosecute meritorious cases as a matter of expediency. The charges against the appellant's wife were serious. The Glock was found in the master bedroom she shared with the appellant and there were photographs tendered of her posing with the handgun. In these circumstances, the Crown's insistence on proceeding with a prosecution was not unreasonable, as there was a reasonable prospect of conviction. We also note that the appellant's current position is inconsistent with his position at trial and on appeal that the Glock handgun was in the possession of his wife.
38The appellant also submits that the Crown delayed the proceeding in the Ontario Court of Justice because it unreasonably refused to agree to the suggestion made by defence counsel to streamline the pre-trial process. In a letter dated December 6, 2010, counsel for the appellant advised the Crown that he and his wife's counsel were prepared to seek instructions from their respective clients to waive committal on all charges in exchange for the Crown making Officer Rock Brunet available to be cross-examined on several informations to obtain and affidavits that he had sworn in support of various judicial orders. Some of the areas of potential cross-examination were listed in the letter.
39In effect, defence counsel were proposing a waiver of the preliminary hearing, which was scheduled eleven months away, in exchange for the Crown consenting to a Dawson application: see R. v. Dawson (1998), 1998 CanLII 1010 (ON CA), 39 O.R. (3d) 436. This proposal was rejected by the Crown in a letter dated February 15, 2011 on the basis that the proposed areas of cross-examination were "too broad and general in nature".
40The appellant acknowledges that the Crown was under no obligation to accept the proposal, but argues that the Crown must bear the consequences of its exercise of prosecutorial discretion in rejecting the proposal. We would not accede to this argument for the following reasons.
41First, there is no evidence that this proposal, which had only been made conditionally, would have saved significant time. The defence was proposing broad categories of cross-examination, which were identified as just some of the potential topics. It is likely that this would have been a lengthy cross-examination. It is also likely that there would have been disagreement among counsel regarding the scope of cross-examination as it related to the confidential informant. There is no reason to believe that issues regarding the scope of the cross-examination on this issue could have been resolved quickly.
42Second, the Crown had a legitimate concern and a legal obligation to protect the identity of the confidential informant. The risk of exposing the confidential informant during the course of the cross-examination of Officer Brunet was a very real one. That is one reason why cross-examination of such affiants is not the general rule.
43Again, we do not read Jordan as requiring the Crown to take any and all steps proposed by the defence to expedite matters. The Crown's reasonable and principled position on the Dawson application provides no basis to conclude the Crown acted arbitrarily or in bad faith in refusing to consent to the cross-examination proposed by the defence. So long as the Crown acts reasonably and consistently with its duties, it would be unconscionable to deny it the benefit of the complex case exception to the 30-month presumptive ceiling.
44In our view, the Crown did have a concrete plan to move this very complex case forward. Nothing in the Crown's conduct complained of exacerbated the delay. To the contrary, the Crown acted reasonably and took steps to reduce the delay, including severing charges, and withdrawing charges against the appellant's wife. Accordingly, in our view, although the net delay in this case exceeds the presumptive ceiling, we are satisfied that the case was particularly complex and that the delay was justified.
45In the alternative, if the delay is not justified, the Crown also relies upon the transitional exceptional circumstances described in Jordan. The Supreme Court made clear that the new framework applies to cases currently in the system: Jordan, at para. 95. However, where the net delay exceeds the presumptive ceiling, a transitional exceptional circumstance may arise where the charges were brought prior to July 8, 2016, being the date of the release of Jordan. To invoke this transitional exceptional circumstance, the onus lies with the Crown to establish that the time the case has taken is justified based on the parties' reasonable reliance on the previous state of the law: Jordan, at para. 96.
46Before Jordan, prejudice and the seriousness of the offence often played a decisive role. For cases currently in the system, these factors can inform whether the parties' reliance on the previous state of the law was reasonable: Jordan, at para. 96.
47The Crown submits that the trial judge properly considered and applied the Morin framework and concluded there was no violation to the appellant's s. 11(b) right. Thus, the Crown's position is that regardless of whether the Morin or Jordan framework is applied, the delay in this case is not unreasonable.
48The appellant submits that applying the Morin framework, the application judge erred in her consideration of the alleged delay caused by the Crown referred to above, i.e., the refusal to withdraw the charges against the appellant's wife and the failure to accept the offer by defence counsel to expedite matters at the Ontario Court of Justice. The appellant further submits that he suffered prejudice by reason of the delay.
49In R. v. Williamson, [2016] 1 S.C.R. 741, the court outlined a contextual assessment of the circumstances that inform an analysis of the applicability of the transitional exceptional circumstance. The court stated that relevant circumstances include (i) the complexity of the case; (ii) the period of delay in excess of the Morin guidelines; (iii) the Crown's response, if any, to any institutional delay; (iv) the defence efforts, if any, to move the case along; and (v) prejudice to the accused.
50An analysis of these contextual factors in the present case favours the position of the Crown. There is no doubt that this was a complex case. The inherent time requirements and the institutional delay were not unreasonable, and the delay attributable to the Crown was minimal. We are also satisfied that the Crown made efforts to move the matter forward expeditiously, including by severing charges, and withdrawing charges against the appellant's wife. For the reasons stated above, we are also not of the view that the Crown acted unreasonably with respect to withdrawal of the charges against his wife or on the issue of the Dawson application. We are satisfied that the defence tried to move the case along and should be given due credit for that effort. With respect to prejudice, we agree with the application judge's finding that much of the prejudice has been exaggerated by the appellant.
51In the circumstances, if we are wrong that the complexity of the case rendered the delay reasonable, we would conclude that applying the transitional exceptional circumstances framework, the Crown has satisfied the court that the time that the case took was justified based on the parties' reasonable reliance on the law as it previously existed.
52For these reasons, we would dismiss the appeal of the application judge's dismissal of the s. 11(b) application.
(ii) Section 8 Application
53The appellant renewed his challenge to the admissibility of evidence that was directly the product of the execution of judicial authorizations, or derivative of the same, pursuant to s. 8 of the Charter. The appellant argued that his right to be secure from unreasonable search and seizure was breached by the warrantless CBSA search and that, without the disclosure of the information in his iPhone, he would not have been included as a target in the judicial authorizations which were granted and the evidence obtained as a result of those authorizations would not have been admitted at trial.
54In support of the s. 8 ground of appeal, the appellant also challenged the constitutionality of ss. 2 and 99(1)(a) of the Customs Act. The appellant raised this issue for the first time on appeal.
55In order to determine whether it was necessary to hear the s. 8 ground of appeal, including the constitutional challenge raised for the first time on appeal, the panel heard from the parties on the following issue: assuming that the evidence obtained through the Customs Act search was inadmissible, whether the inadmissibility of that evidence could have made any difference in the proceedings, either in terms of the admissibility of the judicially authorized wiretaps or searches, or in terms of the admissibility of the evidence actually obtained from the wiretap and subsequent searches, and its effect on the ultimate result at trial.
