minicounsel

Footnotes

Jun-Chul, Kenneth, and Kathleen were also charged with money laundering under Count 7. The trial judge acquitted all three of the money laundering charge, and the Crown does not appeal that acquittal.
It would be unwise to speculate as to what constitutes a refusal to pay, and what constitutes an unreasonable refusal to pay. This is an area of law that must be developed on a case-by-case basis. We do not propose to decide these questions on the basis of hypotheticals that may or may not constitute reasonable refusals. The basic principles are that the purpose of the provision is to prevent an offender from benefitting from crime, and that the committal can only be a consequence of unreasonable refusal, and not genuine inability to pay. There may well be cases of self-induced poverty, by which the property will have been consumed and the offender will thereby have received a benefit. This type of poverty is no defence to incarceration.
Dieckmann dealt with a large-scale scheme that defrauded the Canada Revenue Agency of approximately $5.7 million. There were four co-conspirators: Mr. Davis, Ms. Hartman, Ms. Dieckmann, and Mr. Salmon. All four co-conspirators benefitted from the scheme and were named defendants before the court, but Mr. Davis and Ms. Hartman died before trial. Mr. Salmon and Ms. Dieckmann were both convicted, and the court accepted Mr. Davis and Ms. Hartman were "clearly guilty" and would have been convicted had they survived to trial. When imposing the fines in lieu of forfeiture, the trial judge apportioned the $5.7 between all four co-conspirators (albeit notionally, for Mr. Davis and Ms. Hartman), based on their respective roles in and benefits derived from the scheme. Accordingly, although Ms. Dieckmann had possession and control of the full $5.7 million at one point or another, the trial judge only fined her $1,285,930. Collectively, the four fines totaled $5.7 million, being the value of the proceeds of crime subject to forfeiture: see R. v. Dieckmann, 2014 ONSC 717, aff'd 2017 ONCA 575, 355 C.C.C. (3d) 216, leave to appeal refused, [2018] S.C.C.A. No. 304 and No. 381.

COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Chung, 2021 ONCA 188 DATE: 20210331 DOCKET: C65325, C65815, C65821 & C65843

Rouleau, Benotto and Miller JJ.A.

DOCKET: C65325

BETWEEN

Her Majesty the Queen

Appellant

and

Kenneth Chung

Respondent

DOCKET: C65815

AND BETWEEN

Her Majesty the Queen

Respondent

and

Kathleen Chung

Appellant

DOCKET: C65821

AND BETWEEN

Her Majesty the Queen

Respondent

and

Jun-Chul Chung

Appellant

DOCKET: C65843

AND BETWEEN

Her Majesty the Queen

Respondent

and

Kenneth Chung

Appellant

Jill R. Presser and Cate Martell, for the appellant Kathleen Chung

Jacqueline An, for the appellant Jun-Chul Chung

Susan von Achten and Joshua Napal, for the respondent/appellant Kenneth Chung

Melissa Adams and David Friesen, for the appellant/respondent Crown

Heard: October 20-22, 2020

On appeal from the acquittals entered by Justice Douglas K. Gray of the Superior Court of Justice on April 9, 2018, with reasons reported at 2018 ONSC 2177 (C65325).

On appeal from the convictions entered by Justice Douglas K. Gray of the Superior Court of Justice on April 9, 2018, with reasons reported at 2018 ONSC 2177, and the sentences imposed on September 4, 2018 (C65815, C65821 & C65843).

On appeal from the judgment of Justice Douglas K. Gray of the Superior Court of Justice on November 5, 2018, with reasons reported at 2018 ONSC 6633 (C65815 & C65821).

On appeal from the orders of Justice Douglas K. Gray of the Superior Court of Justice on February 21, 2019, with reasons reported at 2019 ONSC 882 (C65815, C65821 & C65843).

On appeal from the ruling of Justice Gisele M. Miller of the Superior Court of Justice on January 3, 2017, with reasons reported at 2017 ONSC 13 (C65815 & C65821).

	PAGES
OVERVIEW	1
BACKGROUND	2
The split ticket scheme for the Super 7 lottery	3
Kathleen claims the prize	4
The Hi Ok Chung trust	6
THE TRIAL	6
(1) Convictions	7
Count 1: Theft under $5000 (the 30 tickets that won nominal or no prize)	7
Count 2: Possession of property obtained by crime (the 30 tickets)	8
Count 3: Theft over $5000 (the winning ticket)	8
Count 4: Possession of property obtained by crime (the winning ticket)	10
Count 5: Defrauding the OLG of $12.5 million	11
Count 6: Possession of property obtained by crime (the $12.5 million paid)	11
(2) Sentence	12
(3) The constitutional challenge	13
(4) Restitution, forfeiture, and fines in lieu	15
(5) The s. 11(b) application	16
ISSUES ON APPEAL	17
1. Conviction Appeal
2. Sentence Appeal
3. Did the application judge err in dismissing the s. 11(b) stay application?
4. Did the trial judge err in not granting interest to Kenneth Chung?
5. Did the trial judge err in acquitting Kenneth of counts 3-6?
ANALYSIS	17
(1) Conviction Appeals
Issue 1(a): Did the trial judge impose unreasonable verdicts for Kathleen Chung?	17
Count 4: Possession of property obtained by crime (the winning ticket)	18
Count 6: possession of property obtained by crime (the $12.5 million paid)	21
Count 5: Defrauding the OLG of $12.5 million	21
Issue 1(b): Did the trial judge impose unreasonable verdicts for Jun-Chul Chung?	23
Issue 1(c): Did the trial judge impose unreasonable verdicts for Kenneth Chung?	26
(2) Sentence Appeals:	28
Issue 2(a): Restitution and Fine in Lieu
(i) Did the trial judge err in dismissing the constitutional challenges?	28
(ii) Did the trial judge err in establishing time to pay and a six-year sentence in default of payment?	53
Issue 2(b): The Custodial Sentence Appeals	56
(i) Kenneth Chung's custodial sentence of 10 months	57
(ii) Jun-Chul Chung's custodial sentence of seven years	58
(iii) Kathleen Chung's custodial sentence of four years	59
Issue 3: Did the application judge err in dismissing the s.11(b) stay application?	63
Issue 4: Did the trial judge err in not granting interest to Kenneth Chung?	86
Issue 5: Did the trial judge err in acquitting Kenneth of counts 3-6?	86
CONCLUSION	92

By the Court:

OVERVIEW

1These appeals concern a $12.5 million lottery win by the Chung family.

2Jun-Chul Chung is the father of Kenneth and Kathleen Chung. All three appeal their convictions for their roles in relation to a scheme to steal lottery tickets from customers at their family convenience store. The Crown alleged Jun-Chul and Kenneth stole 31 lottery tickets by pocketing one of the two free tickets won by a customer. Thirty of those tickets won nothing or a nominal prize. One won the $12.5 million jackpot. Kathleen cashed in the ticket, received and deposited the $12.5 million prize.

3Jun-Chul and Kenneth were convicted of counts related to the tickets that did not win the big prize. Jun-Chul and Kathleen were convicted of counts related to the winning ticket, but Kenneth was acquitted on those counts. A s. 11(b) Charter of Rights and Freedoms application was dismissed.

4At sentencing, Jun-Chul and Kathleen challenged the constitutionality of the fine in lieu of forfeiture regime set out in s. 462.37(4) of the Criminal Code. This section requires the judge who imposes the fine at sentencing to simultaneously set the term of imprisonment in default of payment and impose mandatory minimum sentences in default of payment. The parties argued that these aspects of s. 462.37(4) violated ss. 7 and 12 of the Charter. The constitutional challenge was dismissed.

5Jun-Chul was sentenced to seven years' imprisonment and Kathleen was sentenced to four years' imprisonment. In addition to their custodial sentences, they were jointly and severally ordered to pay restitution of $12.5 million, forfeit $7.5 million, and pay a fine in lieu of forfeiture of $2.3 million each. Kenneth was sentenced to 10 months' imprisonment.

6Jun-Chul and Kathleen appeal their convictions, custodial sentence, the restitution and forfeiture orders, the fine in lieu of forfeiture, the default term of imprisonment, the dismissed constitutional challenge and the dismissed s. 11(b) application.

7Kenneth appeals his convictions, his sentence, and the trial judge's decision to not award him interest on monies returned to him at the forfeiture hearing.

8The Crown appeals Kenneth's acquittals.

BACKGROUND

9Kenneth operated a convenience store in Burlington called "Variety Plus." He is a registered agent for the Ontario Lottery and Gaming Corporation ("OLG").

10Kenneth worked every day from 12:00 p.m. until 10:00 or 10:30 p.m. Jun-Chul worked in the store every day from 6:00 a.m. to at least 10:00 a.m. Kathleen did not work in the store.

The split ticket scheme for the Super 7 lottery

11Variety Plus had a lottery terminal connected to the OLG's central computer system, through which it sold and validated lottery tickets. When a winning ticket was validated, the terminal played a jingle. The jingle was the same no matter the prize, and no matter the number of prizes a single ticket won. Players of Super 7 could win money -- anywhere from $10 to the grand prize -- and/or up to two free-play tickets per lottery ticket. The purchaser of a Super 7 ticket could pay an extra $1 to play in a further lottery game called "Encore." A free-play ticket could automatically come with Encore included, but not always.

12When a ticket was validated and it won a free-play ticket including Encore, the free ticket would print automatically. If the free-play ticket did not include Encore, the store clerk would have to ask the customer if they wanted to purchase Encore, and then enter the customer's response into the terminal to close the transaction and print the free-play ticket. By way of example, if a validated ticket won two free-play tickets, one automatically with Encore and one without, a jingle would play but it would not indicate how many free-play tickets were won. The free-play ticket that included Encore would then print automatically. The second free-play ticket would not print until the clerk indicated whether the customer wanted to add Encore. The transaction would only close when the clerk inputted the customer's answer and the ticket printed.

13The scheme for which the appellants were convicted involved tickets that were validated at Variety Plus. The customer was given one free ticket and either Jun-Chul or Kenneth kept the other. One of the free tickets the Chungs kept won $12.5 million.

Kathleen claims the prize

14In January 2004, Kathleen called the OLG and asked about the procedure for claiming the proceeds of a winning ticket. She said the ticket belonged to her brother and he was concerned about publicity if he claimed the prize. Following that initial phone call, Kathleen had three separate meetings with representatives of the OLG.

15The first meeting was on February 5, 2004. Ahead of the meeting, OLG officials learned that the winning ticket had been purchased at an outlet in St. Catharines. When Kathleen arrived at the meeting to claim the $12.5 million prize, she said it was her ticket, that she had no brother, and that she wanted to keep her name confidential. Kathleen could not give specific or general information as to the time, date, or location of the purchase of the original ticket. The representatives asked Kathleen whether she went to St. Catharines, and she said she did not. When the OLG asked her to sign a statutory declaration that, among other things, stated she was not related to a "Kenneth Chung", Kathleen started crying and admitted Kenneth was her brother. On the same day, an OLG representative spoke with Kenneth. Kenneth admitted he was Kathleen's brother and that Kathleen lied to protect him. He said the ticket belonged to Kathleen and that she purchased it on her own.

16The second meeting was on February 10, 2004. Kathleen, Kenneth, and Jun-Chul attended. The OLG advised they were concerned about where and when the ticket was purchased. The Chungs advised that Jun-Chul validated the winning ticket on December 27, 2003, sometime between 9:00 and 11:00 a.m. They also stated that Jun-Chul ran a health food business, and that Kathleen made deliveries for the business, sometimes to St. Catharines.

17The third meeting was on March 10, 2004. Again, Kathleen, Kenneth, and Jun-Chul attended. Kathleen was interviewed separately. She said on the morning she won, Jun-Chul was validating multiple tickets. At one point the jingle sounded, and her father said she'd won. She explained it took her a while to calm down, so she waited in her car and used her cell phone to call her brother and mother. She hung around the store for a little while and then went home. She reiterated that she did not know where or when she bought the original ticket. She explained again that she does deliveries for her father throughout Ontario and that she buys tickets wherever she is. She provided a handwritten list of delivery locations, which included three locations in St. Catharines. None of the locations matched the location of retailer that sold the winning ticket. (Later, when the matter was at trial, the Crown produced Kathleen's cell phone records which did not show she had been to St. Catharines.)

18The OLG eventually paid Kathleen's claim on December 28, 2004.

19The true owner of the winning ticket was not determined for several years. In January 2011, Daniel Campbell, who lived in St. Catharines, was identified as the winner and paid $12.5 million plus interest.

The Hi Ok Chung trust

20Kathleen deposited the $12.5 million cheque in an account with CIBC. The money was then dispersed in many ways, with most of the money vested in the "Hi Ok Chung Family Trust".

21Hi Ok Chung is Jun-Chul's sister. Hi Ok lived in Korea and was the settlor of the trust. Jun-Chul was one of three trustees, and Jun-Chul, Kathleen, and Kenneth were all beneficiaries of the trust. Most of the trust's assets came from the lottery winnings. Some of the assets were used to purchase real estate or to provide mortgages for properties Kathleen and Kenneth purchased.

THE TRIAL

22The Chungs were charged as follows:¹

a) Count 1: that Jun-Chul and Kenneth stole lottery tickets during an eight-month period ending on February 6, 2004, contrary to s. 334(b) of the Criminal Code;

b) Count 2: that Jun-Chul and Kenneth were in possession of the lottery tickets referred to in count 1, contrary to s. 354(1)(a) of the Criminal Code;

c) Count 3: that Jun-Chul and Kenneth stole the winning Super 7 lottery ticket, said to be the property of Daniel Campbell, contrary to s. 334(a) of the Criminal Code;

d) Count 4: that Jun-Chul, Kenneth, and Kathleen possessed the winning Super 7 lottery ticket, knowing that it was obtained by the commission of an indictable offence, contrary to s. 354(1)(a) of the Criminal Code;

e) Count 5: that Jun-Chul, Kenneth, and Kathleen did, by deceit, falsehood or other fraudulent means, defraud the OLG of $12.5 million, contrary to s. 380(1) of the Criminal Code; and

f) Count 6: that Jun-Chul, Kenneth, and Kathleen possessed all or part of the $12.5 million, and property purchased with it, knowing the money and property were obtained by the commission of an indictable offence, contrary to s. 354(1)(a) of the Criminal Code.

(1) Convictions

23The trial judge came to the following conclusions.

Count 1: Theft under $5000 (the 30 tickets that won nominal or no prize)

24The trial judge held there was no doubt the evidence disclosed a scheme to steal free-play lottery tickets. Having regard to the hours of work of Kenneth and Jun-Chul, and the timing of the transactions, the only reasonable conclusion from the evidence was that both Jun-Chul and Kenneth were guilty of the thefts.

25Although neither Jun-Chul nor Kenneth physically stole every one of the tickets, there was joint participation because, on at least eight occasions, one validated the original ticket and the other validated the generated free-play ticket. Where the evidence discloses joint participation, both accused can be convicted as principals. Therefore, the trial judge found they were both guilty of all the split ticket thefts as parties under s. 21(1)(a) of the Criminal Code.

26The trial judge considered whether reasonable inferences inconsistent with guilt were available, but found they were not. Specifically, he considered whether the winners of both free-play tickets validated both, in which case each winner would have had to cash the two different tickets in two different places on different dates. While that was theoretically possible, it was unreasonable to infer that happened 30 times over an eight-month period.

