Court of Appeal for Ontario

Date: July 5, 2017

Docket: C58048, C57986, C57992

Judges: Doherty, Rouleau and Pepall JJ.A.

Parties

Between

Her Majesty the Queen Respondent (Applicant/Appellant on Crown Appeal from Sentence)

and

Deborah Dieckmann and George Salmon Appellants (Respondents on Crown Appeal from Sentence)

Counsel

Anil K. Kapoor and Sarah Harland Logan, for the appellant Dieckmann

R. Craig Bottomley and Mayleah Quenneville, for the appellant Salmon

Marie Comiskey and Xenia Proestos, for the respondent

Heard

June 15, 2017

Appeal Information

On appeal from the order of Justice Robert D. Reilly of the Superior Court of Justice, dated March 26, 2012, with reasons reported at 2012 ONSC 1813, dismissing the application for a stay of proceedings, and an appeal from the conviction entered on July 24, 2013 by Justice Deena F. Baltman of the Superior Court of Justice, sitting with a jury, and from the sentences imposed on December 3, 2013, with reasons reported at 2014 ONSC 717, and a further appeal by the Crown from the sentence imposed on the appellant, Dieckmann, with reasons reported at 2014 ONSC 717.

By the Court

I. Introduction

[1] The appellants were tried together by a court composed of a judge and jury. The appellant, Deborah Dieckmann, faced seven charges of fraud over $5,000. The appellant, George Salmon, faced one charge of fraud over $5,000. After a four-month trial, the jury convicted on all counts.

[2] The trial judge sentenced Ms. Dieckmann to four years in the penitentiary, and imposed a fine of $1,285,930 in lieu of forfeiture. In default of payment of the fine, Ms. Dieckmann received an additional five years in jail. The trial judge sentenced Mr. Salmon to two years, less one day in jail, and imposed a fine of $397,758.65 in lieu of forfeiture. In default of payment, Mr. Salmon received three years consecutive.

[3] Both appellants appeal their convictions on several grounds. They also seek leave to appeal their sentences. Ms. Dieckmann seeks a reduction in her custodial term. Ms. Dieckmann also argues that the trial judge should not have imposed a fine in lieu of forfeiture. Mr. Salmon submits that the trial judge erred in not imposing a conditional sentence of two years, less one day. He does not take issue with the fine in lieu of forfeiture order made against him.

[4] The Crown resists the appellants' appeals. The Crown also seeks leave to appeal one aspect of Ms. Dieckmann's sentence. The Crown contends that the trial judge properly determined that a fine in lieu of forfeiture should be imposed, but that the trial judge erred in determining the amount of that fine. The Crown argues that the amount of the fine should have reflected the total amount that would have been forfeited had the property been available for forfeiture. On the Crown's argument, the fine should have been $5,143,723.02.

[5] At the end of oral argument, the court advised counsel of the following:

• the conviction appeals would be dismissed;
• the court would not interfere with the jail terms imposed by the trial judge;
• the court would reserve judgment on the arguments concerning the appropriateness of the order against Ms. Dieckmann imposing a fine in lieu of forfeiture, and the amount of the fine.

[6] These reasons address all aspects of the appeals.

II. The Fraud Scheme

[7] The Crown alleged that between 2002 and 2006, the appellants and other named conspirators operated a scheme to divert millions of dollars from the Canadian Revenue Agency (the "CRA") to their personal use. The Crown alleged that companies controlled by the appellants and other co-conspirators contracted with various legitimate companies to provide payroll-related services, including the remitting of various source deductions, such as income tax and Canada Pension Plan contributions, to the CRA. Instead of remitting the funds to the CRA, the conspirators directed the funds, through a series of corporate shells and bank accounts, to their own personal use. The amount of the fraud totalled $5.7 million.

[8] On the Crown's theory, a man named Tom Davis masterminded the fraud. He died before trial as did Caroline Hartman, who was also integral to the fraud on the Crown's theory. Ms. Hartman was Ms. Dieckmann's sister.