56After hearing oral submissions on this question, the panel indicated that it was unnecessary to determine the issue of the constitutionality of s. 99(1)(a) of the Customs Act and that the s. 8 ground of appeal was dismissed with reasons to follow. These are those reasons.
57Turning first to the question of the constitutionality of s. 99(1)(a) of the Customs Act, courts are understandably reluctant to consider constitutional arguments on appeal not raised at trial. In our view, having read the facta filed, these are issues that need a record specifically directed at the factual issues relevant to the constitutional question.
58Moreover, to hear the constitutional argument would have been an academic exercise. As discussed below, we are satisfied that the evidence from the appellant's iPhone obtained during the CBSA search could have had no impact on any aspect of the evidence that was adduced at trial.
59The appellant made two important concessions regarding the significance of the CBSA search result to the wiretap authorizations. First, the appellant took no issue with the admissibility of the evidence derived from the first wiretap authorization, conceding that even without the evidence obtained from his iPhone during the CBSA search, the appellant's communications would have been intercepted through his communications with the principal known persons, Billy Joe Krieger and Sherri-Lynn Newton, who were listed in the first wiretap authorization. Second, the appellant also conceded that he could not argue that the debt list and other information taken from his iPhone during the CBSA search were critical to the trial judge's analysis, and that this information standing alone would have made no difference to the ultimate result at trial.
60The appellant submitted, however, that the results from the CBSA search stood as the basis for the subsequent judicial authorizations and that the evidence gleaned from the customs search was one of the pillars relied upon to obtain the second wiretap authorizations. Specifically, the appellant argues that the police used the information obtained by the customs officers to interpret his communications from the first wiretap authorization, making the information gathered in the CBSA search inextricably linked to the grounds for the second, much broader wiretap authorizations, allowing the police to intercept all of the appellant's communications with anyone from any place. The fact that the appellant was designated as a "known" person rather than a "principal known" person in the first authorization demonstrated that the information put before the authorizing judge would not have been sufficient, without the iPhone search results, to justify the broader order requested in the second wiretap authorizations. As such, the appellant argues that if the CBSA search is found to be unconstitutional, the second wiretap authorizations and search warrants would be invalid, and the evidence flowing from them inadmissible.
61We would not accept these submissions.
62Starting with the last point first, the distinction that the appellant attempts to draw between "principal known" and "known" persons is absent from ss. 185 and 186 of the Criminal Code, which set out the relevant criteria for the granting of a wiretap authorization. Specifically, s. 186(4)(c) does not contain any language that requires or suggests categories of "known" persons; its requirement involves the identification of any "known" persons whose private communications are to be intercepted under the authorization: R. v. Mahal (2012), 113 O.R. (3d) 209, 2012 ONCA 673, at para. 79.
63As this court noted in Mahal, at para. 71, s. 185(1)(e) of the Criminal Code enacts the standard for including persons as "known" in the supportive affidavit. The standard is a modest one:
The threshold for describing a person as a "known" in the supportive affidavit is a modest one. Investigators need not have reasonable and probable grounds to believe that the person was involved in the commission of an offence being investigated. Provided investigators know the identity of the person and have reasonable and probable grounds to believe that the interception of that person's private communications may assist the investigation of an offence, that person is a "known" for the purposes of s. 185(1)(e).
64That standard was met in this case.
65The fact that the appellant was listed as a "known" rather than a "principal known" person in Officer Brunet's May 19, 2009 affidavit in support of the first wiretap authorization does not affect the validity of the subsequent judicial authorizations.
66More importantly, Officer Brunet's July 12, 2009 affidavit supporting the second wiretap authorization did not rest on the three paragraphs containing the evidence obtained from the customs search. Rather, the core of the affidavit depended on the appellant's communications with Billy Joe Krieger and especially Sherri-Lynn Newton that were obtained from the exercise of the first wiretap authorization, as well as from the police surveillance that showed the appellant in close company with both of them.
67Specifically, in paras. 164 to 188 of Officer Brunet's July 12, 2009 affidavit, he sets out in great detail what the police learned about the business relationship and interactions between the appellant and Ms. Newton from the first interception and subsequent surveillance, which led Officer Brunet to conclude that the appellant was engaged in the business of trafficking controlled substances.
68The appellant's intercepted communications and surveillance, coupled with his ties to the Raven's Nest bar, which served as a distribution point for the trafficking of cocaine and other controlled substances, his communications with Mr. Krieger and Ms. Newton, and his lien on Mr. Krieger's vehicle, constituted ample evidence to support the second authorization. The iPhone evidence could be excised from the application and would not have affected it.
69The appellant also submitted that the alleged impropriety of police actions in relation to the customs search could justify the exclusion of all of the evidence produced from the exercise of the judicially authorized wiretaps and searches under s. 24(2) of the Charter.
70As this court recently stated in R. v. Paryniuk (2017), 134 O.R. (3d) 321, 2017 ONCA 87, at para. 66, a trial judge has a residual discretion to set aside a properly issued search warrant or authorization where the judge is satisfied that the conduct of the police has subverted the pre-authorization process through deliberate non-disclosure, bad faith, deliberate deception, fraudulent misrepresentation or the like. However, the standard to be met to invoke this discretion is high: Paryniuk, at para. 70.
71To succeed on this argument, the appellant must demonstrate that the alleged police conduct subverted the pre-authorization process. We would not give effect to this argument. The evidence falls woefully short of what is required to engage the residual discretion to set aside a search authority.
72In our view, the admissibility or inadmissibility of the product of the CBSA search would have had no effect on the result of this appeal. Accordingly, the s. 8 ground of appeal was dismissed.
(iii) Criminal Interest Rate Agreements
73The appellant was charged with offences of having entered into agreements or arrangements with several individuals to receive interest from them at a criminal rate (the "loan agreements"), and also with offences of having received from several individuals a payment or partial payment of interest at a criminal rate. The appellant was acquitted of the charges to receive a payment or partial payment of interest at a criminal rate. There is no appeal from those acquittals. The appellant submits that the trial judge erred in convicting him of having entered into the loan agreements contrary to s. 347(1).
74It is common ground that the appellant was operating a private lending program whereby he loaned money to high-risk borrowers at high interest rates. The loan agreements were documented in writing. The terms of the agreements provided that interest was due monthly, beginning one month from the day the loan was made. The agreements stated that interest would be calculated at rates ranging from 59 to 60 per cent per year and required that a certain amount was to be paid each month.