Count 2: Possession of property obtained by crime (the 30 tickets)

27Based on the same evidence tendered on count 1, the trial judge found it was clear that Jun-Chul and Kenneth were guilty of count 2.

Count 3: Theft over $5000 (the winning ticket)

28There was an issue at trial about whether there had to be proof that Campbell was the true winner. The trial judge was not satisfied of this beyond a reasonable doubt. However, relying on Vezina and Cote v. The Queen, 1986 CanLII 93 (SCC), [1986] 1 S.C.R. 2, the trial judge concluded that the name of the rightful owner is mere surplusage and can be ignored as long as there is no prejudice to the accused. There was no prejudice, so there was no burden on the Crown to prove the identity of the true owner of the winning ticket.

29The trial judge then considered the evidence tendered under count 3 which made it clear that on December 22, 2003, Jun-Chul validated the four tickets that were purchased on December 19, 2003 in St. Catharines. Those four tickets collectively generated five free-play tickets, one of which was the winning ticket. Four of the free-play tickets were validated in St. Catharines on December 27, 2003. Only the winning ticket was validated at Variety Plus on December 27, 2003. There was only one reasonable conclusion: Jun-Chul kept the $12.5 million winning ticket for himself and therefore stole it from the rightful owner.

30The trial judge considered whether it was possible on the evidence that Kathleen purchased the original ticket. To accept that inference, he would have to conclude Kathleen purchased all four original tickets in St. Catharines on December 19, 2003. She would also have to have been the person who validated all four tickets at Variety Plus on December 22, 2003, validated four of the free-play tickets in St. Catharines on December 27, 2003 and then validated the winning ticket at Variety Plus on the same day. The evidence was not capable of supporting that inference.

31The trial judge found the Crown did not establish that Kenneth was present at the store when Jun-Chul stole the ticket, and he was not persuaded beyond a reasonable doubt that Kenneth was involved in the theft of the winning ticket. In coming to this conclusion, he did not consider the evidence relating to the split ticket scheme which was the basis for Kenneth's convictions on counts 1 and 2. He reasoned that the Crown had not made a similar fact application and accordingly, he acquitted Kenneth of count 3.

Count 4: Possession of property obtained by crime (the winning ticket)

32Considering Jun-Chul was guilty of stealing the $12.5 million winning lottery ticket, he was also guilty of count 4.

33The trial judge concluded that there was no doubt that Kathleen knew the ticket had been stolen. She consistently lied about her purchase of the original ticket and the validation of the winning ticket. Her cellphone, bank, and Visa records showed she could not have been where she said she was at the relevant times. She obviously lied to the OLG and knew the ticket was stolen. She was guilty on count 4.

34With respect to Kenneth, the trial judge found that there was no evidence that Kenneth was in the store at the time the winning ticket was validated. He was not satisfied that Kenneth knew the ticket was stolen. It was a reasonable possibility that he was told Kathleen was the rightful winner and he believed her. Accordingly, the trial judge acquitted Kenneth of count 4.

Count 5: Defrauding the OLG of $12.5 million

35The trial judge convicted Jun-Chul and Kathleen of count 5.

36The trial judge concluded that it was clear Jun-Chul stole the winning ticket and that Kathleen knew it was stolen. She knew she did not purchase or validate any of the original tickets, and that she did not validate any of the generated free-play tickets. When Jun-Chul and Kathleen met with the OLG, they falsely represented that Kathleen purchased the original ticket and that she owned the winning ticket. They knew that was false but continued to lie until they received the money. Therefore, they obtained the $12.5 million through falsehoods and defrauded the OLG of that sum. That finding was not altered by the fact that the OLG paid the money despite their suspicions.

37The trial judge acquitted Kenneth of count 5. Again, the trial judge held there was a reasonable possibility that Kenneth was told and believed that Kathleen was the legitimate purchaser of the original ticket.

Count 6: Possession of property obtained by crime (the $12.5 million paid)

38The trial judge convicted Jun-Chul and Kathleen on count 6. They both knew the $12.5 million was obtained fraudulently, and both possessed the $12.5 million or property derived from it. Jun-Chul was a trustee and beneficiary of the Hi Ok Chung Family Trust, which obtained most of the funds. Kathleen used a large portion of the proceeds to purchase an expensive home and some cars. She was also the beneficial owner of a number of investments.

39The trial judge acquitted Kenneth. Kenneth obtained considerable benefit from some of the proceeds of the $12.5 million. However, for the same reasons as counts 3-5, the trial judge was not convinced beyond a reasonable doubt that Kenneth knew that the money and property were obtained by fraud.

(2) Sentence

40The trial judge held that, in the circumstances, neither suspended sentences nor conditional sentences were appropriate. Deterrence was paramount, so some period of custody was mandatory for each accused.

41The trial judge accepted the Crown's sentencing ranges for each of the accused, but applied reductions for each to reflect the mitigating factors. He sentenced Jun-Chul to a term of imprisonment of seven years. He sentenced Kenneth to a term of imprisonment of 10 months. He sentenced Kathleen to a term of imprisonment of four years.

42Pursuant to the rule in Kienapple v. R., 1974 CanLII 14 (SCC), [1975] 1 S.C.R. 729, the trial judge imposed conditional stays for Kenneth (count 2) and Jun-Chul (counts 2 & 4). Kathleen's conviction under count 6 did not meet the criteria for a conditional stay.

(3) The constitutional challenge

43The Crown requested fines in lieu of forfeiture against Jun-Chul and Kathleen pursuant to s. 462.37 of the Criminal Code.

44Where an offender is convicted of a designated offence, s. 462.37 permits the court to order that any property obtained from the proceeds of crime be forfeited to the Crown. Where that property cannot be made the subject of a forfeiture order, s. 462.37(3) allows the court to order the offender to pay a fine in lieu of forfeiture equal to the value of the property. Pursuant to s. 462.37(4), the imposition of a fine in lieu of forfeiture must include the imposition of specified terms of imprisonment in default of payment. Depending on the amount of the fine, s. 462.37(4) prescribes defined minimum and maximum terms. For fines above $1 million, the term of imprisonment must be not less than five years and not more than ten years.

45Jun-Chul and Kathleen challenged the mandatory minimum sentences specified in s. 462.37(4) under ss. 7 and 12 of the Charter.

46The trial judge found that Parliament's intention in enacting the provisions was to ensure that crime does not pay. The provisions set out in ss. 462.37(3) and 462.37(4) are not intended to punish the offender but are designed to encourage offenders to disgorge ill-gotten gains. He also found it instructive that many of the general Criminal Code provisions on fines apply to fines in lieu of forfeiture.

47The trial judge noted the following factors in support of his decision to dismiss the application:

(a) if a fine is paid in part, there will be a proportionate reduction in the amount of custodial time to be served (s. 734.8);

(b) if an offender requires more time to pay a fine, they may apply to vary the order (s. 734.3);

(c) before the Crown can apply for a warrant of committal for non-payment, the Crown must attempt to use other means of collecting the fine (ss. 734.5 and 734.6);

(d) the court cannot issue a warrant of committal for non-payment until the time allowed for payment has expired, the mechanisms provided by ss. 734.5 and 734.6 are not considered appropriate, or the offender has, without reasonable excuse, refused to pay the fine (s. 734.7);

(e) inability to pay a fine is a reasonable excuse for non-payment;

(f) at the time of sentencing, the court has considerable discretion as to the length of time that may be given to pay the fine; and

(g) mandatory minimum and maximum terms of imprisonment must also be imposed in other cases where a fine is levied. Sections 734(4) and 734(5) require a term of imprisonment in default of payment of a fine.

48Considering the purpose of the challenged provisions and their actual impact in light of other provisions of the Criminal Code, the trial judge held that the mandatory minimum terms of imprisonment required by s. 462.37(4) of the Code did not violate s. 12 of the Charter.

49Regarding s. 7, the offender has the right to make submissions on relevant issues at each stage of the proceeding. The trial judge held that the mere fact that there is a mandatory term of imprisonment does not deprive the offender of any s. 7 rights. The defence argument was more properly left to a determination under s. 12.

(4) Restitution, forfeiture, and fines in lieu

50The Crown sought a $14.8 million restitution order, a $7.7 million forfeiture order, and a $4.6 million fine in lieu of forfeiture ($2.3 million each) against Jun-Chul and Kathleen. The Crown also sought a six-year custodial term in default of payment.

51Kenneth applied for some of the seized funds to be returned to him on the basis they were not properly part of the forfeited sums.

52The trial judge issued a $12.5 million restitution order against Jun-Chul and Kathleen, jointly and severally. The trial judge also ordered $7.5 million be forfeited to the Crown by Jun-Chul and Kathleen.

53He ordered funds received from Kenneth to be returned to him, as he was not satisfied that amount was derived from the proceeds of the lottery funds.

54Notwithstanding Jun-Chul and Kathleen's submissions, the trial judge found there were no grounds for a fine in lieu of forfeiture of anything less than $4.6 million. The trial judge noted, as reflected in R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, that the objective of the statutory provisions is to ensure crime does not pay and the ability to pay is not a relevant factor.

55The trial judge did not agree that Jun-Chul should bear all the responsibility for the fine in lieu of forfeiture. The lottery funds were made out to Kathleen, and she was an active participant in securing the funds from the OLG. Accordingly, they should be equally responsible for the outstanding amount.

56The trial judge gave both Jun-Chul and Kathleen seven years to pay. Considering the mandatory five-year minimum default sentence for fines above $1 million, he held a six-year term of imprisonment was appropriate upon default of payment.

(5) The s. 11(b) application

57Prior to trial, the appellants brought an application under s. 11(b) of the Charter. The application judge found the Crown genuinely responded to the circumstances of the case including the voluminous disclosure, multiple co-accused, and an ever-changing roster of defence counsel. Given the complexity of the case and reasonable reliance on the law as it existed pre-Jordan, 2016 SCC 27, [2016] 1 S.C.R. 631, she found the Crown had established that the time the case would have taken, at the anticipated end of trial on March 24, 2017, was justified. Therefore, there was no breach of s. 11(b) of the Charter.

ISSUES ON APPEAL

Conviction Appeal:

(a) Did the trial judge impose unreasonable verdicts for Kathleen Chung?

(b) Did the trial judge impose unreasonable verdicts for Jun-Chul Chung?

Sentence Appeal:

(a) Restitution and Fine in lieu:

(i) Did the trial judge err in dismissing the constitutional challenges?

(ii) Did the trial judge err in establishing time to pay and a six-year sentence in default of payment?

(b) Custodial Sentence:

(i) Did the trial judge err in principle in imposing the sentences for the appellants?

Did the application judge err in dismissing the s. 11(b) stay application?
Did the trial judge err in not granting interest to Kenneth Chung?
Did the trial judge err in acquitting Kenneth of counts 3-6?

ANALYSIS

(1) Conviction Appeals

Issue 1(a): Did the trial judge impose unreasonable verdicts for Kathleen Chung?

58Kathleen was convicted of counts 4, 5, and 6. We discuss the related counts 4 and 6 and then count 5.

Count 4: Possession of property obtained by crime (the winning ticket)

59Kathleen was convicted of possession of the winning ticket knowing that it was obtained by the commission of an indictable offence. She appeals on two related grounds: (i) that the verdict was unreasonable; and (ii) that the trial judge gave inadequate consideration to Kathleen's mens rea.

60She submits that the verdict is unreasonable because the evidence supported a reasonable inference that she did not know the ticket was stolen, but believed the ticket belonged to Kenneth or Jun-Chul. She submits that the evidence supports an inference that she only said she was the owner either because she thought her father and brother were precluded from claiming the prize because they would be "insiders" as a result of Kenneth's role as agent retailer for the OLG, or because she wanted to protect her brother from unwanted publicity.

61By failing to consider these inferences, Kathleen submits that the mental element for the offence was not established. She submits that the trial judge relied on her lies to the OLG about her purchase of the ticket to conclude that she knew the ticket was stolen. However, she submits that her lies were equally consistent with an honest belief that Jun-Chul or Kenneth was the ticket's rightful owner.

62We do not accept these submissions.

63This court recently reviewed the principles applicable to an appeal based on the assertion of unreasonable verdict. In R. v. Lights, 2020 ONCA 128, 149 O.R. (3d) 273, Watt J.A., speaking for the court, set out the role of the appeal court at para. 30:

A verdict is unreasonable if it is one that no properly instructed jury, acting judicially, could reasonably have rendered. This test requires not only an objective assessment of the evidence adduced at trial, but also, to some extent at least, a subjective evaluation of that evidence. To discharge this responsibility, we are required to review, analyse, and, within the limits of appellate disadvantage, weigh the evidence. This weighing is only to determine whether that evidence, considered as a whole, is reasonably capable of supporting the verdict rendered. [Citations omitted.]

64He also noted, at para. 33, that the court is entitled to consider that the appellant did not testify:

When the claim of an unreasonable verdict rests on the assertion that, based on the evidence, the trier of fact could not have reasonably rendered the guilty verdict, an appellate court is entitled to consider that the accused did not testify at trial or adduce other evidence to support any other reasonable inference consistent with innocence. [Citations omitted.]

65And at para. 39:

When a verdict that rests wholly or substantially on circumstantial evidence is challenged as unreasonable, the question appellate courts must ask is whether the trier of fact, acting judicially, could reasonably be satisfied that the guilt of the accused was the only reasonable conclusion available on the evidence taken as a whole: Villaroman, at para. 55. Fundamentally, it is for the trier of fact to determine whether any proposed alternative way of looking at the case as a whole is reasonable enough to raise a doubt about the guilt of the accused: Villaroman, at para. 56.

66We conclude that the evidence, considered as a whole, is reasonably capable of supporting the guilt of Kathleen on count 4.

67The evidence does not support the inference that Kathleen believed her brother or father could not claim the prize because her brother was a retailer. Were this the case, she would not have initially said that the ticket belonged to her brother. The policy regarding agents, retailers and insiders was explained to her. It did not prevent them from winning and claiming prizes.

68Kathleen did not testify so the only evidence regarding publicity concerns arose from the testimony of David Summers, who spoke to her during her initial call to the OLG in January 2004. He testified that it would be better if the OLG handled the media. He told her that generally certain information would be given to the media, including the details of the particular lottery, the amount won, the name of the winner, and the city in which they lived.

69The trial judge understood that this was a circumstantial case and applied the principles from R. v. Villaroman, 2016 SCC 33, [2016] 1 S.C.R. 1000, to his analysis. He understood Kathleen's submission that her lack of knowledge of the theft was a reasonable inference from the evidence. He concluded that this inference was not reasonable:

Kathleen Chung has lied throughout about her purchase of the original ticket and the validation of the winning ticket. She could not, in fact, have purchased any of the original tickets nor validated any of the subsequent tickets. Apart from the OLG computer records, her cellphone, banking and VISA records show that she could not have been where she said she was at the relevant times. She obviously lied to the OLG personnel about being the legitimate owner of the ticket and how she came to possess it. She knew the ticket was stolen.

70The verdict was not unreasonable and the trial judge properly considered Kathleen's knowledge of the theft -- the appeal with respect to count 4 is dismissed.