[9] The Crown alleged that Ms. Dieckmann played a crucial role in the fraud. She was active in arranging for and paying the nominee directors who purported to act on behalf of the various shell companies used in the scheme. Ms. Dieckmann also created many of the false documents essential to the operation of the scheme. Furthermore, as the bookkeeper, Ms. Dieckmann controlled the various bank accounts through which the proceeds of the fraud flowed. On the Crown's theory, the fraud could not have operated without Ms. Dieckmann.

[10] Ms. Dieckmann testified and denied any knowledge of the fraudulent nature of the scheme. She insisted she had no knowledge that the source deductions were not being paid to the CRA. On Ms. Dieckmann's evidence, she simply performed bookkeeping functions for various entities. She followed Mr. Davis's instructions.

[11] The Crown alleged that Mr. Salmon, who was Ms. Dieckmann's father, became involved in the fraudulent scheme as a result of the financial difficulties he had with his tool and die business. The Crown contended that Mr. Salmon ultimately used his business as one of the vehicles through which Ms. Dieckmann and others diverted source deductions that should have been remitted to the CRA. The Crown alleged that Mr. Salmon used various corporations and nominee directors to disguise this misappropriation. The Crown relied, in part, on a lengthy statement Mr. Salmon made to the investigators. The Crown argued that parts of that statement contained significant admissions by Mr. Salmon.

[12] Mr. Salmon did not testify. His defence as advanced through counsel amounted to the claim that Mr. Salmon, like many other business owners who hired Mr. Davis and his companies, relied on Mr. Davis. According to the defence, Mr. Salmon had solicited Mr. Davis's assistance to try and salvage his business. He had no idea that Mr. Davis was engaged in a fraud on the CRA. In short, Mr. Davis duped Mr. Salmon along with many others.

III. The Conviction Appeals

A. Ms. Dieckmann's Grounds of Appeal

(i) The Section 11(b) Claim

[15] We turn first to the 11(b) issue. The 11(b) application was heard by Reilly J. on January 5 and 6 and February 3, 2012, after the mistrial before Corbett J. and shortly after the dates for the new trial were fixed. The appellant submits that the application judge ought to have allowed her application and stayed the charges. Specifically, she advances two grounds. First, she argues that the length of the delay, 85 months, was simply too long. Second, she submits that the application judge erred in concluding that the Crown had met its disclosure obligations in a timely fashion despite its failure to provide the defence, at the time disclosure was made, with appropriate software to search the voluminous productions made in electronic format.

[16] We disagree.

[17] This case was completed well before R. v. Jordan, 2016 SCC 27, [2016] 1 S.C.R. 631, was decided. The application judge did not, therefore, carry out the analysis that is now required pursuant to Jordan. The Crown maintains that, even under the Jordan analysis, the 85 months of delay, of which 23 are said to be defence delay, would be justified because of discrete events, including a mistrial, and the complexity of the case.

[18] Under the Jordan framework, it is clear that the delay significantly exceeds the Jordan presumptive ceiling, even after accounting for defence delay and discrete events. The remaining delay is in the order of 50 months. The issue under Jordan would be whether the complexity of the case justifies the excess over the presumptive ceiling.

[19] As explained in Jordan, this determination falls well within the expertise of a trial judge. The difficulty in this case, however, is that because this is a pre-Jordan case, the application judge did not carry out the analysis contemplated in Jordan, other than noting the complexity of the case. Given our conclusion that the delay can be justified under the transitional provisions in Jordan due to reliance on pre-Jordan law, we have assumed, without deciding, that the delay is not justified by the complexity of the case.

[20] We therefore move directly to consider transitional exceptional circumstances under Jordan.

[21] This court explained a transitional exceptional circumstance in R. v. Manasseri, 2016 ONCA 703, 344 C.C.C. (3d) 281, at paras. 319-320:

[319] …To invoke this transitional exceptional circumstance, the Crown must establish that the time the case has taken is justified on the basis of the parties' reasonable reliance on the previous state of the law.…

[320] To determine whether a transitional exceptional circumstance will prevail, a court must undertake a contextual assessment of all the circumstances, sensitive to the manner in which the previous framework was applied and the fact that the parties' behaviour cannot be judged strictly, against the standard of which they had no notice. Prejudice and seriousness of the offence, often decisive factors under the former calculus, can inform whether the parties' reliance on the former law was reasonable. Delay above the presumptive ceiling in a jurisdiction with significant institutional delay problems may also be important. [Citations omitted.]