75The appellant does not challenge the evidence given by the Crown's actuarial expert that the effective rate of interest of each of his impugned loan agreements exceeded 60 per cent on the credit advanced under each of these agreements. However, the appellant denies that he knowingly agreed to charge effective annual rates of interest at a criminal rate of more than 60 per cent. The appellant argues that the Crown was required to prove beyond a reasonable doubt that he knew that the effective annual interest rates under each of these agreements were above 60 per cent. The appellant submits that the trial judge erred in applying the presumption of knowledge under s. 347(3) to reject his defence of mistake of fact with respect to the interest charged under each agreement.
76The Crown's position is that it is only required to prove beyond a reasonable doubt that the appellant voluntarily entered into the impugned loan agreements and had knowledge of their terms, and that those terms produce an effective rate of interest at a criminal rate upon the application of the requisite actuarial calculation. The Crown relies on the inference that a person intends the natural consequences of his or her actions.
77It is helpful at this point to consider the framework of the relevant portions of s. 347 of the Criminal Code.
78For the purposes of this appeal, the relevant portions of s. 347(1) and (3) read as follows:
347(1) Despite any other Act of Parliament, every one who enters into an agreement or arrangement to receive interest at a criminal rate, or receives a payment or partial payment of interest at a criminal rate, is
(a) guilty of an indictable offence and liable to imprisonment for a term not exceeding five years;
(3) Where a person receives a payment or partial payment of interest at a criminal rate, he shall, in the absence of evidence to the contrary, be deemed to have knowledge of the nature of the payment and that it was received at a criminal rate.
79Section 347(1) of the Criminal Code creates two offences: (i) entering into an agreement or arrangement to receive interest at a criminal rate (the "agreeing offence"); and (ii) receiving a payment or partial payment of interest at a criminal rate (the "receiving offence"): Degelder Construction Co. v. Dancorp Developments Ltd., 1998 CanLII 765 (SCC), [1998] 3 S.C.R. 90, at paras. 28-32.
80Under s. 347(2), "criminal rate" is defined as an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds 60 per cent on the credit advanced under an agreement or arrangement. As a result, effective annual rates of interest that are 60 per cent or less when calculated in accordance with actuarial principles are not criminal rates of interest.
81Whether an agreement or arrangement for credit is an agreement or arrangement to receive interest at a criminal rate should be narrowly construed and is determined as of the time the transaction is entered into: Degelder, at para. 29.
82With these principles in mind, we turn first to the appellant's submission that the trial judge erred because he did not consider the question of the appellant's knowledge and misapplied the presumption under s. 347(3).
83We agree that the trial judge's application of the presumption of knowledge under s. 347(3) is inconsistent with the Crown's actuarial evidence and the trial judge's findings and acquittal of the appellant in relation to the counts alleging that the appellant received a payment or partial payment of interest at a criminal rate.
84The Crown's actuarial expert testified that he was unable to calculate whether the amounts that the appellant received as interest under the various agreements exceeded the criminal rate because the borrowers were not required to repay the amounts owing under these agreements by a specific date. As a result of this evidence, the trial judge found that the Crown had failed to prove beyond a reasonable doubt that the appellant had received payments or partial payments at a criminal rate of interest and acquitted the appellant of the charges related to receiving interest at a criminal rate.
85Section 347(3) deems a person to have knowledge where the person receives a payment or partial payment of interest at a criminal rate. Given the trial judge's finding that the Crown had failed to prove that the appellant received payments or partial payments of interest at a criminal rate, the presumption could not apply. In light of that finding, the trial judge erred in applying the presumption as he did.
86In the particular circumstances of this case, it is unnecessary for us to determine the more general question of whether the presumption under s. 347(3) can ever apply to agreeing offences. For the reasons stated, the factual circumstances of this case do not support such an application.
87We turn next to address the fault requirement for the "agreeing" offences on which the appellant was convicted.
88As earlier noted, s. 347(1) creates an offence of agreeing to receive interest at a criminal rate and an offence of receiving interest at a criminal rate. The appellant was convicted on the "agreeing" charges and acquitted on the "receiving" charges. These reasons address the fault requirement for the "agreeing" offence.
89The Crown and the defence agree as to the conduct component of the agreeing offence. The Crown must prove beyond a reasonable doubt an agreement or arrangement that called for payment of interest at a criminal rate, that is, an effective annual rate of greater than 60 per cent. Both "interest" and "criminal rate" are defined terms in s. 347(2).
90The parties disagree as to the required fault or mens rea component. The Crown submits that it must prove beyond a reasonable doubt that:
- the appellant voluntarily entered into the agreement; and
- the appellant knew the terms of the agreement.
91The Crown argues for liability without any fault requirement beyond knowledge of the terms of the agreement. On the Crown's argument, an honest and entirely reasonable belief that the effective annual interest rate agreed upon was below 60 per cent would be no bar to a conviction.
92The defence submits that, in addition to voluntarily entering into the agreement and knowing the terms of the agreement, the appellant must know or be wilfully blind to the fact that the agreement's terms required payment at an effective annual rate of interest greater than 60 per cent.
93We begin with the language of s. 347(1). Like many offence-creating provisions in the Criminal Code, s. 347(1) provides virtually no insight into the fault or mens rea component in the offence. The section describes the prohibited conduct, or actus reus, without any express reference to the required fault component.
94Section 347(1), however, undoubtedly creates a true crime. The offence is punishable by up to five years in prison if, as in this case, the Crown proceeds by indictment. There is a presumption that true crimes have a subjective fault component: see R. v. W. (D.L.), [2016] 1 S.C.R. 402, 2016 SCC 22, at paras. 15-16; and R. v. Sault Ste. Marie (City), 1978 CanLII 11 (SCC), [1978] 2 S.C.R. 1299, at p. 1303 S.C.R. In Sault Ste. Marie, at p. 1309 S.C.R., Dickson J., as he then was, identified the crucial difference between criminal and regulatory offences:
Where the offence is criminal, the Crown must establish a mental element, namely, that the accused who committed the prohibited act did so intentionally or recklessly, with knowledge of the facts constituting the offence, or with wilful blindness toward them.
95The fault component of true crimes is not necessarily subjective. However, when the provision creating the crime is silent as to the requisite mens rea, judicial interpretation usually favours subjective fault. The presumption in favour of subjective fault reflects the constitutional principle that the morally innocent should not be subjected to punishment. Subjective fault in the form of intention, recklessness, knowledge, or some other mental state provides an effective dividing line between the morally culpable and the morally innocent. For example, a person's possession of stolen property is morally innocent if that person does not know that the property is stolen. The same possession is morally culpable if the person knows that the property is stolen.