Count 6: possession of property obtained by crime (the $12.5 million paid)

71It follows logically from the above analysis on count 4, that the appeal on count 6 must be dismissed. The trial judge found -- and we have confirmed -- that Kathleen knew the ticket was stolen and received the proceeds. The funds were deposited into her bank account and, as the trial judge concluded:

Kathleen Chung obtained the benefit of large amounts of the proceeds, including the purchase of an expensive home and some cars, and she was the beneficial owner of a number of investments.

72The appeal with respect to count 6 is dismissed.

Count 5: Defrauding the OLG of $12.5 million

73Kathleen Chung was convicted of defrauding the OLG of $12.5 million.

74She claims that the trial judge did not meaningfully consider her arguments at trial and erred in his analysis of the offence of fraud. By focusing on her dishonesty, he failed to consider whether her dishonesty resulted in deprivation. She submits that dishonesty is insufficient to establish fraud; the dishonesty must cause the victim to act to its detriment. In other words, her lies did not cause the OLG to act to its detriment because the OLG's policy was to pay the bearer of the ticket unless someone else claimed it. Therefore, the OLG paid Kathleen's claim because she was the bearer of the ticket, not because she falsely claimed to be the rightful owner.

75Although the OLG also paid out the funds to the rightful owner, there was no evidence it was under any legal obligation to do so. Instead, the OLG paid out the second claim because it wanted to restore the public confidence it lost after the "insider win" scandal. Kathleen's actions did not directly cause the detriment. Kathleen submits that the trial judge did not meaningfully consider these arguments at trial and erred by focusing on the element of dishonesty and failing to consider whether the dishonesty resulted in deprivation.

76Kathleen submits that this situation is akin to that in R. v. Benson (M.) et al., 2012 MBCA 94, 284 Man. R. (2d) 204, a decision of the Manitoba Court of Appeal. In that case, Mr. Helgason was acquitted of fraud in respect of a falsified claim to the Manitoba government regarding a resettlement programme for persons whose property was expropriated. In dismissing the Crown appeal of acquittal on this count, the court relied on the trial judge's acceptance of the government representative's evidence that the government was not concerned about falsification and would have acted as it did irrespective of Helgason's statements.

77This is not an analogous situation.

78There is no evidence here that the OLG would have paid the money to Kathleen had they known that the ticket was stolen. On the contrary, David Myers' evidence was that the OLG was concerned that they were paying the rightful owner and that "if it was a stolen ticket and we knew it was stolen, we would not have paid that ticket."

79This court has confirmed that the deprivation element of fraud is satisfied even if the accused's dishonest conduct is not the sole cause of the deprivation: R. v. Drakes, 2009 ONCA 560. In fact, "the causal link between the dishonest conduct and the deprivation may not depend on showing that the victim relied on or was induced to act by the fraudulent act": R. v. Riesberry, 2015 SCC 65, [2015] 3 S.C.R. 1167, at para. 24.

80The guilty verdict for Kathleen Chung on count 5 was reasonable. The appeal on this count is dismissed.

Issue 1(b): Did the trial judge impose unreasonable verdicts for Jun-Chul Chung?

81Jun-Chul Chung appeals the findings of guilt on counts 1 to 6:

Count 1: theft under $5000 (the 30 tickets that won nominal or no prize);
Count 2: possession of property obtained by crime (the 30 tickets);
Count 3: theft over $5000 (the winning ticket);
Count 4: possession of property obtained by crime (the winning ticket);
Count 5: defrauding the OLG of $12.5 million; and
Count 6: possession of property obtained by crime (the $12.5 million paid).

82Counts 2 and 4 were conditionally stayed pursuant to Kienapple.

83Jun-Chul relies on Kathleen's submissions and further submits that the guilty verdicts were unreasonable because: (i) the evidence permitted an inference that he believed Kathleen was the rightful owner of the winning ticket; (ii) it was not established that Daniel Campbell was the real owner; (iii) the trial judge erred in relying on Exhibit 38; and (iv) the OLG had a policy to pay the bearer of the ticket.

84Kathleen does not take the position that she was the rightful owner and the trial judge clearly rejected that inference. He accepted the evidence that Kathleen could not have purchased the ticket based on cell phone and banking records and that the ticket had been stolen as part of the scheme to steal lottery tickets. The evidence also disclosed that, contrary to what Kathleen and Jun-Chul told OLG personnel, Kathleen could not have been sitting in her car with Jun-Chul outside of Variety Plus shortly after Jun-Chul validated the winning ticket. The trial judge properly rejected the suggestion that Jun-Chul believed that Kathleen was the rightful owner of the winning ticket.

85The Crown did not need to establish that Campbell was the real owner. The trial judge correctly relied on Vezina, and Little and Wolski v. R., 1974 CanLII 201 (SCC), [1976] 1 S.C.R. 20, both of which confirm that it is not necessary to prove the name of the rightful owner absent prejudice to the accused. The trial judge determined that there was no prejudice.

86The OLG system is capable of producing a transaction report of ticket purchases. The purchasing patterns for Variety Plus were set out in Exhibit 38. This report tracked the 30 split tickets in issue. Ten of the original tickets were validated during the hours that Kenneth was at work, and eight original tickets were validated during the hours that Jun-Chul was at work. 12 of the original tickets were validated during hours when it was not clear who was at work.

87Each of the 30 original tickets were validated at Variety Plus and generated two free-play tickets. For every one of the 30 original tickets, one of the free-play tickets was validated at Variety Plus on one day, and the other free-play ticket was validated elsewhere on that or a different day.

88The trial judge carefully reviewed this evidence and concluded with respect to count 1:

There is no doubt, in my view, that the evidence discloses a scheme to steal free play lottery tickets.

In every case, a lottery ticket was purchased and that lottery ticket was validated at Variety Plus. In every case, two free tickets were generated. In every case, one of those tickets was validated elsewhere, and the second free ticket was validated at Variety Plus. In every case, the validation of the original ticket was done by either Jun-Chul Chung or Kenneth Chung, and the validation of the second free ticket was done by Jun-Chul Chung or Kenneth Chung.

In my view, the evidence, while circumstantial, is consistent only with the guilt of Jun-Chul Chung and Kenneth Chung, and it is inconsistent with any other reasonable conclusion.

89These findings of fact also apply to count 3. The trial judge made no error in relying on Exhibit 38 to conclude that Jun-Chul participated in the scheme to steal lottery tickets.

90Jun-Chul submits that the OLG's policy to pay the bearer of the ticket is relevant to the conviction for theft. It is not. Any relevance would potentially be to the conviction for fraud. For the reasons set out in relation to Kathleen, we do not accept this submission for Jun-Chul.

91For these reasons, we do not accept that the verdicts for Jun-Chul on counts 1-6 were unreasonable and his appeal on this basis is dismissed.

Issue 1(c): Did the trial judge impose unreasonable verdicts for Kenneth Chung?

92Kenneth appeals his convictions for theft and possession of property obtained by crime. The possession of property obtained by crime was stayed pursuant to Kienapple. The convictions relate to the 30 tickets that did not win the large prize.

93Kenneth submits that the trial judge erred in relying on Exhibit 38 (described above). He also submits that the trial judge erred because the tickets had no value so there was no theft in the first place.

94The trial judge determined that the evidence "discloses a scheme to steal free play lottery tickets." He considered, and rejected as unreasonable, inferences other than the fact that Kenneth participated in the scheme. Although Kenneth Chung did not testify, he had told the OLG the hours he worked. The trial judge found:

In my view, having regard to the hours of work of Jun-Chul Chung and Kenneth Chung, and the timing of the transactions, it is clear that Jun-Chul Chung stole some of the tickets and Kenneth Chung stole some.

95Some of the split tickets were validated during the hours that Kenneth worked. Although he now suggests that perhaps his mother was working during some of those hours, this submission was not made to the trial judge. Nor was the evidence of what he told the OLG ever challenged at trial. We give no effect to this submission made for the first time on appeal.

96Kenneth also submits that it is not "illegal" to take something that has no value. Since a lottery ticket on its own is merely a "chance" it has no value and -- while it may be immoral to take someone else's lottery ticket -- it is not illegal. We reject this submission outright. To steal means to take the property of another without permission.

97We dismiss Kenneth Chung's appeal as to convictions.

(2) Sentence Appeals:

Issue 2(a): Restitution and Fine in Lieu

(i) Did the trial judge err in dismissing the constitutional challenges?

98 Section 462.37(1) of the Criminal Code authorizes the Crown to seek the forfeiture of any property that is the proceeds of crime, obtained by the commission of a designated offence. The objectives of the provision are "to deprive the offender ... of the proceeds of their crime and to deter them from committing crimes in the future": Lavigne, at para. 16. As this court held in R. v. Schoer, 2019 ONCA 105, 371 C.C.C. (3d) 292, "where the sentencing judge is satisfied on a balance of probabilities that the property is the proceeds of crime, that the offender had possession or control of it at some point, and the designated offence was committed in relation to that property, a forfeiture order must be made": at para. 88, citing Lavigne, at para. 14; R. v. Angelis, 2016 ONCA 675, 133 O.R. (3d) 575, at para. 35, leave to appeal refused, [2016] S.C.C.A. No. 484.

99Parliament anticipated circumstances in which property that is the proceeds of crime may no longer be available for forfeiture: it may have been "used, transferred or transformed, or may simply be impossible to find": Lavigne, at para. 18. To ensure, nevertheless, "that the proceeds of a crime do not indirectly benefit those who committed it", Parliament established the fine in lieu of forfeiture provisions: Lavigne, at para. 18. Where the property that has been in the control of the offender is no longer available to be forfeited, s. 462.37(3) provides that a fine may be imposed in lieu of forfeiture.

100Unlike the forfeiture provisions, the fine in lieu of forfeiture provisions allow for the exercise of some discretion. The key interpretive principle articulated in Lavigne is that the fine in lieu provisions are to operate so as to ensure that crime does not benefit those who committed it: at para. 18. There may be circumstances where the objectives of the provision do not call for a fine to be imposed, for example if the offender acted alone and did not benefit from the crime: Lavigne, at para. 28; Schoer, at para. 91.

101However, once a sentencing judge has determined that a fine in lieu of forfeiture ought to be imposed, the sentencing judge has no discretion over the value of the fine to be imposed. The fine must be equal to the value of the property for which it is a substitute: Lavigne, at para. 34; Criminal Code, s. 462.37(3). Where there are multiple offenders before the court, however, and the property passed through the hands of one offender to another without the first offender retaining the benefit of the full value of the property, the sentencing judge may allocate a portion of the fine less than the full value of the property that had been under the offender's possession and control, so long as the balance of the total value of the proceeds of crime are distributed to the other offenders before the court: R. v. Dieckmann, 2017 ONCA 575, 355 C.C.C. (3d) 216, at paras. 90-100, leave to appeal refused, [2018] S.C.C.A. No. 304 and No. 381.

102As a means of enforcing the fine, s. 462.37(4) requires the judge who imposes the fine to also impose a term of imprisonment in the event that the offender does not pay the fine. Although the sentencing judge has some discretion in the length of the term of imprisonment to be set, that discretion is bounded by mandatory minimum and maximum terms of imprisonment that correspond to the quantum of the fine. For example, default of a fine of more than $1 million requires a mandatory minimum sentence of five years and a maximum of ten years. The sentencing judge must provide the offender with reasonable time to pay: Lavigne, at paras. 45-47.

103Section 462.37(4) provides a graduated approach to setting the term of imprisonment consequent to default. The larger the amount of unrestored proceeds of crime that the offender is found to have possessed or controlled, the longer the minimum term of incarceration: see e.g. R. v. Rafilovich, 2019 SCC 51, 442 D.L.R. (4th) 539, at para. 109; cf R. v. Pham (2002), 2002 CanLII 41969 (ON CA), 167 C.C.C. (3d) 570 (Ont. C.A.), at paras. 19-21 (where this court found the connection under s. 240 of the Excise Tax Act, R.S.C. 1985, c. E-14, between the quantity of the illegal substance possessed and the size of the minimum fine established proportionality).

104The mechanism for imprisoning a defaulting offender is set out in s. 734.7 of the Criminal Code. As the trial judge explained, "the court cannot issue a warrant of committal until the time allowed for payment has expired, the mechanisms provided by ss. 734.5 and 734.6 are not considered to be appropriate, or the offender has, without reasonable excuse, refused to pay the fine." Although ability to pay a fine is not a consideration at the sentencing stage (except in terms of the time to be given to pay), it is a consideration at the committal stage both with respect to determining if time should be given to pay and with respect to determining whether there has been a reasonable excuse for not paying: Angelis, at para. 81; R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530, at paras. 60-69. No one is to be committed unless judged not to have had a reasonable excuse for nonpayment. Poverty is a reasonable excuse. The section targets refusals -- in other words, wilful nonpayment.

105The rationale for imprisonment in default of payment is to give serious encouragement to those with the means to pay a fine to make payment: Wu, at para. 3. This aligns with the intent and purpose of Part XII.2 generally, particularly the forfeiture regime under s. 462.37: Parliament enacted these provisions to give teeth to the general sentencing provisions under Part XXIII. By depriving offenders and criminal organizations of the proceeds of their crimes, Parliament sought to ensure that crime does not pay and thereby also deter future crimes: Lavigne, at paras. 10, 16 and 31; Angelis, at para. 32. Imprisonment on default of payment is thus not additional punishment for the underlying offence, but a means of coercing payment from those offenders who have the means to pay.

The Constitutional Challenge

106Kathleen Chung and Jun-Chul Chung challenge the constitutionality of the fine in lieu of forfeiture regime on two bases. First, they argue that s. 462.37(4), which requires the judge to set the term of imprisonment in default at the sentencing stage rather than the committal stage, violates both s. 7 and s. 12 of the Charter; and second, that s. 462.37(4)(a)(vii), which imposes a five-year mandatory minimum sentence in default of payment where the amount of the fine in lieu exceeds $1 million, violates s. 12.

107As set out below, we conclude that the Charter challenges must fail.

The s. 7 challenge

108Kathleen and Jun-Chul argue that s. 462.37 violates Kathleen and Jun-Chul's rights under s. 7 of the Charter on the basis that an offender is potentially deprived of liberty without being afforded natural justice. In particular, Kathleen and Jun-Chul argue that there is a denial of the right to participate and make meaningful submissions as to the length of sentence to be imposed on default of payment.

109At the time the order is imposed, the offender has the opportunity to make submissions on the appropriate penalty in the event of default. Once default has occurred, however, the offender is limited to making submissions as to whether a warrant of committal should issue. The judge at the committal hearing has no jurisdiction to vary the sentence that was established at the front end.

110Kathleen and Jun-Chul argue that neither opportunity for submissions -- at the front end or back end -- is sufficient to satisfy the requirements of natural justice. Natural justice, Kathleen and Jun-Chul argue, requires that an offender be able to make submissions on the appropriate sentence for default after the default has taken place and the reasons for the default are known. It is only then, Kathleen and Jun-Chul argue, that a judge can assess the moral culpability for the default.

111We do not agree. When the Crown seeks a fine in lieu of forfeiture, the offender has the right to be heard with respect to whether the fine should be imposed, the amount of the fine, the time to pay, and the term of imprisonment on default. Relevant considerations at this stage include the offender's role in possessing or controlling the proceeds of crime, the whereabouts of unrestored proceeds, and -- with respect to the time being given to pay -- the offender's current and anticipated ability to pay.