[22] The application judge's dismissal of the 11(b) application is explained in a 31 page decision. Applying R. v. Morin, [1992] 1 S.C.R. 771, he carefully reviewed each step in the proceeding, from the laying of the charges to the anticipated end of the trial. In the course of this analysis, he considered the reason for each of the delays incurred.

[23] The application judge explained that this was a complex case involving, at the outset, six co-accuseds, problems involving unrepresented accuseds, extensive productions including 100 banker's boxes of documents, more than a dozen judicial pre-trials in the Ontario Court of Justice, a preliminary inquiry that spanned almost five months, a further 15 judicial pre-trials in Superior Court and culminating in an anticipated three months of pre-trial motions and three months of trial. To this is added extensive defence delay to accommodate defence counsel's schedule and further delay arising as a result of an unfortunate mistrial.

[24] The application judge went on to note that the delays had no impact on the appellant's right to liberty. She has not been subject to pre-trial custody or any bail conditions. There is also little indication in the materials that the appellant was seeking to move expeditiously to trial. In fact, she sought and obtained an extensive delay after the mistrial in order to accommodate her counsel's availability.

[25] Other than the application judge's approach to the Crown's delay in providing software to facilitate electronic search of the 21 CDs of disclosure, the appellant has not pointed to any alleged error in the application judge's analysis. As a result, we agree with the application judge's conclusion, set out in his reasons as follows:

These are serious charges. They involve seven counts of fraud on Her Majesty in Right of Canada (and therefore the people of Canada) of several million dollars. While this case has involved a considerable delay in bringing it to trial, the societal interest in determining this case on its merits outweighs any possible prejudice to Ms. Dieckmann. I conclude that there has been in effect no institutional delay, that the delay attributable to the Crown in initially "getting its act in order" is but a very few month[s]. The remaining delay is either neutral or may be attributable to the inherent time requirements of the case in preparing by the defence and the prosecution for the preliminary inquiry and the first trial. Therefore, I conclude there has been no unreasonable delay and the application must be dismissed.

[26] We turn now to the appellant's second ground. The appellant submits that the Crown's disclosure obligations involve more than simply providing the defence with 21 CDs of electronic discovery. The Crown must also provide the defence with the ability to search the voluminous electronic productions. The application judge agreed that in the circumstances of this case, there was an obligation on the Crown to assist.

[27] The application judge acknowledged that the initial "Supertext CD View" software and training provided to the defence by the Crown was not effective to search the electronic productions. He noted that after the Crown was advised of the difficulty, the "Supertext Research" software and training was provided. That technology was satisfactory. The application judge went on to find that the Crown did not act in bad faith or wilfully in initially providing inferior software to the defence. This factual finding is entitled to deference on appeal.

[28] Although it is safe to assume that some delay was incurred because the superior software was not initially provided to the appellant, nothing in the record points to any specific part of the delay having been the result. The appellant has not satisfied us that the application judge's factual finding that no significant delay was caused by the software issue is wrong or unreasonable.

[29] This dispute as to whether the Crown ought to have provided the defence with the "Supertext Research" software sooner, and who is responsible for any delay caused, is the very type of problem Jordan and R. v. Cody, 2017 SCC 31, seek to remedy. Had the defence promptly notified the Crown of its problems accessing the electronic productions, and had the Crown given a timely response, this issue could have been resolved in short order: see Cody, at para. 60. Where the parties are unable to resolve the issue, the court's involvement is to be sought to avoid the proceeding being derailed.

[30] For these reasons, we are not persuaded that the application judge erred in finding the delay justified under pre-Jordan law. In all the circumstances, we are satisfied that the delay in this case is justified based on the parties' reasonable reliance on the law as it previously existed.