96The gravamen of the offence of agreeing to accept interest at a criminal rate lies in the effective annual interest rate charged by the terms of the agreement. If the rate is 60 per cent or lower, the agreement is not criminal. It is the rate, and more precisely a rate of over 60 per cent, that makes the agreement potentially criminal. The prohibition against punishing the morally innocent dictates that the fault component should attach to the feature of the agreement that distinguishes those agreements that are criminal from those that are not. The effective annual interest rate charged by the terms of the agreement is that feature.
97Knowledge, or its legal equivalent, wilful blindness, that the terms of the agreement call for an effective annual interest rate of over 60 per cent provides a fault element that ensures the morally innocent are not captured by the prohibition in s. 347(1). In so describing the requisite fault element, we do not suggest that the accused must know how the Criminal Code defines or calculates the effective annual interest rate. Those are matters of the law and ignorance of the law is no excuse: Criminal Code, s. 19. For example, the accused's belief that the criminal rate of interest is defined as over 70 per cent would not assist the accused who entered into an agreement to receive interest at a rate of over 60 per cent. Nor would the accused's mistaken belief that interest did not include certain charges defined as interest in s. 347(2) assist the defence. However, a belief that the effective annual interest rate charged by an agreement's terms was 60 per cent or less -- according to generally accepted actuarial principles and the definitions in s. 347(2) -- would negate knowledge and provide a defence.
98There can be no doubt that requiring the Crown to prove knowledge or wilful blindness makes the prosecution's task harder. The imposition of a subjective fault requirement inevitably has that effect. Requiring proof of knowledge does not, however, render the provision impotent or unworkable, particularly when the prosecution takes aim at loan sharks, the evil targeted by the legislation.
99In a case like this one, for instance, the agreements expressly set out annual simple interest rates at the very edge of the criminal rate and required significant monthly interest payments. We think it would be open to a trier of fact to infer that a lender would know, or be wilfully blind, that generally accepted actuarial principles dictate an effective annual rate of interest well above the amount stated in the agreement. Clearly, the same inference would not be as readily available in other commercial contexts, particularly if there was conflicting evidence as to how interest should be calculated on the application of generally accepted actuarial practices and principles to the terms of the agreement. We do not think the criminal prohibition in s. 347(1) was ever intended to capture these kinds of agreements.
100In our view, the interpretative principles developed since Sault Ste. Marie fully warrant a reading of s. 347(1) that requires the Crown to prove beyond a reasonable doubt that the accused knew (or was wilfully blind) that the terms of the agreement charged an effective annual rate of interest in excess of 60 per cent.
101The language of s. 347(3) provides a further indication that Parliament intended that the fault requirement in the offences created by s. 347(1) have a knowledge component. The section reads:
347(3) Where a person receives a payment or partial payment of interest at a criminal rate, he shall, in the absence of evidence to the contrary, be deemed to have knowledge of the nature of the payment and that it was received at a criminal rate.
(Emphasis added)
102The section deems (absent evidence to the contrary) an accused to have knowledge that an interest payment "was received at a criminal rate" if the Crown first proves that the accused received an interest payment at a criminal rate. The deemed knowledge component of s. 347(3) would be superfluous if knowledge that the payment was received at a criminal rate was not an essential element of the offence or offences to which s. 347(3) applies.
103In R. v. McRobb, 1986 CanLII 4766 (ON CA), [1986] O.J. No. 1329, 32 C.C.C. (3d) 479 (C.A.), in a brief endorsement, this court indicated that the predecessor to s. 347(3) applied only to the charge of receiving interest at a criminal rate and not to the charge of agreeing to receive interest at a criminal rate. Assuming that distinction is sound, the language of s. 347(3) still informs the mens rea required on a charge of agreeing to receive interest at a criminal rate.
104We see no basis, either in principle or in the language of s. 347, to distinguish between the fault components of the two offences created by s. 347(1). It would be passing strange to require proof of knowledge that a payment received was in excess of 60 per cent interest, while at the same time imposing criminal liability for entering into an agreement to make the very same payment without requiring proof of that knowledge.
105Agreeing to receive interest at a criminal rate is an inchoate crime that is preparatory to the substantive offence of receiving payment at a criminal rate of interest. As explained in R. v. Legare, [2009] 3 S.C.R. 551, 2009 SCC 56, at paras. 32-35, inchoate offences punish conduct that is preliminary to, and removed from, the actual conduct that causes the harm which the criminal prohibition seeks to prevent. Because the offence is somewhat removed from the actual harm, the criminal law generally requires a higher degree of subjective fault for the inchoate crime than is required for the substantive offence. This principle would be turned on its head if s. 347(1) were interpreted to require proof of subjective knowledge for the offence of receiving interest at a criminal rate, but to have no such requirement for the offence of agreeing to receive interest at a criminal rate.
106Legare provides a second lesson relevant to assessing the appropriate fault element in the offence of agreeing to receive interest at a criminal rate. As Fish J. notes, at para. 35, if the conduct prohibited by a provision creating a criminal offence is very broad, a subjective standard of fault serves to circumscribe the reach of the prohibition and properly restrain the application of the criminal law.
107As observed in Garland v. Consumers' Gas Co. (1998), 1998 CanLII 766 (SCC), 40 O.R. (3d) 479, [1998] 3 S.C.R. 112, at para. 24: "The scope of the language in s. 347 is extremely broad." A review of the extensive case law in which the section has been applied to challenge the legality of various commercial transactions demonstrates the broad scope of the provision. Without a subjective fault component that identifies the morally culpable, the section would criminalize commercial transactions bearing no resemblance to the kind of loan sharking activity targeted by the provision: see, e.g., Garland; TerraCan Capital Corp. v. Pine Projects, Ltd., 1993 CanLII 2655 (BC CA), [1993] B.C.J. No. 203, 75 B.C.L.R. (2d) 256 (C.A.); Degelder Construction Co.; William E. Thomson Associates Inc. v. Carpenter (1989), 1989 CanLII 185 (ON CA), 69 O.R. (2d) 545, leave to appeal to S.C.C. refused (1989), 71 O.R. (2d) x; and Transport North American Express Inc. v. New Solutions Financial Corp., 2004 SCC 7, [2004] 1 S.C.R. 249.
108The trial judgment in R. v. McRobb, 1984 CanLII 3521 (ON SC), [1984] O.J. No. 3471, 20 C.C.C. (3d) 493 (Co. Ct.), is one of the few criminal cases in which the fault component has been considered in any detail. The trial judge describes the requisite fault requirement in different ways in the course of his reasons. The ambiguity is no doubt explained by the facts of the case. On the evidence, the terms of the agreement clearly demanded payments well in excess of 60 per cent effective annual interest. Knowledge of the terms effectively proved knowledge that the agreement required payments at a rate beyond 60 per cent.