112The prospective imprisonment is premised on the offender having subsequently defaulted. If default occurs, it is either culpable or non-culpable. If non-culpable, there is either no refusal to pay, or no unreasonable refusal. In such circumstances, there is to be no imprisonment.

113If nonpayment is culpable, there will be imprisonment.

114We do not agree that the structure of the regime breaches principles of natural justice. The rationale for sentencing on default does not track the panoply of ordinary sentencing principles that includes, for example, rehabilitation. It is principally concerned with specific and general deterrence, which are by their nature prospective. Specific deterrence in this context is concerned with providing the offender with motivation to disclose what happened to the money and to choose to pay the fine. Given this limited rationale, nothing that happens subsequently is relevant to the quantum of sentence imposed. When the offender does not pay the fine, or only pays some of it, the only open question is whether the nonpayment was the result of an unreasonable refusal. Did the offender choose not to repay? Or were there circumstances outside the offender's control? The offender has full rights of participation at the committal hearing to answer this question. As to the prior question of what the penalty should be if the offender deliberately and unreasonably refuses to pay, there is nothing contrary to natural justice in the penalty being set in advance in accordance with submissions made before the circumstances of default are known. Consequently, we do not agree that there is a violation of s. 7.

The s. 12 challenges

115 Section 12 of the Charter guarantees to everyone "the right not to be subjected to any cruel or unusual treatment or punishment." At trial, Kathleen and Jun-Chul specifically challenged s. 462.37(4)(a)(vii) which sets out a five-year mandatory minimum sentence on default of a fine exceeding $1 million. On appeal, they added a second argument respecting s. 462.37(4) as a whole: that the requirement that the term of imprisonment be set in advance of default -- before any mitigating or aggravating circumstances can be known -- has the ability to produce grossly disproportionate sentences in reasonably foreseeable cases and therefore violates s. 12.

116For the reasons set out below, we conclude that neither s. 462.37(4)(a)(vii) nor s. 462.37(4) infringes s. 12.

The first argument -- mandatory minimum sentences

117There is no disagreement in this case that although the fine in lieu of forfeiture provisions do not constitute punishment, they are "treatment" for the purposes of s. 12. The dispute is whether this treatment is cruel or unusual.

118Although the methodology for determining whether treatment or punishment is cruel or unusual has been developed primarily in the context of punishment, the same methodology applies -- with some adaptation -- to treatment: R. v. Boudreault, 2018 SCC 58, [2018] 3 S.C.R. 599; R. v. Nur, 2015 SCC 15, [2015] 1 S.C.R. 773. The basic structure is set out in Nur, at para. 46. First, the court must determine what constitutes a fit and proportionate sentence for the offence "having regard to the objectives and principles of sentencing in the Criminal Code." Second, the court must ask whether the mandatory minimum sentence is grossly disproportionate to the fit and proportionate sentence. If the answer is yes, the mandatory minimum limits s. 12 rights, and will be constitutionally infirm unless it can be justified under s. 1 of the Charter.

119Boudreault is a leading authority on the interaction of s. 12 and sentencing measures, in that case the victim surcharge under s. 737 of the Criminal Code. The surcharge imposed a mandatory, pre-set fine for every summary conviction or indictable offence, "regardless of the severity of the crime, the characteristics of the offender, or the effects of the crime on the victim": at para. 1. The Supreme Court struck down s. 737 on the basis it constituted cruel and unusual punishment in violation of s. 12 of the Charter. Although there are similarities between the victim surcharge and fine in lieu of forfeiture regimes, in this case, the analysis is complicated by the fact that the mandatory minimum sentence is a matter of enforcing a fine in lieu of forfeiture and not a penal fine as in Boudreault. Because the objectives and principles of sentencing are different in the two contexts, the gross disproportionality analysis is different.

120The first question is whether the mandatory minimum sentence provision results in a grossly disproportionate sentence on the person before the court. If not, the question is whether reasonably foreseeable applications will impose grossly disproportionate sentences on others: Nur, at para. 77.

121Following the structure set out in Boudreault, disproportionality is determined by considering three factors: (1) the purpose of the provision; (2) the impact of the mandatory minimum on the offender; and (3) recognized sentencing principles. These inquiries must be modified somewhat to account for the transposition from a penal to a non-penal context.

The purpose of the provision

122As noted above, the purpose of the fine in lieu of forfeiture is to "deprive the offender of the proceeds of his or her crime and deter potential offenders and accomplices": Lavigne, at para. 26. The mandatory minimum terms of imprisonment further these purposes by providing an incentive for those offenders with the means to pay a fine to actually pay it: Wu, at para. 3.

The impact on the offender

123The provision provides a graduated approach to terms of imprisonment on default. The larger the amount of unrestored proceeds of crime found to have been possessed or controlled by the offender, the longer the minimum term of incarceration. Although the band may be broad at the very top category for the greatest defaults, the regime is nevertheless calibrated to the amount of proceeds retained or used. If the purpose is to ensure that the offender does not benefit from the crime, where an offender frustrates that purpose by refusing pay the fine in lieu, it makes sense that lengthier periods of incarceration would be thought commensurate with greater retention or use of proceeds of crime. This is consistent with the fact that the sentence in default reduces in proportion to amounts paid toward the fine: Criminal Code, s. 734.8(2).

124With respect to the impact of the provision on the offender, Kathleen and Jun-Chul advanced four hypothetical scenarios. Each variation involves an offender who once was in possession of the proceeds of crime but is no longer in possession. The offender may have disposed of the property or lost it without enjoying any benefit from it. Or the offender may have consumed the proceeds and no longer had any property with which to satisfy the fine, but had the means to earn an income and pay down a fine over time, before losing employment or employability and the means to pay the fine. The hypotheticals vary in the offender's degree of culpability for no longer having access to funds or subsequently being able to earn sufficient funds: drug addiction, gambling problems, loss of gainful employment.

125In each of the hypotheticals, when the time to pay had been exhausted and the offender defaulted, the judge at the committal hearing would be required to determine whether the offender had refused to pay, and whether the refusal would have been reasonable in the circumstances of the offender. If the judge determined that there had been a refusal, and that the refusal was not reasonable, the judge would be required to commit the offender for the period of incarceration set at the front-end hearing. The predetermined sentence would have been set by reference to a mandatory minimum.²

126Kathleen and Jun-Chul argue that the mandatory minimum five-year sentence in s. 462.37(4)(a)(vii) is grossly disproportionate by reference to sentences that have been imposed on civil contemnors, and by reference to the sentence imposed for the underlying offence.

127With respect to civil contempt, Kathleen and Jun-Chul refer to the decision in Chiang (Re), 2009 ONCA 3, 93 O.R. (3d) 483, in which one year of imprisonment was imposed on Mr. Chiang and eight months on Mrs. Chiang as a consequence of a concerted course of conduct spanning 15 years, in which they continually breached orders requiring them to disclose their assets. Kathleen and Jun-Chul argue that if one year of imprisonment is taken as a benchmark for a contempt related to the frustration of judgment of over $8 million, then a five-year minimum for default of payment of a fine of $1 million is grossly disproportionate.

128Kathleen and Jun-Chul also argue that a five-year term in default of payment is grossly disproportionate when compared to the hypothetical offenders' sentences for the underlying offences. They submit the fact that an offender -- like Kathleen -- may serve more time for the default than for the offence itself further indicates the gross disparity between the mandatory sentence and the offender's moral blameworthiness.

129We do not agree with Kathleen and Jun-Chul's submissions. As the Crown argues, the rationale for a penalty for contempt of court is different from the rationale of the impugned provisions. Civil contempt penalties are a matter of securing compliance with court orders. What is judged to be sufficient to encourage compliance and respect for the court's processes will vary with the particular case. What is being punished, in the case of Chiang, was not non-payment of a judgment debt, but of refusing to cooperate or abide by court orders intended to assist the judgment creditor realize on a judgment. Significantly, after serving the term of incarceration, the judgment debtor would still have been required to submit to the processes that the judgment debtor had refused to participate in.

130But as explained above, the purpose of the fine in lieu provisions is different. The purpose is not simply to provide an incentive to defiant litigants to comply with court orders. It is also to remove any benefit that the offender may have received from participating in a crime. Where the offender refuses to pay a fine in lieu of forfeiture, the incarceration stands in place of the property that has not been forfeited or the fine that has not been paid. Incarceration is intended to correct an imbalance: the injustice of the offender's possession or use of proceeds of crime. How lengthy a sentence -- how much deprivation of liberty -- is required to balance what the offender has taken, is a value judgment and not something that can be expressed with mathematical precision. But we cannot say that Parliament's conclusion that a five-year sentence for an unreasonable refusal to pay $1 million or more would be grossly disproportionate to the goal of ensuring that an offender did not benefit from a crime in which the offender received proceeds in excess of $1 million.

131Although Boudreault was decided after the trial judge released his reasons, Kathleen and Jun-Chul rely on it to challenge two key aspects of the trial judge's finding that the mandatory minimum sentence did not violate s. 12. First, the trial judge noted that the judge who imposes the fine has discretion over the length of time to pay, and an offender can apply for extensions of time. Second, the trial judge observed, as we have above, that a warrant of committal cannot be ordered unless the offender has refused to pay, and there is no reasonable excuse for that refusal.

132Martin J., writing for a majority of the Supreme Court, addressed these procedural safeguards in the context of the victim surcharge in Boudreault. Before it was struck down, the victim surcharge was subject to the same safeguards as the fine in lieu of forfeiture regime, namely: the offender's ability to request an extension of time under s. 734.3; and prohibition on issuing a warrant of committal against an offender unless they unreasonably refuse to pay, pursuant to s. 734.7.

133In Boudreault, the Crown argued that an offender's ability to apply under s. 734.3 for an extension of time to pay significantly mitigated the threat of incarceration. Martin J. rejected this argument on the basis that s. 734.3 offers certain offenders little, if any, relief. Martin J. explained applying for an extension of time is not a routine administrative matter, and some offenders -- especially the impoverished and uneducated -- would find it daunting to prepare and file a written application with the court. She also noted offenders cannot obtain state-funded legal counsel to assist with the application: at para. 73. Furthermore, Martin J. held that requiring some offenders -- such as those grappling with severe addiction and mental illness -- to continually appear before a committal judge to explain their inability to pay results in de facto indefinite sentences, saying, at para. 77:

For all of these offenders, the effect of the victim surcharge is that they must live with a criminal sanction that they are unable to acquit for the foreseeable future, if ever. These offenders face repeated appearances before a court to explain their inability to pay the surcharge -- even if that inability is rooted in mental illness or physical disability. This ritual, which will continue indefinitely, operates less like debt collection and more like public shaming.

134Martin J. also found the requirements for issuing a warrant of committal for defaulting on a fine, as provided for under s. 734.7, were insufficient to neutralize the disproportionate effects of the victim surcharge. Though she recognized that s. 734.7(1)(b) prohibits a court from issuing a warrant of committal where the offender has a reasonable excuse, and that inability to pay constitutes a reasonable excuse, she found the provision could not attenuate the threat of imprisonment or detention under the victim surcharge, particularly since it could be difficult for committal judges to draw the line between inability to pay and a refusal to pay. Impoverished offenders would therefore live under a continual threat of imprisonment because it would be impossible to predict whether one would be able to prove a reasonable excuse at a committal hearing: at paras. 71-72.

135Kathleen and Jun-Chul argue the same considerations apply to the fine in lieu of forfeiture regime. As with the victim surcharge, the ability to apply for additional time to pay and to present evidence of a reasonable excuse for failing to pay cannot render the mandatory minimum five-year sentence constitutional. However, for the reasons that follow, we do not agree that Boudreault invalidates the trial judge's finding that s. 462.37(4)(a)(vii) does not violate s. 12.

136First: the argument that the availability of time to pay and the opportunity to seek extensions can effectively lead to an indeterminate sentence. It must be noted that unlike the victim surcharge in Boudreault, the fine in lieu of forfeiture is not a punishment that applies indiscriminately to all offenders, regardless of their resources, the nature of the crime committed, or whether it is at all realistic to expect them to ever be in a position to pay. Rather, the fine is tailored to the quantum of proceeds of crime the offender has possessed or used. Granting time to pay -- and extensions of time to pay -- is not a matter of condemning an offender to indentured servitude, or to participating in a futile exercise in public shaming, but of giving to those offenders who are or will become capable of paying, time to organize their affairs so as to pay the fine.

137Second, Kathleen and Jun-Chul rely on Martin J.'s observation in Boudreault that in the context of persons who are poor, unhoused, addicted, marginalized, and facing a committal hearing for non-payment of a mandatory victim surcharge, a judge at a committal hearing may find it difficult "to draw the line between an inability to pay and a refusal to pay": at para. 71. On the facts in Boudreault, Martin J. found that the uncertainty caused by the subjectivity of the assessment added to the gross disproportionality of the surcharge.

138The circumstances here are different, and we have no good reason to believe that a judge at the committal stage would have inordinate difficulty in drawing the line, that the committal hearing will place an unreasonable burden on the offender, or that uncertainty would render the scheme grossly disproportionate to the refusal to pay the fine. Again, there must be not just an inability to pay the fine, but a refusal. And not merely a refusal but a refusal without reasonable excuse. A person found to have received proceeds of crime in excess of $1 million is not in circumstances at all similar to the litigants in Boudreault. The uncertainty of whether one's extreme poverty, mental illness, addiction, and instability will be accepted by a court as reasonable excuse for non-payment of a comparatively minor fine is not analogous to the facts -- hypothetical or otherwise -- on this appeal. On the fine in lieu of forfeiture regime before this court, as long as there is a stable legal doctrine guiding the exercise of judicial discretion, the fact that an offender does not know in advance whether the offender's argument will be accepted is not a manifestation of cruel and unusual treatment. As explained further below, the doctrine is sufficiently stable for this purpose.

Sentencing principles

139With respect to the argument that the minimum sentence is disproportionate in cases where the term of imprisonment on default is longer than the term of imprisonment for the underlying offence, we do not agree that the comparison is apt. Again, the penal sentence that offenders receive for the offences giving rise to the proceeds of crime has a different rationale for the sentence imposed for the refusal to pay a fine in lieu of forfeiture. As this court said in Angelis, at para. 39, Part XII.2 of the Criminal Code is not offender centric. Criminal sentencing goals such as rehabilitation do not factor into the determination of a fit sentence for wilful default. There is instead a singular focus on a particular mode of deterrence -- ensuring that crime does not pay in circumstances where an offender refuses to pay without reasonable excuse.

Conclusion

140We find that the trial judge made no error in concluding that the five-year mandatory minimum provision under s. 462.37(4)(a)(vii) does not infringe s. 12 of the Charter.

The second s. 12 argument -- setting the sentence in advance

141The second s. 12 argument, which Kathleen and Jun-Chul advanced for the first time on appeal, does not depend on the existence of mandatory minimum terms of imprisonment. The argument is that the requirement that the term of imprisonment be set in advance of the default, before the existence of any mitigating or aggravating circumstances can be known, has the potential to result in grossly disproportionate sentences in reasonably foreseeable cases. The argument postulates that sentences that were reasonable when imposed could become grossly disproportionate when executed, because of changed circumstances in the interim that the committal judge would not be permitted to take into account. Kathleen and Jun-Chul argue that there may be degrees of culpability in circumstances giving rise to a refusal to pay, and the offender ought to have the opportunity to seek a reduced period of incarceration, commensurate with the level of culpability.