(ii) Issue Estoppel

[31] Ms. Dieckmann sought a stay of the criminal proceedings on the basis that a civil consent judgment resolved in her favour the same issue raised in the criminal proceeding. She asserted that issue estoppel applied and a stay of the criminal proceeding should be granted.

[32] The trial judge described the applicable test for issue estoppel:

1. the same question was decided in the prior proceeding;
2. the judicial decision said to create the estoppel is final; and
3. the parties to the prior decision are the same persons as the parties to the proceedings in which the estoppel is raised.

She noted that if the preconditions were established, a court still had to determine whether, as a matter of discretion, issue estoppel ought to be applied.

[33] The trial judge dismissed the application on the basis that the consent judgment was not a decision on the merits and it was unclear that the issues in the two proceedings were the same.

[34] Ms. Dieckmann argues that the trial judge erred in finding that the test for issue estoppel was not met.

[35] Contrary to the trial judge's conclusion, a consent judgment may be the basis for issue estoppel: Hardy Lumber Co. v. Pickerel River Improvement Co. (1898), 29 S.C.R. 211; and Re Ontario Sugar Co. (1911), 24 O.L.R. 332 (C.A.), leave to appeal to S.C.C. refused (1911), 44 S.C.R. 659.

[36] Nonetheless, we agree with the result reached by the trial judge. The same question was not decided in the two proceedings. In the civil proceeding, the matter in issue was the appellant's obligation under the Income Tax Act to remit funds to the CRA. In the criminal proceeding, the matter in issue was the appellant's misappropriation of the remittances owing to the government.

[37] Accordingly, we would not give effect to this ground of appeal advanced by Ms. Dieckmann.

(iii) Did the Manner in Which the Trial Judge Reviewed the Evidence of the Witnesses Constitute Misdirection, Resulting in Reversible Error?

[38] The trial judge chose to summarize the evidence by providing the jury with a detailed witness-by-witness written summary of the testimony. The summaries were long but accurate. The trial judge read the summaries to the jury. She also made references to the evidence when explaining specific rules (e.g. the co-conspirators' exception), and when outlining, in some detail, the parties' positions.

[39] The trial judge did not, in a separate part of her instruction, relate parts of the evidence to the elements of the offence of fraud. Specifically, she did not connect the relevant parts of the evidence to the existence of the fraudulent scheme alleged, or the appellants' knowledge of the fraudulent nature of the scheme.

[40] In the pretrial discussions, the defence objected to the proposed summaries of the evidence. The objection, however, focused on the extent to which the summaries seemed to refer to evidence that favoured the Crown. The Crown responded that the summaries simply reflected the imbalance in the evidence heard by the jury.

[41] Trial judges are obliged in almost every criminal case to review the significant parts of the evidence for the jury and to relate the evidence to the issues raised in the case. Trial judges have a broad discretion as to how best to perform those functions. However, lengthy witness-by-witness detailed summaries of the evidence are often not helpful for the jury. Courts have also cautioned against giving juries a judge's written summary of the evidence. The concern is that by providing a written summary, the trial judge may subconsciously cause the jury to refrain from its own vigorous assessment of the evidence.

[42] Ultimately, however, the appellate task is not to grade the performance of the trial judge. The issue is whether the appellant can demonstrate reversible error on account of the manner in which the trial judge chose to review the evidence.

[43] A review which is misleading or factually inaccurate may result in reversible error. The procedure used by the trial judge did not mislead the jury about the evidence. The summaries were accurate. The jury was reminded that it was their recollection of the evidence that mattered. Furthermore, most of the evidence reviewed by the trial judge was not controversial by the end of the trial. While one could criticize the trial judge's summaries as unnecessary, and even unhelpful, they cannot be characterized as misleading.

[44] Reversible error may occur if the trial judge's review of the evidence does not leave the jury with a proper understanding of how the evidence relates to various issues in the trial. We are not satisfied that the appellant has demonstrated that the jury would not appreciate the relevant issues and how they related to the evidence. When the case finally got to the jury, it was almost exclusively about what the appellants did or did not know about Mr. Davis's fraudulent operations. The appellants' actions and the fraudulent nature of the scheme were essentially admitted.