109The many civil cases that have considered the argument that the particular commercial agreement is illegal because it charged a criminal interest rate have uniformly treated s. 347(1) as breached if the terms of the agreement impose an effective annual interest rate of over 60 per cent. In the commercial context, the lender's intent or knowledge that the effective rate exceeded 60 per cent becomes relevant only when the court is considering remedy, and specifically the extent to which the court should enforce or alter the terms of the agreement between the parties: see Transport North American Express Inc., at para. 44; and TerraCan Capital Corp.
110In our view, the civil cases pose no impediment, in the context of a criminal prosecution, to the interpretation of s. 347(1) as requiring the Crown to prove that the accused knew that the agreement or arrangement charged an effective annual rate of interest above 60 per cent. The legality of an agreement for the purposes of enforceability may well be determined exclusively by reference to the terms of the agreement. However, the imposition of criminal liability for entering into that same agreement, in our view, requires proof of moral culpability as evinced by a culpable state of mind: see TerraCan Capital Corp., at paras. 30-31.
111We would order a new trial on the charges of entering into an agreement to receive interest at a criminal rate.
(iv) Misapprehension of the Evidence and Unreasonable Verdicts
112As noted above, the appellant asserts that virtually all of his convictions are based on misapprehensions of the evidence and/or are unreasonable. Before turning to the specific convictions in issue, we note that it is well established that the threshold to justify appellate intervention due to a misapprehension of the evidence or an unreasonable verdict is a high one.
(a) Criminal Organization Offences
113The appellant was convicted of several criminal organization offences. Section 467.1(1) of the Criminal Code defines a criminal organization as follows:
criminal organization means a group, however organized, that
(a) is composed of three or more persons in or outside Canada; and
(b) has as one of its main purposes or main activities the facilitation or commission of one or more serious offences that, if committed, would likely result in the direct or indirect receipt of a material benefit, including a financial benefit, by the group or by any of the persons who constitute the group.
It does not include a group of persons that forms randomly for the immediate commission of a single offence.
114The appellant argues, and we agree, that every criminal organization will involve a conspiracy but not every conspiracy is a criminal organization. Assuming that the trial judge was correct in finding the existence of a conspiracy, the appellant submits that there was insufficient evidence of permanence or hierarchy to ground a finding of the existence of a criminal organization.
115The definition of a criminal organization is broader than the groups one traditionally associates with organized crime. The guiding question in assessing whether a group of individuals forms a criminal organization is whether the group "pose[s] an elevated threat to society due to the ongoing and organized association of their members": R. v. Venneri, [2012] 2 S.C.R. 211, 2012 SCC 33, at para. 40.
116Stereotypical hallmarks such as territoriality, hierarchy, exclusive membership and violence are indicia of a criminal organization, but are not necessary conditions: Venneri, at paras. 37-38; and R. v. Battista, [2011] O.J. No. 6637, 2011 ONSC 4771 (S.C.J.), at para. 21. Rather, courts must take a flexible approach, appreciating that "criminal organizations have no incentive to conform to any formal structure": Venneri, at para. 28, citing R. v. Terezakis, [2007] B.C.J. No. 1592, 2007 BCCA 384, 223 C.C.C. (3d) 344, at para. 34.
117Courts have found that criminal organizations exist even in small drug operations, where they involve a division of labour, temporal continuity and an intention by the members to advance their illicit goals through the organization.
118For example, in R. v. Pasquin, [2014] Q.J. No. 3364, 2014 QCCA 786, the Quebec Court of Appeal upheld the trial judge's finding that three people involved in cocaine trafficking comprised a criminal organization. One member was responsible for transporting the cocaine. Another member was responsible for brokering meetings between members and providing a safe place to conspire to traffic the cocaine.
119Similarly, R. v. Beaven, [2013] S.J. No. 35, 2013 SKQB 7, 411 Sask. R. 129, also involved a small cocaine trafficking operation that was found to be a criminal organization. The group had a leader who ran an "elaborate scheme" to buy large quantities of cocaine, dilute it, repackage it and sell it for profit. He instructed other members to transport and sell the cocaine. He was responsible for negotiating pricing, securing deliveries and supplying cutting agents.
120It is useful to compare those cases to cases where a criminal organization was alleged by the Crown but not established. In R. v. Kwok, [2015] B.C.J. No. 137, 2015 BCCA 34, 320 C.C.C. (3d) 212, five people came together to import ketamine into Canada. Their plan was elaborate and they divided labour. However, there was no evidence of any continuity beyond the one isolated scheme, so no criminal organization was found to exist. The court came to the same conclusion in R. v. Savari Carbonnel, [2014] Q.J. No. 260, 2014 QCCA 95, noting that there was no evidence the co-conspirators got together for anything more than one cocaine importation.
121The determination of whether the existence of a criminal organization has been established is a highly factual one. In the present case, the trial judge found that the appellant was part of a criminal organization based on the following evidence:
The appellant, Mr. Wall, and Mr. Sarsfield formed a group of three persons whose main purpose was to traffic in cocaine and marijuana.
The group was organized into a hierarchy. The appellant was the leader. He bought cocaine at the kilogram level, cut it and repackaged it into gram-sized "decks". Mr. Wall was the middleman who shielded the appellant from the public and police. He helped repackage the cocaine and transported it from the stash to the bar. Mr. Sarsfield operated the bar where the cocaine was sold.
The group's structure gave them an advantage. The appellant controlled the supply, the method of packaging, and the "formula" he used to cut the cocaine.
The organization operated for a considerable period of time.
There was no evidence of monopolistic or territorial behaviour. However, the multitude of weapons found at the appellant's various residences suggested the organization was willing to use violence to protect itself and its members.
122This is obviously not a stereotypical organized crime case. This was a small operation with a loose structure. But as the Supreme Court cautioned in Venneri, in determining whether the existence of a criminal organization has been established, courts must look beyond the stereotypical view of organized crime described in earlier case law, e.g., R. v. Lindsay, 2005 CanLII 24240 (ON SC), [2005] O.J. No. 2870, [2005] O.T.C. 583 (S.C.J.), affd (2009), 97 O.R. (3d) 567, 2009 ONCA 532.
123In the circumstances, based on the record before him, it was open to the trial judge to find that the Crown had proven beyond a reasonable doubt the existence of a criminal organization. There is no basis for appellate interference with this finding.
(b) Extortion
124The appellant was convicted of one count of extortion in relation to a loan he made of $15,000 to V.C. In support of this loan, V.C. signed a promissory note for $15,000, which provided for an interest only monthly payment of $750.