142Kathleen and Jun-Chul advance a hypothetical offender who committed fraud and is subject to a fine in lieu of forfeiture of $1.5 million. The offender had assets outside of the country worth approximately $1.5 million, which could be liquidated to pay the fine. Time to pay was set at 3.5 years and a lengthy term of imprisonment in default was set -- 8 years -- on the reasoning that the offender had sufficient assets to pay and therefore refusal to pay would reflect a high degree of moral blameworthiness. The offender, while serving her 2.5-year prison sentence, instructed her husband to sell the assets and discharge the fine. Instead, he sold the assets and absconded with the proceeds. After the offender served her initial sentence, she was unable to find work and at the end of 3.5 years had contributed nothing towards repayment. The judge at the committal hearing faulted the offender for negligence in the management of her property, which resulted in her being unable to pay the fine. The refusal to pay, on the hypothetical, was unreasonable because it resulted from negligence. Kathleen and Jun-Chul argue that the offender, who was committed to serve the additional 8 years, ought to have been able to argue that the sentence on default should be reduced to reflect that non-payment was not the result of defiance, but of negligence, which ought to receive more lenient treatment.

143We do not agree that the hypothetical raises any serious difficulty. The offender cannot repay on account of having been defrauded and, on the facts assumed, cannot be considered to have refused to pay, much less refused unreasonably. To order committal, in such circumstances, would be an error of law.

144Under the statutory scheme, after a fine has been imposed, the offender's moral culpability for inability to pay is addressed only through the concept of unreasonable refusal. Unless there is an unreasonable refusal, there is to be no committal. As Lavigne established, inability to pay, by itself, is not enough. The absence of a third option -- incarceration but with a lesser term for cases where there is a refusal that is unreasonable but not sufficiently unreasonable to warrant the full term of incarceration -- does not render the scheme unconstitutional.

The appeal against the restitution order

145At sentencing, Kathleen argued that no restitution order should be imposed beyond the proceeds that had been forfeited, and Jun-Chul argued that if any restitution or fine in lieu should be ordered, that he be made solely liable as he was the one who controlled the funds after Kathleen received them from OLG.

146The trial judge ordered $12.5 million in restitution, payable jointly and severally by Kathleen and Jun-Chul. The trial judge also ordered the forfeiture of $7,555,589.70, which had already been seized and which was to be credited against the restitution order. After deducting the amounts forfeited, Kathleen and Jun-Chul remain jointly and severally liable under the restitution order for approximately $4.9 million.

147Kathleen argues that the trial judge failed to consider sentencing principles when imposing the restitution order and imposed the order as a mechanical afterthought without considering its overall impact in combination with the custodial sentence on her rehabilitation or her ability to pay. She argues that the trial judge ought to have divided the restitution between them, or accepted Jun-Chul's submission at trial that he be made liable for the full amount.

148We agree that the trial judge does not explain the rationale for making Kathleen jointly and severally liable for the full amount of the restitution order, given that Jun-Chul's much longer custodial sentence suggests the trial judge viewed him as significantly more culpable. Additionally, unlike the fine in lieu of forfeiture, ability to pay is a factor in making a restitution order, as is the panoply of sentencing principles including totality, proportionality, and the impact on the offender's prospects for rehabilitation: R v. Castro, 2010 ONCA 718, 102 O.R. (3d) 609, at paras. 23-26. The trial judge did not address these principles, and made an order resulting in liability greater than double the $2.3 million fine in lieu of forfeiture he imposed on Kathleen.

149Taking into account the full range of sentencing principles appropriate to a restitution order, including proportionality, totality, and rehabilitation, and taking into account the nature of the reduction of Kathleen's custodial sentence, it is appropriate to vary the restitution order and reduce the amount payable by Kathleen to the amount of property already forfeited, plus $2.3 million. The amount payable by her remains jointly and severally payable by Jun-Chul.

150We do not change the restitution order as imposed against Jun-Chul. There remain $4.9 million in unrecovered proceeds of crime. Jun-Chul had control over these funds after they were handed over to him by Kathleen. He has provided no disclosure as to the whereabouts of these proceeds.

The appeal against the fine in lieu of forfeiture

151Kathleen requested the trial judge exercise his discretion to limit the fine to the amount of proceeds that she used for her own benefit, being $600,000, less the $500,000 forfeited. The trial judge declined and instead imposed a fine in the amount of $2.3 million.

152As we set out above, where property that is the proceeds of crime is unavailable, a sentencing judge has a limited discretion over whether to order a fine in lieu of forfeiture. Once a sentencing judge decides to impose a fine, it must be for the amount of the property for which it stands as substitute: Lavigne, at para. 34. However, as this court stated in Dieckmann, where proceeds have been dispersed among multiple convicted (or clearly guilty) offenders, a sentencing judge may impose a fine on each individual offender for an amount less than the total value of the proceeds of crime, so long as the individual fines cumulatively equal the value of the proceeds: at paras. 90-100. In Dieckmann, even though the offender had originally been in receipt of proceeds of crime in the amount of $5,143,732, the sentencing judge imposed a fine of $1,285,930 rather than the full amount, on the basis that a sizable portion of the funds had been shared with her "clearly guilty" co-conspirators.³

153The sentencing judge exercised this same discretion and apportioned the fine of $4.6 million equally between Kathleen and Jun-Chul:

Notwithstanding the submissions of counsel for Jun Chul Chung and Kathleen Chung, I see no ground for fines of zero or anything less than $4.6 million. The objective of the statutory provisions, as reflected in Lavigne, supra, is to ensure that crime does not pay. Also reflected in Lavigne, ability to pay is not a factor.

154Kathleen argues that the discretion was exercised improperly. She argues that the sentencing judge erred in his characterization of her argument. The basis of her argument was not that she lacked the ability to pay a fine, which is an irrelevant consideration per Lavigne, but that she never exercised any control over the proceeds.

155We do not agree that the trial judge erred. The statement that "ability to pay is not a factor", in context, does not suggest that the trial judge misapprehended Kathleen's argument. His reasons, taken as a whole, clearly address Kathleen's argument that she did not control the funds. Contrary to Kathleen's submissions, he found that Kathleen did have possession and control of the funds, regardless that she only used a relatively small proportion for herself. The fact that Kathleen chose to turn the funds over to the control of Jun-Chul does not negate the fact that she initially had full control, and it was her choice to dispose of the funds in this way. The trial judge was content that she was no mere conduit of the funds to Jun-Chul. She was a director of corporate entities to which some of the funds were later transferred, and a beneficiary of the Hi Ok Chung Family Trust, which received much of the funds. Investment, real estate, and vehicle purchases -- and the transfer of $3 million overseas -- were accomplished through these entities and directly from Kathleen's personal account.

156The fact that Kathleen lived modestly and retained or received comparatively little of the funds (on the Crown's evidence, some $600,000) to her direct benefit was potentially relevant in allocating the fine in lieu as between her and Jun-Chul. If the purpose of the fine in lieu provisions is to ensure that crime does not pay, it makes sense that fines can be allocated between offenders on a differential basis that follows the money.

157So even though Jun-Chul, on the trial judge's findings, is the more culpable of the two and accordingly received a lengthier sentence, the fine in lieu provisions are a matter of recovery of proceeds of crime and not culpability: Dieckmann, at para. 88. A differential order could perhaps have been made on the basis that Jun-Chul had greater control over the proceeds that are now missing. But the trial judge chose not to exercise his discretion that way. He acted judicially in so doing, having regard to Kathleen's means of control over the funds. The trial judge had reason to follow the money, not only into Kathleen's account, but from there into corporate entities and trusts over which she had interest and some control. Regardless of whether Jun-Chul was the directing mind, her involvement with the property did not simply end with the initial deposit of the OLG cheque. Kathleen and Jun-Chul acted in concert and $4.6 million in funds have not been accounted for.

(ii) Did the trial judge err in establishing time to pay and a six-year sentence in default of payment?

Time to pay

158Kathleen and Jun-Chul were each given seven years to pay. At the sentencing hearing, they both sought 30 years. It was undisputed that should they not be in a position to access the funds that have not been accounted for, at Kathleen's current salary, she only had the ability to pay $44,000 per year towards the satisfaction of the fine. Kathleen argues that given that she could, at best, pay down $308,000 of a $2.3 million fine in seven years, the time given to pay is clearly unreasonable. Jun-Chul takes the same position, as he submits he has no hope of discharging a $2.3 million fine in seven years.

159We do not agree. As stated above, the purpose of giving offenders time to pay is not to inflict further punishment by indenturing them to lives of servitude. It is to ensure that crime does not pay. In some cases, giving an offender time to pay is a means of allowing the offender to arrange his or her affairs so as to realize on existing assets and pay the fine. This includes offenders who are able to recall proceeds of crime they have put into the hands of third parties. In other cases, an offender may have dissipated the proceeds and not have assets, but it is not unreasonable to require offenders to compensate for their use of proceeds of crime by requiring them to make payment over time from superfluous income. In other cases, whether because the amount of the fine is so large, or the offender's ability to earn income so minimal, it may not be realistic to expect an offender will be able to use the time given to make much of a contribution.

160If things progress such that Kathleen or Jun-Chul are concerned they will be unable to discharge their fines within the seven years, it is open to them to apply for additional time to pay. In any event, all the above considerations factor into the assessment at the committal hearing of whether non-payment is the result of a refusal to pay without reasonable excuse. Lavigne states that impecuniosity is a reasonable excuse, although it may be better to say that genuine impecuniosity does not, in itself, constitute a refusal at all. Where an offender is presently impecunious as a result of living lavishly, a committal judge may be appropriately sceptical. But an offender who is simply unable to save $2.3 million in seven years -- without lavish living and without sheltering significant assets -- should not be considered in jeopardy of incarceration as though the fine in lieu of forfeiture provisions establish a form of debtors' prison.

161In conclusion, in light of the purpose of the fine in lieu provisions, the trial judge did not err in refusing to grant Kathleen and Jun-Chul 30 years to pay.

The six-year sentence

162Kathleen and Jun-Chul both argue the trial judge erred in imposing a six-year custodial sentence in default of payment of the fine in lieu of forfeiture, as the six-year sentence is harsh and excessive. Specifically, they argue the trial judge erred by arriving at that sentence after considering only the amount of the fine. They submit the amount of the fine in lieu was not the only relevant factor, and there were two other relevant considerations: that the six-year sentence in default of payment -- one year in addition to the mandatory minimum -- is crushing, when considered in addition to the custodial sentence for the underlying offences and that there was no evidence Kathleen or Jun-Chul would evade payment.

163We do not agree. First, the sentence in default is not to be considered as an add-on to the sentences for the convictions for fraud. It is the consequence for a separate matter -- a refusal to pay a fine in circumstances where there is either an ability to pay, or an inability that is culpable. The six-year default term of imprisonment is reasonable given the control of the proceeds of crime and the failure to explain the disposition of proceeds that remain unrecovered. Second, Kathleen and Jun-Chul point to no authority requiring a trial judge to consider evidence that an offender will or will not evade payment. Again, the rationale for imprisonment in default of payment is to give serious encouragement to those with the means to pay a fine to make payment. The trial judge determined a six-year sentence in default of payment would properly encourage Kathleen and Jun-Chul to may payments, should they have the means to do so. We see no reason to interfere with that determination.

164In summary, the appeals against the dismissal of the constitutional challenges are dismissed, as are the appeals against the quantum of the fines in lieu of forfeiture, the time given to pay, and the sentence to be imposed on default of payment. Jun-Chul's appeal against the quantum of the restitution order is dismissed, and Kathleen's appeal is allowed in part and the quantum of restitution is reduced to the forfeiture order plus $2.3 million.

Issue 2(b): The Custodial Sentence Appeals

165All three appellants seek a reduction for the custodial portion of their sentence. We will deal with each of these in turn.

(i) Kenneth Chung's custodial sentence of 10 months

166Kenneth maintains that the custodial sentence of 10 months he received for theft under $5,000 is manifestly unfit. He argues that the sentencing judge failed to take into consideration his background, prior good character, and future intentions, and he submits the sentencing judge failed to address the issues of general deterrence and rehabilitation. He further submits that the theft of the lottery tickets was simply the theft of a chance of potentially winning a prize and is therefore de minimis. Therefore, an absolute or conditional discharge was the appropriate sentence. In oral submissions, counsel went even further, arguing that a lottery ticket is a piece of paper that is simply reflective of a chance to win and is therefore of no value. As a result, the wrongful taking of lottery tickets, while morally reprehensible, does not constitute theft.

167We disagree. The sentencing judge referred to the relevant sentencing principles and noted Kenneth's positive presentence report. The sentencing judge also considered the absence of a criminal record. Furthermore, as we have noted earlier, the wrongful taking of the lottery tickets constitutes theft. As for the limited value of lottery tickets, the sentencing judge took the amounts involved in the theft in fashioning the appropriate sentence, as he recognized that Kenneth was only convicted of theft under $5,000. His weighing of those factors and his determination of the appropriate sentence are entitled to deference, and we see no basis to interfere.

168We note, however, that given our disposition of the Crown appeal, Kenneth will have to return to the sentencing judge to be sentenced on the additional convictions.

(ii) Jun-Chul Chung's custodial sentence of seven years

169Jun-Chul seeks reduction of his seven-year custodial sentence to one within the range of three to five years for large-scale frauds. He argues in oral submissions that the sentence was excessively harsh given the fact that the scheme he and Kenneth devised and exploited was not particularly sophisticated and did not have serious negative consequences on the OLG. He further maintains that the sentencing judge did not consider the sentencing principle of rehabilitation.

170We see no basis to interfere. This was a significant large-scale fraud. The appellant, while owing a duty of trust to his customers, implemented a scheme whereby lottery tickets were regularly stolen and, when the opportunity to defraud the OLG of the $12.5 million prize presented itself, he proceeded to work in concert with Kathleen to extract payment through lies and misrepresentations. The sentencing judge considered all of the sentencing principles and committed no error in his consideration of the appropriate factors in the sentence he imposed. The range of sentences for large-scale frauds is broad, and, although the seven-year sentence is high, it is not unfit in the circumstances.

(iii) Kathleen Chung's custodial sentence of four years

171Kathleen seeks a reduction of her four-year custodial sentence. She argues that the sentencing judge erred in his identification of the applicable range of appropriate sentences. She explains that this case was unique among large-scale frauds given that: the impact on OLG, a large and sophisticated corporation, was relatively small; Kathleen, unlike Jun-Chul and Kenneth, was not in a position of trust; and this offence was not particularly sophisticated or skilled. In fact, the theft was more in the nature of a single instance of theft carried out when the opportunity presented itself.

172In Kathleen's submissions, the appropriate range for large-scale frauds is three to five years: R. v. Davatgar-Jafarpour, 2019 ONCA 353, 146 O.R. (3d) 206, at para. 34; R. v. Plange, 2019 ONCA 646, 440 C.R.R. (2d) 86, at para. 40. She argues that the sentencing judge erred in accepting that the Crown's proposed range of four to five years for Kathleen's custodial sentence was appropriate. Given that the sentencing judge expressed the view that a sentence "at the low end of the range" was appropriate in Kathleen's case, the sentencing judge's acceptance of the Crown's proposed range led him into error. As a result, a three-year, rather than a four-year, custodial sentence is appropriate.