125In examination in chief, V.C. was asked whether he was threatened for non-payment or late payment of the loan. He replied that he had not been threatened. The Crown then played various intercepts of conversations between V.C. and the appellant. The trial judge reviewed these calls and summarized V.C.'s evidence related to them, at para. 283:
V.C. testified that he understood that Mr. Saikaley was intending to send someone to "rough him up" as a result of what he had heard Mr. Saikaley tell him on September 30, 2009. During cross-examination, V.C. said that during the telephone conversations, reviewed in the previous paragraph, he had felt "threatened a little bit, not threatened but worried". During cross-examination, V.C. testified that he understood that his $750 payment was made to satisfy interest only on his loan.
126The trial judge went on to find the appellant guilty of extortion, at para. 287:
I also find Mr. Saikaley guilty of Count 38, namely, of extortion. The defence's position is unacceptable as V.C. confirmed that the threat was made and it was made to collect a debt. If a debtor does not pay, a lender's arsenal to collect on the debt consists of obtaining the services of a lawyer and commencing a lawsuit. It does not, however, consist of threatening physical harm, as Mr. Saikaley did when he threatened: "I'll send a couple of my lads over to your place to collect the paperwork." These are Mr. Saikaley's exact words on the intercepted phone call to V.C.
127The appellant submits that the verdict is unreasonable. He says the trial judge erred in relying on V.C.'s testimony that the appellant's suggestion that he was going to "come by and say hello" probably meant that the appellant was going to rough him up for non-payment. According to the appellant, this evidence was speculative and amounted to an ex post facto assessment of what the statement on the intercept meant.
128We do not accept that this verdict was unreasonable. In our view, it is entirely supported by V.C's testimony and by the contents of the intercepts, which included statements made by the appellant to V.C. stating that "you're going to have a rough fucking week if you don't pay me bud", and "call me or else I'll send a couple of my lads over to your place to collect the paperwork", and "I was sending somebody to come and say hello to you".
129These statements were made in the context of a predatory relationship and, with respect to at least one of the statements, V.C. testified that he interpreted it as a threat to rough him up to collect the money owing. In our view, the conclusion that the appellant was threatening violence was not only reasonable, it was inescapable. That conclusion is bolstered by the fact that the appellant did not testify and offer a plausible alternative explanation for his threatening words.
(c) Weapons Offences
130The appellant was convicted of numerous firearm offences. For present purposes, it is helpful to distinguish the firearm offences resulting from the search of the residence from the firearm offences resulting from the search of the rental apartment.
131The execution of a search warrant at the residence led to the discovery of, among other things, the loaded Glock handgun and a Sabre stun gun. The Glock was found under a night table to the left of the bed in the master bedroom. The stun gun was in a safe located on the floor of a closet in the master bedroom. The safe also contained two pill bottles labelled with the appellant's name. The execution of a search warrant at the rental apartment located an Enfield .38 calibre revolver.
132The primary issue at trial on these counts was whether the Crown had proven beyond a reasonable doubt that the appellant was in possession of the weapons. On appeal, the appellant argues that, while there may be some evidence suggesting that he had knowledge of the weapons, the Crown has adduced no evidence that could reasonably support the inference that he had the requisite degree of control over those items so as to be in joint possession of them. Accordingly, he argues that the firearms convictions are unreasonable.
133In our view, the appellant has failed to establish that the verdicts on the firearm counts are unreasonable.
134With respect to the weapons seized from the residence, there is ample evidence which support these convictions. The mere location of the seized weapons supports both knowledge and possession. Two pictures seized from the appellant's computer show him posing with his wife, who is holding the Glock handgun. In addition, the weapons seized were part of a large cache of weapons located in the residence. These weapons include a throwing knife, arrow tips and a laser-aim sighting mechanism for a handgun.
135In the face of this evidence, the appellant argues that his wife may have had exclusive control over these weapons, because she was sleeping alone in the residence for the two weeks before the execution of the search warrant. The difficulty with this argument is that is wholly unsupported by the evidence. Neither the appellant nor his wife testified. In assessing the reasonableness of the verdict, this court is entitled to take into account their failure to testify on this point, and the absence of evidence to support the appellant's submission.
136With respect to the convictions related to the Enfield revolver, the appellant submits that because Mr. Wall and Mr. Wall's girlfriend were the primary occupants of the rental apartment, the trial judge unreasonably convicted him on the basis that he was in joint possession of the revolver. Again, the appellant has not met his onus of establishing that these verdicts were unreasonable.
137While the appellant was not the main occupant of the rental apartment, there was evidence that he had unlimited access to it, and was closely associated with it. He paid the rent and the associated bills for the rental apartment. He had a fob to enter the building, and keys to deadbolt locks that were installed on the apartment door and on a walk-in closet. The evidence established that when the appellant wanted sole possession of the rental apartment, the persons living there would vacate the premises.
138In addition, three gym bags were found in the walk-in closet in the rental apartment that contained narcotics and drug-related paraphernalia. One of the bags contained an invoice from a law firm addressed to the appellant and five bullets for a .38 calibre gun. The police also seized .38 calibre bullets at the residence.
139Again, the appellant did not testify to offer an innocent explanation regarding the evidence that links him to the revolver.
(d) Conspiracy and Substantive Drug Offences
140In his factum, the appellant advances three grounds of appeal related to the conspiracy and substantive drug offences.
141First, the appellant argued that he only took possession of a quantity of hashish and marijuana from Mr. Kaizer as collateral for a loan. Thus, he submitted that he did not possess the drugs for the purpose of trafficking. This argument was abandoned during oral argument.
142Second, the appellant submits that the trial judge erred in concluding that he was in possession of the contents of the rental apartment. This argument has already been rejected above in the section dealing with the weapons convictions and need not be addressed here.
143Third, the appellant submits that the trial judge erred in interpreting the co-conspirator's exception to the hearsay rule too broadly, in that he failed to engage in an analysis of whether the utterances of the third parties were in furtherance of any alleged offence. Significantly, the appellant does not identify any statements or acts relied upon by the trial judge under the co-conspirator's exception that were not capable of being in furtherance of an ongoing conspiracy.
144In any event, we would not give effect to this submission. The trial judge made repeated reference to the in-furtherance requirement. Indeed, at para. 62 of his reasons, the trial judge considered the relevant case law regarding the issue and concluded, "I must rely only on those acts or declarations that further the common interest, which are the very acts and declarations that the parties themselves are likely to have relied upon in seeking to achieve the common goal." Clearly, the trial judge was mindful of the need to only rely upon acts and declarations in furtherance of the conspiracy when utilizing the co-conspirator's exception to the hearsay rule.
(e) Proceeds of Crime
145The appellant's argument on this ground of appeal is limited to the assertion that, to the extent the trial judge erred in convicting the appellant on any of the substantive drug offences, the convictions for the proceeds of crime offences should also fail to a corresponding degree. In light of our conclusion on the appeal of the conspiracy and substantive drug offences, it is unnecessary to consider this ground of appeal.