173Further, the sentencing judge relied on the cases of R. v. Dobis (2002), 2002 CanLII 32815 (ON CA), 58 O.R. (3d) 536 (C.A.), at paras. 49-51, and R. v. Bogart (2002), 2002 CanLII 41073 (ON CA), 61 O.R. (3d) 75 (C.A.), at paras. 33, 36, for the proposition that while conditional sentences are theoretically possible, they are not generally imposed in cases of large-scale frauds. Having referenced these cases, however, he failed to note that the frauds involved in Dobis and Bogart were carried out by persons in a position of trust and involved lengthy and somewhat sophisticated frauds. Further, in the case of the large-scale fraud in Dobis, there was the additional aggravating factor that the defrauded company was crippled by the fraud and it was unclear whether the company would in fact survive the fraud. In addition, despite these aggravating features being present in those cases and absent in Kathleen's case, both Mr. Dobis and Mr. Bogart received lower sentences than four years.

174Therefore, in Kathleen's submission, the sentencing judge ought to have considered imposing a conditional sentence. Although not typical in cases of large-scale frauds, it would have been appropriate here given that Kathleen was not in a position of trust and significant mitigating circumstances existed. Those mitigating circumstances included the lengthy period Kathleen spent under restrictive bail conditions, the positive presentence report, the absence of any previous conviction, her youthful age, and the fact that she has three young children at home. Alternatively, she asks that the sentence be reduced.

175The Crown, for its part, argues that the range of sentences in large-scale fraud cases is broad, and the sentence imposed in this case falls squarely within that range. Here, Kathleen played a central role in the fraud. Without her actions, it would not have been possible to collect the $12.5 million from the OLG. She maintained her lies for the better part of a year before she ultimately succeeded in obtaining payment of the funds. The Crown acknowledges that the OLG is a large and sophisticated Crown corporation and is in a better position than other victims to absorb a loss of that magnitude. However, the Crown notes that the OLG is more in the nature of a public institution and that the fraud is one made against the public. Courts have considered such frauds to be as serious as those committed against individuals or corporations, as frauds on the public purse are not "victimless crime[s]": R. v. Khatchatourov, 2014 ONCA 464, 313 C.C.C. (3d) 94, at para. 44; Dieckmann, at para. 75. In cases such as here, the principle of deterrence is paramount, and, in the Crown's submission, the sentencing judge reasonably concluded that a conditional sentence was not appropriate. Therefore, the four-year custodial sentence should stand.

176We see no error in the sentencing judge's rejection of a conditional sentence. He recognized that, while possible, conditional sentences were generally not imposed in large-scale frauds: Dobis, at paras. 49-51; Bogart, at paras. 33, 36. In his view, having regard to the particular circumstances of the offences and the importance of deterrence in cases of large-scale fraud, it was mandatory that each of the appellants serve some time in custody.

177In our view, however, the sentencing judge erred in imposing a four-year sentence on Kathleen. At the outset, we note that it is not clear from his reasons whether the sentencing judge correctly identified the range for large-scale frauds as being three to five years: Davatgar-Jafarpour, at para. 34; Plange, at para. 40. His only reference is to the "Crown's range of sentencing" being appropriate, the Crown having proposed four to five years. Nowhere in his reasons does he identify the range to be three to five years. It is of note that in oral submissions on appeal, the Crown concedes that a three- to five-year sentencing range is appropriate for Kathleen. However, in fairness to the sentencing judge, Davatgar-Jafarpour and Plange, which clearly outlined the appropriate range, were decided subsequent to the sentencing. When the sentencing judge stated that Kathleen "should be sentenced at the low end of the range, taking into account certain mitigating factors", we are left to wonder whether he understood the Crown's proposal to be the upper end of the range and whether, in fact, the sentencing judge would have imposed a sentence of three years had he been informed of the normal range.

178There are also significant omissions in the sentencing judge's reasons. He made no mention of the fact that Kathleen was not in a position of trust like Jun-Chul and Kenneth. Although this court in Khatchatourov, at para. 39, and Davatgar-Jafarpour, at para. 42, has indicated that even where there is an absence of a position of trust, the appropriate range for large-scale and sophisticated frauds is still applicable, the absence of a breach of trust is nonetheless a factor that ought to have been taken into account. Further, Kathleen's conduct can also be distinguished from the breach of "good faith" in Davatgar-Jafarpour, at para. 43, that was determined to include "[t]he same aggravating conduct that underlies and informs the aggravating nature of breaches of trust", or the "nuanced" breach of trust referred to in Khatchatourov, at para. 41. Unlike Jun-Chul and Kenneth, Kathleen had no relationship with or good faith obligation toward the customers of Variety Plus. Further, although Kathleen persisted with her lies to the OLG in order to secure payment of the $12.5 million, the fraud was, as acknowledged by the Crown in oral submissions, a one-time crime of opportunity that is not sophisticated. This fraud was not one that was part of the ongoing fraudulent scheme perpetrated by her co-accused. Although not strictly mitigating factors, these are nonetheless significant points that distinguish Kathleen's role as compared to that of her co-accused and other cases involving large-scale frauds.

179By failing to correctly identify and refer to the appropriate range and by failing to note and take into account the factors we have set out above, the sentencing judge erred. Considering the circumstances of the offences and the offender, a three-year custodial sentence is fit for Kathleen.

Issue 3: Did the application judge err in dismissing the s.11(b) stay application?

180Jun-Chul and Kathleen appeal the application judge's dismissal of their application for a stay of proceedings pursuant to s. 24(1) of the Charter on the basis that their rights to a trial within a reasonable time under s. 11(b) of the Charter have been violated. They argue that the application judge erred in attributing several delay periods to defence conduct, attributing delay to the complexity of the case, and finding the delay can be justified under the transitional exceptional circumstance provision of Jordan.

181We disagree with these submissions. As we will explain, the application judge's attribution of delay to defence conduct was entirely reasonable. As explained in R. v. Cody, 2017 SCC 31, [2017] 1 S.C.R. 659, at para. 31, such determinations are "highly discretionary" and "appellate courts must show a correspondingly high level of deference thereto."

182As for the application judge's attribution of delay to the complexity of the case, we agree with the Crown that the application judge's error in deducting specific periods of delay attributable to complexity is of no consequence, as it had no impact on the outcome. Even after deducting those periods of delay, the application judge recognized that the delay incurred in this case was over the 30-month presumptive ceiling set in Jordan. As a result, the Crown bore the onus of justifying the delay.

183In Jordan, at para. 102, the Supreme Court of Canada explained that, for cases already in the system, the release of Jordan should not automatically transform what would have, under the previous regime in R. v. Morin, 1992 CanLII 89 (SCC), [1992] 1 S.C.R. 771, been considered a reasonable delay into an unreasonable one. This was clearly a case where the parties were relying on the previous Morin framework. The appellants do not allege that the combined institutional delay in the Ontario Court of Justice and the Superior Court of Justice for this case fell outside of the Morin guidelines. As we will explain, an analysis of the criteria informing the decision as to whether the transitional exceptional circumstance provision set out in Jordan ought to apply weighs against the granting of a stay.

184In the paragraphs that follow, we will first briefly outline the findings of the application judge. Second, we will address Jun-Chul and Kathleen's concerns with the application judge's attribution of delay to defence conduct and the application judge's error in deducting periods of delay attributable to complexity. Third, we will carry out the transitional exceptional circumstance analysis as dictated in Jordan. Fourth, and lastly, we will address the submissions made in Kathleen's oral arguments that the delay in the Ontario Court of Justice was so extensive as to justify a stay.

The application judge's findings

185There was no dispute that the total delay between the arrest of the appellants on September 28, 2010 and the anticipated end of the trial on March 27, 2017 was 2,369 days, or 77.9 months using the formula for conversion in R. v. Shaikh, 2019 ONCA 895, 148 O.R. (3d) 369, at para. 33. The application judge found that there had been 144 days of implied or implicit defence waiver by both Jun-Chul and Kathleen. This is not contested on appeal. The application judge then deducted four periods for defence delay attributable to both Kathleen and Jun-Chul totalling 794 days. Different portions of this deduction are contested on appeal. Finally, the application judge deducted two periods of defence delay totalling 79 days attributable only to Jun-Chul. These delays were the result of accommodation for the availability of Jun-Chul's new counsel and this counsel's subsequent failure to attend court on time on October 7, 2013. This is not contested by Jun-Chul on appeal. The result was a net delay of 1,431 days (47 months) for Kathleen and a net delay of 1,352 days (44.5 months) for Jun-Chul. The application judge then attributed 347 days of delay to the complexity of the case and deducted the time from the net delay on the basis that it constituted exceptional circumstances. This left a net delay of 1,084 days (35.6 months) for Kathleen and a net delay of 1,005 days (33 months) for Jun-Chul.

The appropriateness of the deductions for defence conduct

July 21, 2011 to November 1, 2011

186The first period of defence conduct deductions challenged by Jun-Chul and Kathleen is the 103-day period running from July 21, 2011 to November 1, 2011. This was the period between the start of the judicial pre-trial on July 21, 2011 and the date set for its continuation on November 1, 2011. The application judge attributed it to defence delay. She found that both Jun-Chul and Kathleen had spent this period engaging in resolution discussions without scheduling the preliminary inquiry. Also, during this time period, Jun-Chul dismissed his counsel. Although new counsel was retained as early as August 8, 2011, his counsel did not respond to the Crown's attempts to confirm her availability on the dates set for the continuation of the judicial pre-trial.

187Kathleen argues that there was no basis in the evidence for concluding that her conduct caused any of this delay. Specifically, she argues that there was no evidence that an earlier date was available for a continuing judicial pre-trial, nor that the Crown was in a position to set preliminary inquiry dates any sooner. In fact, she questions whether the continuing judicial pre-trial was even required in the first place. Jun-Chul adopts the arguments advanced by Kathleen.

188We see no error in the application judge's attribution of this period to defence delay. She found that during this period, both appellants were engaging in resolution discussions instead of setting preliminary inquiry dates while those discussions were ongoing. This finding is confirmed by the record. At the continuing judicial pre-trial held on December 22, 2011, Jun-Chul's counsel acknowledged that, at that time, the matter had been heading toward a resolution. This was clearly a case where resolution discussions were somewhat complex and would involve all three appellants. The settlement would have to address the period of incarceration, if any, forfeiture, restitution, and fines. The contribution of one appellant to forfeiture, restitution, and fines would no doubt be relevant to determine the amount that the other two appellants would be prepared to accept in a resolution. The totality of these considerations would be important to the Crown's decision concerning a resolution. It is clear that Jun-Chul's change of counsel during this period delayed those discussions.

189The application judge's finding is reasonable and is entitled to deference. Therefore, we would not interfere with this finding.

December 13, 2013 to October 30, 2014

190The second period challenged by the appellants is December 13, 2013 to October 30, 2014. On December 13, 2013, Jun-Chul and Kathleen advised of their intention to bring an application to stay the proceedings pursuant to s. 11(b) of the Charter as well as an application to stay the proceedings for abuse of process. The date for hearing these applications was originally set for May 12, 2014. Considering the nature of these applications for a stay of proceedings, no trial dates were set pending the outcome of this hearing. The applications were adjourned to October 27, 2014 to allow the appellants more time to review the necessary transcripts. The matters were subsequently adjourned to October 30, 2014. Although there was some delay in the preparation of transcripts, all the transcripts were available as of March 7, 2014. No reasonable explanation was put forward indicating why Jun-Chul and Kathleen were not prepared to move forward with these applications on the originally scheduled date, given that they had over two months to review the transcripts and prepare their submissions. Ultimately, the appellants did not file any material other than the transcripts, and the applications adjourned to October 30, 2014 were never brought.

191In their factums, Jun-Chul and Kathleen argue that the full 321-day period between the December 13, 2013 judicial pre-trial and the final adjourned date of October 30, 2014 for the abandoned applications ought not to have been attributed to defence delay. Rather, Jun-Chul and Kathleen submit that only the period between the originally scheduled date for hearing the applications, May 12, 2014, to the adjourned date of October 27, 2014 is attributable to defence delay. This represents a period of 167 days instead of 321 days. They also submit that they are not responsible for the fact that the applications did not proceed on the rescheduled date of October 27, 2014. Their failure to proceed on that date was because Kenneth did not have a lawyer at that time. They maintain that the adjournment of these applications was to allow Kenneth to bring a Rowbotham application: R. v. Rowbotham (1988), 1988 CanLII 147 (ON CA), 41 C.C.C. (3d) 1 (Ont. C.A.).

192At the oral hearing of the appeal, Kathleen did not proceed with this ground of appeal, focussing on the delays occurring at the Ontario Court of Justice. Jun-Chul, however, did not explicitly concede this issue and appears to maintain his position to the effect that part of this period was improperly attributed to defence delay.

193In our view, the application judge did not err in her attribution of this entire period of 321 days to defence delay. During this whole period, Jun-Chul and Kathleen were expressing their desire to bring stay applications pursuant to s. 11(b) and for abuse of process. These applications were not diligently pursued and, in the end, the appellants did not file any material in furtherance of these applications, other than the transcripts. Over this period, dates for the applications were scheduled and rescheduled. Had it not been for the pending applications that were never brought, dates for the trial could have been set at the December 13, 2013 judicial pre-trial instead of much later.

February 22, 2016 to February 27, 2017

194The final period of delay challenged is February 22, 2016 to February 27, 2017. It is challenged solely by Jun-Chul. That period of 370 days was attributed to defence delay by the application judge. Kathleen acknowledges that this delay was properly attributable to her on account of her decision to discharge her counsel just before the scheduled trial date of February 22, 2016. Jun-Chul argues, however, that the application judge erred in deducting this period as defence delay against him. The adjournment was obtained at the request of Kathleen and Kenneth since they both dismissed their counsel on February 16, 2016. Jun-Chul maintains that he did not waive his s. 11(b) rights during this period and the application judge wrongly faulted him for not opposing the adjournment.

195In our view, the application judge did not err in attributing this period as defence delay caused by both Jun-Chul and Kathleen. It was apparent that Jun-Chul and Kathleen wished to proceed through the system as a collective. Jun-Chul never opposed the adjournment, nor did he apply for a severance so that his trial could proceed alone. Delays caused by scheduling challenges arising directly and inevitably from the joint situation of the appellants are properly analysed collectively: see R. v. Albinowski, 2018 ONCA 1084, 371 C.C.C. (3d) 190, at paras. 36-39. Therefore, this period of defence delay of 370 days is attributable to both Jun-Chul and Kathleen.

The 347-day delay due to the complexity of the case

196The application judge considered the case to be particularly complex and determined that certain periods of delay could properly be attributed to the complexity of the case. Notably, she identified periods for voluminous disclosure, for the filing of written submissions to the preliminary inquiry judge after completion of the evidence on the preliminary inquiry, for the additional time required for the preliminary inquiry, and for recognizing the delay caused by the presence of multiple co-accused. The application judge deducted these periods on the basis that they met the test for exceptional circumstances outlined in Jordan. In total, she deducted 347 days attributable to the complexity of the case.

197Jun-Chul and Kathleen argue that the application judge erred in making this deduction. As held in Cody, at para. 64, "Complexity cannot be used to deduct specific periods of delay." The application judge was, in their view, required only to consider complexity as a factor when deciding whether the overall delay could be justified. She was not entitled to deduct specific periods of delay on account of complexity. By deducting periods of delay on account of complexity, she improperly minimized the overall delay figure.

198Although we agree with the application judge's finding that the case was complex, we also agree with Jun-Chul and Kathleen that the application judge erred in deducting specific periods of delay due to complexity. However, as noted by the Crown, when she made her decision, the application judge did not have the benefit of Cody, as that decision was released on June 16, 2017, some five months after the application was dismissed on January 3, 2017.

199While the application judge erred in deducting specific periods of delay attributable to case complexity, her error had no impact on the outcome. It was acknowledged by the Crown that the delay was in excess of the 30-month presumptive ceiling in Jordan even after deducting the 347 days attributable to the complexity of the case. As a result, the application judge knew that the Crown bore the onus of justifying the delay and the Crown did so on the basis of the transitional exceptional circumstance provision outlined in Jordan. As we will explain, the transitional exceptional circumstance provision applies even though the deduction for complexity was erroneous.

The transitional exceptional circumstance provision of Jordan

200In Jordan, at para. 102, the Supreme Court of Canada acknowledged that for cases already in the system, the release of their decision in Jordan "should not automatically transform what would previously have been considered a reasonable delay into an unreasonable one." Therefore, the framework the court was creating ought to be applied "contextually and flexibly for cases currently in the system": Jordan, at para. 94. The transitional exceptional circumstance was created on the basis that it would be unfair to judge the parties against a standard of which they had no notice: Jordan, at para. 94. The exception applies, therefore, if the Crown satisfies the court that the time the case has taken to make its way through the courts is justified based, at least in part, on the parties' reasonable reliance on the law as it had previously existed: Jordan, at para. 96.

201Generally, therefore, if the delay was incurred prior to the release of Jordan and the delay would have been reasonable under the Morin framework, the transitional exception will apply to justify delays beyond the 30-month presumptive Jordan ceiling. This is not to say that all cases where the delay would have been reasonable under Morin will qualify under the transitional exception. For example, keeping in mind that any analysis "must always be contextual", the transitional exception might not assist in a "simple case" where the ceiling is "vastly exceed[ed]" due to "repeated mistakes or missteps by the Crown": Jordan, at para. 98.

202The present case is clearly not a simple case. There is no suggestion that the Crown has made repeated missteps resulting in a substantial delay. Importantly, it is apparent that there was reasonable reliance on the pre-Jordan law regarding delay. As earlier noted, Jun-Chul and Kathleen had announced their intention to bring an application to stay the proceedings under s. 11(b) of the Charter as early as December 13, 2013. However, they ultimately decided not to proceed with this application. It was not until late 2016, a few months after the release of Jordan, that the s. 11(b) application that is currently the subject of this appeal was brought.

203With this background in mind, we now turn to consider whether the application judge was correct in finding that the delay was justified pursuant to the transitional exceptional circumstance provision in Jordan.

204To determine whether a transitional exceptional circumstance justifies a delay above the 30-month presumptive ceiling, the court must conduct a contextual assessment of all of the circumstances. The relevant circumstances include:

the complexity of the case;
the period of delay in excess of the Morin guidelines;
the Crown's response, if any, to any institutional delay;
the defence efforts, if any, to move the case along; and
prejudice to the accused.

205See R. v. Williamson, 2016 SCC 28, [2016] 1 S.C.R. 741, at paras. 26-30; R. v. Gopie, 2017 ONCA 728, 356 C.C.C. (3d) 36, at para. 178; and R. v. Faulkner, 2018 ONCA 174, 407 C.R.R. (2d) 59, at para. 175.

206The seriousness of the offences is also a factor to be taken into account, as it was a consideration under Morin: see Morin, at p. 787; Jordan, at para. 96.

207While we acknowledge that the delays in bringing this case to trial were lengthy, as we will explain, an analysis of the five criteria set out in Williamson and the seriousness of the offences fully support the application judge's conclusion that a stay is not appropriate in this case.

The case was complex

208As explained in Cody, at para. 64, complexity requires a qualitative, not a quantitative, assessment of the case. It is noted in Jordan, at para. 77, that "[p]articularly complex cases are cases that, because of the nature of the evidence or the nature of the issues, require an inordinate amount of trial or preparation time" (emphasis in original). Complexity is therefore to be assessed in light of the entirety of the proceedings, taking into account factors such as the volume of disclosure and length of the preliminary inquiry: Cody, at para. 64; R. v. Picard, 2017 ONCA 692, 354 C.C.C. (3d) 212, at para. 62, leave to appeal refused, [2018] S.C.C.A. No. 135; and R. v. Baron, 2017 ONCA 772, 356 C.C.C. (3d) 212, at paras. 52, 71.

209In our view, the application judge did not err in holding that this was a complex case. It involved voluminous disclosure, a lengthy preliminary inquiry, the evidence of technical witnesses, the scheduling of several pre-trial applications, charges covering a lengthy period of time, and multiple co-accused. All of these factors support the application judge's finding that the case was complex.

The institutional delay did not exceed the Morin guidelines

210In her reasons, the application judge stated that the institutional delay was 17 to 20 months. As the Crown explained on appeal, this was an error. These were the figures set out in the Crown's factum for the application. In oral submissions, the Crown had told the application judge that this was an error, as the Crown substantially overstated the institutional delay. On appeal, the Crown explains that the total institutional delay properly calculated is 12.4 months, which is under the Morin guidelines of 14 to 18 months of institutional delay: Jordan, at para. 52.

211In oral submissions, Jun-Chul and Kathleen take issue with two aspects of the Crown's calculation. First, they consider that the time to effect disclosure in this case was excessive. Specifically, they argue that approximately four months of the period the Crown identifies as inherent delay for intake and disclosure should be considered as institutional delay, since the disclosure could not be completed because of the ongoing police investigation. Second, Jun-Chul and Kathleen indicate that approximately one month is attributable to institutional delay for the delay in securing a date for the first judicial pre-trial before the Ontario Court of Justice. They concede, however, that even if this adjustment is made, the combined institutional and Crown delay before the Ontario Court of Justice and the Superior Court of Justice is approximately 17 months, which still comes within the Morin guidelines of 14 to 18 months. As a result, this factor clearly weighs in favour of dismissal of the application.

The Crown's response to institutional delay

212The application judge found that this factor favoured dismissal of the application. She determined that the Crown had "genuinely responded to the circumstances of the case including the voluminous disclosure, multiple co-accused and an ever-changing roster of defence counsel by seeking and creating opportunities to streamline the issues and evidence, and adapting to the evolving circumstances as the case progressed." This factual conclusion is well supported in the record, and we agree with the application judge that this factor also favours dismissal of the application.

The defence efforts to move the case along

213It is apparent from a review of the record that neither Jun-Chul nor Kathleen demonstrated any genuine interest in moving the case along. Jun-Chul discharged his first counsel and there were delays caused by accommodating the availability of his second counsel and by this counsel's subsequent failure to attend court on time on October 7, 2013. Lengthy delays were caused by Jun-Chul and Kathleen's scheduling and rescheduling of their proposed stay application. They did not proceed with that application. There were also delays by the late decision of the appellants on August 6, 2015 to re-elect to a judge-alone trial. Prior to re-electing, they had advised of their intention to bring a change of venue application. Because of that pending change of venue application, a trial could not reasonably be scheduled until the venue was confirmed. Lastly, Kathleen's discharge of her second lawyer occurred just before the scheduled trial date of February 22, 2016. This led to further delays.

214In short, Jun-Chul and Kathleen's actions demonstrate that they were content with the pace of proceedings. This factor therefore supports dismissal of the application.

Prejudice to the appellants

215The application judge acknowledged that the protracted nature of the proceedings exacerbated the anxiety, concern, and stigma of exposure to criminal proceedings that Jun-Chul and Kathleen felt. However, in the application judge's view, Kathleen's decision to discharge her lawyer just before the trial scheduled for February 22, 2016 and Jun-Chul's failure to oppose that adjournment played a role in protracting the proceedings and called into question the degree to which Kathleen and Jun-Chul were anxious, at least at that point, to have the matter proceed expeditiously.

216In terms of restrictions on Jun-Chul and Kathleen's liberty, the amount of bail was significant, but the restrictions were relatively minimal and reasonable considering the nature of the allegations that involved moving the proceeds of crime out of the country. In fact, these restrictions were relaxed for Jun-Chul when he requested variations to his bail.

217On appeal, Jun-Chul and Kathleen argue that the application judge failed to infer substantial prejudice from the length of the delay itself. Jun-Chul also argues that the application judge failed to consider the actual prejudice to Jun-Chul, who lived under the threat of a lengthy jail sentence for seven years while under bail conditions prohibiting him from travelling outside Ontario or from communicating with Kathleen, his daughter, except in the presence of counsel.

218While we agree with the appellants that prejudice is to be inferred from the length of the delay and that this factor weighs in favour of granting the application, we do not, as the appellants suggest, view it as constituting a substantial prejudice. Rather, we consider it to be of limited significance in this case. The bail terms were not particularly onerous, certainly in respect of Kathleen, and, as the application judge found, the actions of the appellants indicate that they were not anxious to have the matter heard expeditiously.

The seriousness of the offences

219The charges in this case were undoubtedly serious. Not only did it involve a very large fraud of $12.5 million on the OLG, it also involved the victimization of the rightful owner of the lottery ticket. Under the Morin analysis, the seriousness of the offences would weigh against the granting of a stay, as this consideration "played a decisive role in whether delay was unreasonable under the previous framework": Jordan, at para. 96. In fact, "[a]s the seriousness of the offence increases so does the societal demand that the accused be brought to trial": Morin, at p. 787. As these serious offences involved a large-scale fraud that victimized both a Crown corporation and the true owner of the $12.5 million lottery ticket, they do not warrant a stay of proceedings under the Morin framework.

Does the delay in the Ontario Court of Justice justify a stay?

220In her oral submissions, Kathleen focussed her arguments on the delay that occurred in the Ontario Court of Justice. She maintained that it was excessive to the point where a stay ought to be granted. She explained that the delay in that court totalled almost three years. Two aspects of that delay were emphasized:

the delay in completing disclosure; and
the total institutional delay in that court.

221We are not persuaded by these submissions.

The delay in completing disclosure

222Kathleen argues that 162 days (5.3 months) to effect disclosure in this case was excessive. She was arrested on September 28, 2010 and received significant disclosure on October 27, 2010, but it was not until the end of January 2011 when the investigation ended that the materials in support of the various search warrants could be unsealed, and the contents could be disclosed to the appellants. In addition, full disclosure, including disclosure related to the search for and identification of the presumed true winner of the $12.5 million, was not completed until March 3, 2011. Therefore, Kathleen argues that approximately four months of this disclosure delay caused by the ongoing investigation should be attributable to the Crown. She further explains that the appellants could not reasonably prepare for a preliminary inquiry or otherwise address the charges until this disclosure was complete.

223Kathleen maintains that this delay in completing disclosure from October 27, 2010 to March 3, 2011 was the fault of the Crown, which is attributable to the Crown's decision to lay the charges and make the arrests before the investigation had been completed.

224While we acknowledge that there were significant delays, we consider these to be reasonable in the circumstances of this case. As explained by the Crown in oral submissions, in order to find the true owner of the ticket, the OLG had to publicly announce that Kathleen did not win the $12.5 million prize and ask those who may be the legitimate owner of the ticket to come forward. If the announcement was made before the seizure of the defrauded funds and the freezing of the assets acquired by the appellants with the stolen funds, the appellants, knowing that they would have to return the funds and would likely be charged, may well have dissipated or taken the funds and assets out of reach of the authorities. Therefore, the seizure of the funds and freezing of the assets could not reasonably be effected until the charges were laid.

225As for the unsealing of the material in support of the search warrants, this could not occur until after the search for the true winner had been carried out. This is because the material would disclose key information that only the true purchaser of the ticket would know, information such as the date and location of the purchase of the original ticket. As indicated by the Crown during oral submissions, the release of this search warrant information could have tainted the investigation for the true winner.

226In these exceptional circumstances, we would not fault the Crown for delaying the disclosure of the search warrant materials or for laying the charges, even though the investigation, to some degree, was ongoing: see R. v. N.N.M. (2006), 2006 CanLII 14957 (ON CA), 209 C.C.C. (3d) 436 (Ont. C.A.), at para. 16; R. v. Schertzer, 2009 ONCA 742, 248 C.C.C. (3d) 270, at paras. 116, 128 and 131, leave to appeal refused, [2010] S.C.C.A. No. 3.

227In any event, as we have explained in our analysis of the transitional exceptional circumstance provision of Jordan, even if the inherent delay allocated for intake and disclosure was reduced by four months and these four months were subsequently allocated to Crown delay, the overall institutional and Crown delay would still be within the Morin guidelines.

228A second concern raised by Kathleen with respect to disclosure is the delay in disclosing documents that were in the possession of the OLG. It was only shortly before the preliminary inquiry was scheduled to commence that the Crown was alerted that documents in the possession of the OLG had not been provided to the Crown, and therefore were not disclosed to the appellants. The preliminary inquiry could not be completed until these documents were obtained by the Crown and disclosed to the appellants.

229Kathleen argues that it was the Crown's responsibility to have obtained and disclosed these documents well in advance of the scheduled preliminary inquiry. She maintains that the delays caused by the Crown's failure to do so weigh in favour of granting a stay.

230In our view, the delay by the Crown to secure the OLG documents and provide them to the appellants as part of their disclosure obligations does not amount to a misstep by the Crown that warrants or supports granting a stay. The documents were in the possession of the OLG, a non-party to these proceedings. While the Crown ought to have been aware of their existence, as there was a reference to these documents in the Ombudsman's report regarding an investigation into the OLG, the appellants also had access to this report and could have requested the production of these documents. It was not until the preliminary inquiry was scheduled that this issue came to light. Once it was discovered, the Crown acted quickly to obtain the documents, and the parties cooperated to make best use of the preliminary inquiry dates that had been set aside.

The amount of institutional delay in the Ontario Court of Justice

231Kathleen argues that the start date of the preliminary inquiry was delayed because of a lack of court resources. She submits that while counsel was prepared to commence the preliminary inquiry in early fall of 2012, the court ultimately scheduled the preliminary inquiry to commence on November 6, 2012. In addition, she maintains that before the preliminary inquiry was completed, further delays were caused by the disclosure issues and the court's unavailability. The preliminary inquiry scheduled for November 2012 therefore continued in February and May 2013, concluding on May 29, 2013. The matter was then adjourned to September 24, 2013 for the decision on committal, since the preliminary inquiry judge had other judgments under reserve. These institutional delays were lengthy and contributed to the excessive time the case took to proceed through the Ontario Court of Justice. In Kathleen's submission, this, in combination with the disclosure delays, is sufficient to justify granting a stay of proceedings. According to Kathleen, a case taking three years to work its way through the Ontario Court of Justice is simply unacceptable.