(v) Sentence Appeal
146The appellant was sentenced to 19 years' imprisonment, with a parole ineligibility order under s. 743.6(1.1) and (1.2) of the Criminal Code, as a result of the appellant's convictions on the criminal organization offences, thereby prohibiting him from applying for parole for 9.5 years. The trial judge gave the appellant credit of eight months for his pre-sentence custody and restrictive bail conditions, reducing the sentence to be served to 18 years and four months.
147The appellant submits that the sentence imposed was the product of various errors in principle, failed to give effect to the principles of totality and proportionality, and was manifestly unfit. Further, the trial judge erred in delaying his parole eligibility on all offences, which is conceded by the Crown.
(i) Length of Sentence
148The appellant concedes that a significant custodial sentence was appropriate because he was sentenced on the bases that he was a dangerous drug trafficker and money lender who mixed violence and weapons to carry out his offences in the context of a criminal organization. Moreover, in light of the conviction for the criminal organization offence, the appellant acknowledges that the trial judge was required to impose a sentence for those offences that was consecutive to any other sentence that was imposed.
149However, the appellant submits that the sentence was crushing and manifestly unfit because it greatly exceeded the range of sentences for similar offences and offenders and even the 15- to 18-year range suggested by the Crown on sentencing. As a result, the trial judge failed to give effect to the principles of totality and proportionality. The appellant also submits that the trial judge erred in refusing to grant the appellant credit for pre-sentence custody and restrictive bail conditions on a 1.5 times basis.
150The Crown concedes that the trial judge should have granted credit for pre-sentence custody on a 1.5 times basis and that the appellant's global sentence should accordingly be reduced by a further 30 days. Otherwise, the Crown submits that there is no basis to interfere with the sentence imposed.
151It is well established that a trial judge's sentence is entitled to considerable deference on appeal. Absent error in principle, a failure to consider a relevant factor or the erroneous consideration of an aggravating or mitigating factor that has had an impact on the sentence imposed, appellate intervention is not justified: R. v. Lacasse, [2015] 3 S.C.R. 1089, 2015 SCC 64, at paras. 43-44.
152In our view, appellate intervention is justified in the present case because the trial judge erred in his application of the principles of totality and proportionality.
153Section 718.1 of the Criminal Code sets out the fundamental sentencing principle that a sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender. The more serious the offence and its consequences, or the greater an offender's degree of responsibility, the heavier the sentence imposed will be: Lacasse, at para. 12.
154Section 718.2(c) of the Criminal Code provides that where, as here, consecutive sentences are imposed, the combined sentence should not be unduly long or harsh. The principles of totality and proportionality require a sentencing judge to ensure that the cumulative sentence rendered does not exceed the overall culpability of the offender; the cumulative sentence may offend the totality principle if the aggregate sentence is substantially above the sentence for the most serious of the offences or if its effect is crushing: R. v. M. (C.A.), 1996 CanLII 230 (SCC), [1996] 1 S.C.R. 500, at para. 42.
155In the present case, the trial judge properly considered and gave effect to the aggravating and mitigating factors in this case. He considered whether some sentences should be served consecutively or concurrently with other sentences and correctly stated the principle of totality. He then imposed a global sentence of 19 years and allocated it among the counts.
156However, the trial judge erred by failing to consider and account for the overlap among the conspiracy, trafficking, proceeds of crime, firearm and criminal organization offences. The appellant was the leader of a criminal organization that conspired to traffic in controlled substances and used firearms to carry out this business in the context of a criminal organization. The main focus of the appellant's criminal organization was the distribution of cocaine and other controlled substances through the operation of an Ottawa bar and the activities of his associates.
157While the sentences when viewed in isolation are appropriate, collectively they amount to a longer term than is warranted. The trial judge acknowledged the sentencing principle that the least restrictive sanction should be imposed. However, he did not consider whether the overall sentence materially exceeded the longest sentence for the most serious offence of drug trafficking, which, according to the case law reviewed by the trial judge, ranged from eight to 15 years. He failed to ensure that the cumulative sentence ordered did not exceed the overall culpability of the appellant, given the overlap in the offences carried out under the umbrella of a criminal organization. If he had, he would not have imposed a 19-year effective sentence in the circumstances of this case. As a result, the trial judge erred in imposing a sentence that failed to adequately reflect the principles of totality and proportionality.
158In determining what the appropriate global sentence should be, we adopt the trial judge's analysis of the predominantly aggravating and few mitigating factors in this case. The appellant had high moral culpability; he was the ring leader and high-level dealer in a sophisticated commercial drug operation that packaged and distributed kilogram bricks of cocaine into large quantities of one-gram decks, as well as other controlled substances. He engaged in extortion and used weapons to carry on his drug-trafficking business with his associates.
159In our view, sentences totalling 15 years would have been appropriate. The appellant is, however, entitled to nine months' credit for pre-sentence custody, yielding a total sentence of 14 years, nine months. To achieve that total sentence, we would leave the concurrent sentences unchanged and impose the following consecutive sentences:
Trafficking and proceeds of crime offences:
- count 16, conspiracy to traffic in cocaine: five years, three months;
- count 8, proceeds of crime: six months.
Weapons offences:
- count 3, possession of a loaded Glock prohibited firearm: five years.
Extortion offence:
- count 38, extortion: one year.
Criminal organization offences:
- count 14, directing the commission of an indictable offence: three years.
160We would not accept the appellant's argument that the trial judge did not give effect to the parity principle of sentencing. Excepting to the extent that we would vary it, the sentence imposed by the trial judge was otherwise a fit sentence for the appellant and the offences for which he was convicted.
(ii) Parole Ineligibility Order
161The appellant concedes that the trial judge's order under s. 743.6(1.2) in relation to his criminal organization convictions under ss. 467.11, 467.12 and 467.13 was mandatory and that, as a result, he is not entitled to parole until he has served half of his sentence for those convictions. However, the appellant submits that the trial judge erred in treating all of the offences for which he was convicted as criminal organization offences and, as a result, in applying s. 743.6(1.1) to delay his parole eligibility for 50 per cent of his global sentence of 19 years.
162At para. 78, the trial judge gave the following reasons for his decision to impose a parole ineligibility order:
I increase your parole ineligibility at 50%, pursuant to section 743[.6] (1.1) and section 743[.6] (1.2) of the Code. You rendered detection difficult and a tremendous amount of police resources were required to investigate your case. You conscientiously focused on maximizing your profit and in so doing you victimized a large number of persons. You operated through the structure of a corporation and individuals to minimize the risk to yourself. The fact that the offences were committed inside a criminal organization makes it necessary to increase the parole ineligibility. Denunciation and deterrence are paramount considerations applicable here.
163The relevant provisions governing eligibility for parole under s. 743.6(1.1) and (1.2) of the Criminal Code, as they existed at that time, were as follows:
743.6(1.1) . . . [W]here an offender receives a sentence of imprisonment of two years or more, . . . on conviction for a criminal organization offence other than an offence under section 467.11, 467.12 or 467.13, the court may order that the portion of the sentence that must be served before the offender may be released on full parole is one half of the sentence or ten years, whichever is less.
(1.2) . . . [W]here an offender receives a sentence of imprisonment of two years or more, . . . on conviction for a terrorism offence or an offence under section 467.11, 467.12 or 467.13, the court shall order that the portion of the sentence that must be served before the offender may be released on full parole is one half of the sentence or ten years, whichever is less, unless the court is satisfied, having regard to the circumstances of the commission of the offence and the character and circumstances of the offender, that the expression of society's denunciation of the offence and the objectives of specific and general deterrence would be adequately served by a period of parole ineligibility determined in accordance with the Corrections and Conditional Release Act.
164Under s. 2 of the Criminal Code, a "criminal organization offence" was defined, at that time, as follows:
(a) an offence under section 467.11, 467.12 or 467.13, or a serious offence committed for the benefit of, at the direction of, or in association with, a criminal organization, or
(b) a conspiracy or an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a).
165Under s. 467.1(1), a "serious offence" means "an indictable offence under this or any other Act of Parliament for which the maximum punishment is imprisonment for five years or more, or another offence that is prescribed by regulation".
166In making the parole eligibility order under s. 743.6(1.1) and (1.2), the trial judge properly considered the applicable circumstances of the commission of the offences and the character and circumstances of the appellant, as well as the paramount principles of denunciation and deterrence, in accordance with s. 743.6(2):
743.6(2) For greater certainty, the paramount principles which are to guide the court under this section are denunciation and specific or general deterrence, with rehabilitation of the offender, in all cases, being subordinate to these paramount principles.
167However, for the offences other than under ss. 467.11, 467.12 or 467.13, the trial judge was also required to consider the other criteria under s. 743.6(1.1), namely, whether the offences for which the appellant was convicted were criminal organization offences, in accordance with the above definitions, and, if so, whether the appellant received sentences of two years or more in relation to those offences. The trial judge did not do so. As a result, he erred in failing to explain why all of the offences were criminal organization offences, and in extending his order under s. 743.6(1.1) to offences which were not criminal organization offences and for which the appellant received a sentence of imprisonment of less than two years.
168While conceding the trial judge's errors, the Crown submits that this court may clarify the trial judge's order and determine which offences should be subject to a parole ineligibility order under s. 743.6(1.1).
169We decline to do so.
170As a result, the trial judge's order on parole eligibility, except under s. 743.6(1.2) in relation to the criminal organization convictions under s. 467.11, 467.12 and 467.13, must be set aside.
(iii) Forfeiture
171The trial judge made a forfeiture order under s. 462.37(2.01) of the Criminal Code. That subsection targets the property of offenders who are involved in criminal organizations or engaged in serious drug crime. It provides that property identified by the Attorney General in an application for forfeiture shall be forfeited where the court is satisfied on a balance of probabilities that
(a) within 10 years before the proceedings were commenced in respect of the offence for which the offender is being sentenced, the offender engaged in a pattern of criminal activity for the purpose of directly or indirectly receiving a material benefit, including a financial benefit; or
(b) the income of the offender from sources unrelated to designated offences cannot reasonably account for the value of all the property of the offender.
172Subsection 462.37(2.03) provides that a court shall not make a forfeiture order "in respect of any property that the offender establishes, on a balance of probabilities, is not proceeds of crime".
173The trial judge ordered the forfeiture of all of the identified property, except where there was evidence of lawful ownership by third parties. In making his order, the trial judge relied upon the evidence of a forensic accountant called by the Crown, and concluded that between 2005 and 2009, the appellant had between $418,044 and $1,125,770 in unknown sources of income. The trial judge found on a balance of probabilities that $800,000 of this income was proceeds of crime. Ultimately, the trial judge ordered a forfeiture in the amount of $53,000, and a fine in lieu of forfeiture in the amount of $1,296,293.37.
174The appellant submits that there was evidence that he had lawful sources of income related to his money lending activities. He further argues that there was no evidence to support a conclusion that in the past ten years he had engaged in illegal activity which generated proceeds of crime.
175We would not give effect to these submissions. The trial judge carefully reviewed the evidence and made a factual finding that the appellant was the head of a criminal organization involved in the trafficking of drugs. He further found that the income of the appellant from sources unrelated to the designated offences could not reasonably account for his property. There was no error in those factual findings, or in the legal conclusion, that the requirements of s. 462.37(2.01) had been satisfied. The onus was, therefore, on the appellant to establish that the property was not the proceeds of crime. Even accepting the submission that there was some legitimate income from the loan business, the appellant never testified and provided very little by way of documentation related to this business activity. In our view, the appellant did not meet his onus under s. 462.37(2.03).
176The alternative argument advanced by the appellant is that the trial judge erred in failing to take into account "that a full forfeiture order in all the circumstances, particularly in light of the period of imprisonment that was imposed was disproportionate such that a partial order should be made instead".
177This argument impermissibly conflates a forfeiture order with punishment for the offences committed. In fact, they are two distinct concepts. The imposition of a fine in lieu of forfeiture is not punishment imposed upon an offender. It is also not part of the global sentence imposed upon an offender and accordingly it is not to be consolidated with sentencing on a totality approach: R. v. Angelis (2016), 133 O.R. (3d) 575, 2016 ONCA 675, at paras. 50-53.
178Contrary to the submission of the appellant, it would have been an error in law for the trial judge to rely upon the sufficiency of the carceral component of the sentence to justify a refusal to order forfeiture: Angelis, at para. 53; R. v. Dwyer, [2013] O.J. No. 277, 2013 ONCA 34, 296 C.C.C. (3d) 193, at para. 18; and R. v. Lavigne, [2006] 1 S.C.R. 392, 2006 SCC 10, at paras. 25-26.
Disposition
179For the foregoing reasons, we would allow the conviction appeal in relation to the convictions for entering into agreements to receive interest at a criminal rate. The conviction appeal is otherwise dismissed.
180We would grant leave to appeal sentence, and would allow the sentence appeal as follows:
(i) the appellant's sentence is reduced from 19 to 15 years, less credit for pre-sentence custody and restrictive bail conditions in the amount of nine months, resulting in a sentence to be served of 14 years and nine months;
(ii) in accordance with s. 743.6(1.2) of the Criminal Code, the appellant must serve one and a half years of the three-year concurrent sentences for his convictions under ss. 467.11, 467.12 and 467.13, before he may be released on full parole.
181The sentence appeal is otherwise dismissed.
Appeals allowed in part.
End of Document