232We agree that institutional delay in the Ontario Court of Justice is certainly a factor to be taken into account, as is the total length of time that a case takes to work its way through that court. Those delays, however, have been taken into account in the Morin analysis we carried out earlier. Under the Morin framework, it is the combined institutional and Crown delay for the Ontario Court of Justice and the Superior Court of Justice taken together that is considered, as it is the "reasonableness of the overall delay" or the "reasonableness of the total period of time" that needs to be assessed: see R. v. Conway, 1989 CanLII 66 (SCC), [1989] 1 S.C.R. 1659, at p. 1674; R. v. Bennett (1991), 1991 CanLII 2701 (ON CA), 3 O.R. (3d) 193 (C.A.), at p. 211, aff'd 1992 CanLII 61 (SCC), [1992] 2 S.C.R. 168; and Schertzer, at para. 122. Therefore, an excessive delay in the Ontario Court of Justice can, in effect, be remedied by a short delay in Superior Court, as long as the total delay is reasonable. The overall delay in this case did not exceed the Morin guidelines.

Conclusion

233There is no doubt that the delay in this case far exceeded the 30-month presumptive ceiling of Jordan. When the 347 days of delay that the application judge improperly deducted on account of complexity are added to the 1,005 days of net delay for Jun-Chul and the 1,084 days of net delay for Kathleen, the net delays rise to 1,352 days (44.5 months) for Jun-Chul and 1,431 days (47 months) for Kathleen. If, as argued by the appellants, the application judge improperly allocated some of the delay to defence conduct, the delay numbers would rise even higher.

234In our view, however, despite the extent of the delay over the Jordan ceiling, we agree with the application judge's conclusion that this is a case that falls squarely into the category of cases to which the transitional exceptional circumstance provision outlined in Jordan applies. Therefore, we would dismiss this ground of appeal advanced by Jun-Chul and Kathleen, as the application judge did not err in dismissing the s. 11(b) stay application.

Issue 4: Did the trial judge err in not granting interest to Kenneth Chung?

235The Crown was in possession of $28,874.51 from Kenneth. On February 21, 2019, it was ordered that the funds be returned to him. The forfeiture judge declined to award interest on the funds. Kenneth Chung appeals that order. He relies on the Civil Remedies Act, 2001, S.O. 2001, c. 28, the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and the Courts of Justice Act, R.S.O. 1990, c. C.43, to say that interest should have been provided.

236The provincial statutes that Kenneth relies on relate to civil proceedings. They have no application to the federal Criminal Code which makes no provision for the payment of interest on money restrained and subsequently ordered returned. The trial judge did not err and this portion of Kenneth's appeal is dismissed.

Issue 5: Did the trial judge err in acquitting Kenneth of counts 3-6?

237The Crown appeals Kenneth's acquittal on count 3 (the theft of the winning ticket), count 4 (possession of the winning ticket), count 5 (fraud) and count 6 (possession of the proceeds of crime).

238Relying on Exhibit 38, the trial judge found there was a scheme by Jun-Chul and Kenneth to steal free tickets. He found they were joint participants in an eight-month scheme under which they stole lottery tickets from customers. He convicted them both for theft and possession of stolen lottery tickets. However, the trial judge refused to consider the split ticket scheme in relation to remaining counts because the Crown did not bring a similar fact application:

As noted, no application was brought by the Crown to have the evidence relevant to Counts 1 and 2, that I have reviewed, rendered admissible under Count 3 or, for that matter, any of the other Counts. Accordingly, I will not consider any of the "pattern" evidence elicited under Count 1, through Exhibit 38, on any of the other counts, including Count 3.

239The Crown submits that the trial judge wrongly treated the theft of the winning ticket as an isolated act and acquitted Kenneth because there was insufficient evidence under counts 3-6 to support a conviction. In response, Kenneth repeats the submissions relied upon with respect to his appeal of the convictions on counts 1 and 2.

240In each of the remaining counts, the trial judge -- having ignored his finding on the split ticket scheme -- found that there was a reasonable doubt because Kenneth could have been told that Kathleen was the legitimate owner of the ticket.

241We have concluded that the trial judge erred by failing to consider Kenneth's participation in the split ticket scheme on the remaining counts. This legal error had a material bearing on the acquittals.

242We have further concluded that the trial judge's factual findings with respect to counts 1 and 2 establish Kenneth's guilt on counts 3 and 4 beyond a reasonable doubt. But for the error, Kenneth would have been convicted. However, the trial judge did not make factual findings sufficient to convict on counts 5 and 6. Therefore we substitute a conviction on counts 3 and 4 and order a new trial on counts 5 and 6.

The legal error

243The trial judge concluded that Kenneth Chung was a joint participant in the split ticket scheme. He concluded that it was "clear that Jun-Chul Chung stole some of the tickets and Kenneth Chung stole some. However, more fundamentally, in my view they are both guilty of all the thefts as parties under s. 21(1)(a) of the Code."

244It was pursuant to that scheme that the winning ticket was stolen. Thirty-one free tickets were stolen, one won the $12.5 million. The theft of the 31st ticket was not an isolated act but part of the scheme. The trial judge was required to consider all of the evidence, and evidence of Kenneth's participation in the scheme was admissible on counts 3-6. This was addressed by Doherty J. (as he then was) in R. v. Sahaidak, [1990] O.J. No 3228 (Ont. H.C.), at para. 150:

In most cases where a multi-count indictment is before the Court, evidence adduced on one count is not admissible for or against an accused on the other counts. Where, however, the events underlying the various counts are part of an ongoing course of dealings and where those events are interwoven and interrelated so that as a matter of logic and common sense, the events underlying one count also enlighten and assists the trier of fact in understanding and assessing the evidence on the other counts, then the evidence directly relevant to one count is admissible on the other counts as well. [Emphasis added.]

245This reasoning was cited with support in R. v. Kirk, 2004 CanLII 7197 (ON CA), [2004] O.J. No. 3442 (C.A.), at para. 15.

246The scheme to steal free tickets, which produced 30 no wins or nominal wins, also produced the winning ticket. The winning ticket was part of "an ongoing course of dealings" and was "interwoven and interrelated." The scheme outlined in Exhibit 38 was admissible on the remaining counts in the indictment. The legal error had a material bearing on the acquittals.

The facts found by the trial judge support convictions on counts 3 and 4

247On an appeal from an acquittal, this court may "enter a verdict of guilty with respect to the offence of which, in its opinion, the accused should have been found guilty but for the error in law": s. 686(4)(b)(ii) of the Criminal Code. The trial judge's conclusion that Kenneth was a joint participant in the scheme pursuant to s. 21 of the Criminal Code leads inevitably to convictions on counts 3 and 4.

248 Section 21(1) of the Criminal Code provides:

Everyone is a party to an offence who

(a) actually commits it;

(b) does or omits to do anything for the purpose of aiding any person to commit it; or

249As found by the trial judge, the scheme that Kenneth participated in was to steal lottery tickets. The scheme produced the winning ticket. Kenneth is guilty of theft and possession of the winning ticket based on the same evidence that resulted in his convictions on counts 1 and 2.

250With respect to count 3, theft of the winning ticket, the trial judge found as follows:

It has not been established that Kenneth Chung was present in the store at the time Jun-Chul Chung stole the ticket. I am not persuaded beyond a reasonable doubt that he was involved in the theft. He must be acquitted on Count 3.

251The trial judge made the same finding on count 4, possession of the winning ticket.

252These findings by the trial judge on counts 3 and 4 are inconsistent with Kenneth's involvement in the scheme to steal tickets. The theft of the winning ticket was indistinguishable from the other 30 tickets. As part of the scheme it was not necessary for Kenneth to steal the specific ticket. As the trial judge held, the scheme involved Kenneth stealing some tickets and Jun-Chul stealing some tickets, but they are both guilty of all of the thefts. Had the trial judge considered the scheme, Kenneth would have been found guilty of theft of the winning ticket (count 3) and possession of the winning ticket (count 4).

The facts found by the trial judge cannot support convictions on counts 5 and 6

253Common sense would suggest that the purpose of stealing a lottery ticket is to defraud the OLG and cash in the ticket. However, the trial judge's findings with respect to counts 5 and 6 are not sufficient to invoke s. 686.

254With respect to count 5, defrauding OLG, the trial judge found that when Kenneth attended meetings at the OLG he joined in the story that Kathleen had purchased the original ticket that generated the winning ticket.

255In acquitting Kenneth on count 5, the trial judge relied on the fact that Kenneth could have been told that Kathleen was the rightful owner:

The issue is whether Kenneth Chung is also guilty on this count. Once again, not without doubt, I am not convinced of his guilt beyond a reasonable doubt. As noted earlier, it is possible that he was told, falsely, that Kathleen Chung was the legitimate purchaser of the original ticket, and he believed her. Once again, this is a reasonable possibility which is inconsistent with Kenneth Chung's guilt. Accordingly, he must be acquitted on Count 5.

256Although Kenneth stole the winning ticket, there are no findings from which it can be determined that Kenneth knew the truth when he participated in the meetings at the OLG. It is unclear whether the trial judge's "reasonable possibility" that Kenneth did not have the requisite knowledge would have remained had he considered the scheme.

257With respect to count 6, possession of the $12.5 million paid, the trial judge expressed similar concerns:

While Kenneth Chung obtained considerable benefit from some of the proceeds of the $12.5 million, once again I am not convinced beyond a reasonable doubt that he knew that the money and property were obtained by fraud. As noted, it is at least a reasonable possibility that he was told that Kathleen Chung was the legitimate owner of the ticket, and he believed her. Thus, it is a reasonable possibility which is inconsistent with the guilt of Kenneth Chung.

258We are not satisfied that, but for the error, Kenneth would have been convicted of counts 5 and 6.

259Pursuant to s. 686(4)(b)(ii) of the Criminal Code a conviction is entered on counts 3 and 4 and the matter is returned to the Superior Court for sentencing. With respect to counts 5 and 6 a new trial is ordered.

CONCLUSION

260Kathleen Chung's appeal is allowed in part as follows:

a. The quantum of restitution is reduced to the amount of the forfeiture plus $2.3 million.

b. The custodial sentence is reduced to three years.

261The Crown appeal of the acquittals of Kenneth Chung is allowed as follows:

a. A conviction is entered on counts 3 and 4 and the matter is returned to the Superior Court for sentencing.

b. A new trial is ordered on counts 5 and 6.

262In all other respects the appeals are dismissed.

Released: March 31, 2021 "P.R."

"Paul Rouleau J.A."

"M.L. Benotto J.A."

"B.W. Miller J.A."

Footnotes

Jun-Chul, Kenneth, and Kathleen were also charged with money laundering under Count 7. The trial judge acquitted all three of the money laundering charge, and the Crown does not appeal that acquittal.
It would be unwise to speculate as to what constitutes a refusal to pay, and what constitutes an unreasonable refusal to pay. This is an area of law that must be developed on a case-by-case basis. We do not propose to decide these questions on the basis of hypotheticals that may or may not constitute reasonable refusals. The basic principles are that the purpose of the provision is to prevent an offender from benefitting from crime, and that the committal can only be a consequence of unreasonable refusal, and not genuine inability to pay. There may well be cases of self-induced poverty, by which the property will have been consumed and the offender will thereby have received a benefit. This type of poverty is no defence to incarceration.
Dieckmann dealt with a large-scale scheme that defrauded the Canada Revenue Agency of approximately $5.7 million. There were four co-conspirators: Mr. Davis, Ms. Hartman, Ms. Dieckmann, and Mr. Salmon. All four co-conspirators benefitted from the scheme and were named defendants before the court, but Mr. Davis and Ms. Hartman died before trial. Mr. Salmon and Ms. Dieckmann were both convicted, and the court accepted Mr. Davis and Ms. Hartman were "clearly guilty" and would have been convicted had they survived to trial. When imposing the fines in lieu of forfeiture, the trial judge apportioned the $5.7 between all four co-conspirators (albeit notionally, for Mr. Davis and Ms. Hartman), based on their respective roles in and benefits derived from the scheme. Accordingly, although Ms. Dieckmann had possession and control of the full $5.7 million at one point or another, the trial judge only fined her $1,285,930. Collectively, the four fines totaled $5.7 million, being the value of the proceeds of crime subject to forfeiture: see R. v. Dieckmann, 2014 ONSC 717, aff'd 2017 ONCA 575, 355 C.C.C. (3d) 216, leave to appeal refused, [2018] S.C.C.A. No. 304 and No. 381.

COURT OF APPEAL FOR ONTARIO

TABLE OF CONTENTS

OVERVIEW

BACKGROUND

The split ticket scheme for the Super 7 lottery

Kathleen claims the prize

The Hi Ok Chung trust

THE TRIAL

(1) Convictions

Count 1: Theft under $5000 (the 30 tickets that won nominal or no prize)

Count 2: Possession of property obtained by crime (the 30 tickets)

Count 3: Theft over $5000 (the winning ticket)

Count 4: Possession of property obtained by crime (the winning ticket)

Count 5: Defrauding the OLG of $12.5 million

Count 6: Possession of property obtained by crime (the $12.5 million paid)

(2) Sentence

(3) The constitutional challenge

(4) Restitution, forfeiture, and fines in lieu

(5) The s. 11(b) application

ISSUES ON APPEAL

ANALYSIS

(1) Conviction Appeals

Issue 1(a): Did the trial judge impose unreasonable verdicts for Kathleen Chung?

Count 4: Possession of property obtained by crime (the winning ticket)

Count 6: possession of property obtained by crime (the $12.5 million paid)

Count 5: Defrauding the OLG of $12.5 million

Issue 1(b): Did the trial judge impose unreasonable verdicts for Jun-Chul Chung?

Issue 1(c): Did the trial judge impose unreasonable verdicts for Kenneth Chung?

(2) Sentence Appeals:

Issue 2(a): Restitution and Fine in Lieu

(i) Did the trial judge err in dismissing the constitutional challenges?

The Constitutional Challenge

The s. 7 challenge

The s. 12 challenges

The first argument -- mandatory minimum sentences

The purpose of the provision

The impact on the offender

Sentencing principles

Conclusion

The second s. 12 argument -- setting the sentence in advance

The appeal against the restitution order

The appeal against the fine in lieu of forfeiture

(ii) Did the trial judge err in establishing time to pay and a six-year sentence in default of payment?

Time to pay

The six-year sentence

Issue 2(b): The Custodial Sentence Appeals

(i) Kenneth Chung's custodial sentence of 10 months

(ii) Jun-Chul Chung's custodial sentence of seven years

(iii) Kathleen Chung's custodial sentence of four years

Issue 3: Did the application judge err in dismissing the s.11(b) stay application?

The application judge's findings

The appropriateness of the deductions for defence conduct

July 21, 2011 to November 1, 2011

December 13, 2013 to October 30, 2014

February 22, 2016 to February 27, 2017

The 347-day delay due to the complexity of the case

The transitional exceptional circumstance provision of Jordan

The case was complex

The institutional delay did not exceed the Morin guidelines

The Crown's response to institutional delay

The defence efforts to move the case along

Prejudice to the appellants

The seriousness of the offences

Does the delay in the Ontario Court of Justice justify a stay?

The delay in completing disclosure

The amount of institutional delay in the Ontario Court of Justice

Conclusion

Issue 4: Did the trial judge err in not granting interest to Kenneth Chung?

Issue 5: Did the trial judge err in acquitting Kenneth of counts 3-6?

The legal error

The facts found by the trial judge support convictions on counts 3 and 4

The facts found by the trial judge cannot support convictions on counts 5 and 6

CONCLUSION

Footnotes

COURT OF APPEAL FOR ONTARIO

TABLE OF CONTENTS

OVERVIEW

BACKGROUND

The split ticket scheme for the Super 7 lottery

Kathleen claims the prize