[45] Given the narrow focus of the trial by the end of the evidence, the detailed closing submissions, and the trial judge's charge as a whole, we are satisfied that the jury would understand what parts of the evidence were central to the question of whether the appellants knew the fraudulent nature of the scheme. The trial judge touched on parts of the evidence when referring to various legal and other evidentiary issues. She also referred to some of the evidence when summarizing the positions of the parties. It is also fair to observe, as urged by the Crown, that the nature of most of the evidence heard by the jury made any explicit and comprehensive connection of the evidence to the question of the appellants' state of knowledge far from helpful from the defence perspective.

[46] The manner in which the trial judge chose to review the evidence with this jury is not a model of effective communication. However, for the reasons set out above, counsel for the appellants have not satisfied us that this jury would not have fully appreciated the relationship between the evidence led and the crucial question of whether the appellants were aware of the fraudulent nature of the scheme in which they were involved.

(iv) Did the Trial Judge Err in Refusing to Allow Ms. Dieckmann to Lead Evidence of the Consent Judgment Entered in the Tax Court?

[47] Throughout the trial, the Crown led evidence of the interactions between CRA investigators and auditors and Ms. Dieckmann prior to the criminal charges. The jury heard evidence of ongoing correspondence between Ms. Dieckmann and CRA auditors concerning her responsibility to remit funds deducted from various payrolls. The jury heard evidence that eventually the tax authorities issued assessments against Ms. Dieckmann and/or companies controlled by her. The Crown contended that the evidence concerning the interactions between Ms. Dieckmann and the CRA demonstrated ongoing efforts by her and her cohorts to mislead the CRA as to their role in the administration of the payrolls and their diversion of the deductions to accounts controlled by them.

[48] In cross-examination, counsel for Ms. Dieckmann sought to adduce evidence that the tax-related investigation and the assessments resulting from that investigation were ultimately resolved by a consent judgment in Tax Court, indicating that Ms. Dieckmann was not responsible for the remission of the payroll deductions to the CRA. The trial judge had earlier ruled that the consent judgment did not give rise to issue estoppel against the Crown. For the reasons set out above (see paras. 31-37), we agree with that holding. She further held that the consent judgment did not constitute evidence of a "fact".

[49] In our view, given the scope of the evidence called by the Crown, Ms. Dieckmann should have been permitted to complete the narrative by eliciting evidence of the outcome of the tax assessment-related proceedings. In so holding, we do not accept Ms. Dieckmann's argument that the judgment constituted an admission by the CRA that was inconsistent with the fraud claim advanced. In our view, evidence of the outcome of the tax assessment proceedings had value only as narrative.

[50] The trial judge's failure to allow counsel for Ms. Dieckmann to lead evidence of the consent judgment occasioned no substantial wrong or miscarriage of justice. The evidence was not probative of anything related to the alleged fraud. The trial judge expressly and correctly instructed the jury that evidence concerning the civil proceedings in relation to the tax assessments between the government and Ms. Dieckmann "have nothing to do with your decision in this trial". That instruction would have applied with full force to any evidence concerning the consent judgment.

(v) The Party Liability Instruction

[51] The trial judge instructed the jury that the appellants were potentially liable as perpetrators or as aiders. In her instruction on aiding, she said:

An aider may help another person commit an offence by doing something or failing to do something. It is not enough that what the aider does or fails to do has the effect of helping the other person commit the offence. The aider must intend to help the other person commit the offence. Actual assistance is necessary. [Emphasis added.]

[52] The appellants submit that the trial judge failed to tell the jury that to be an aider, an accused had to know that the perpetrator intended to commit the offence.

[53] Knowledge, as described in the appellants' submissions, is a component of the mens rea requirement for aiding and abetting. Jury charges should refer to that knowledge requirement.

[54] In our view, however, the trial judge's instruction that one could only be an aider if one "intended to help the other person commit the offence" effectively captured the knowledge requirement in the circumstances of this case. On the evidence, Ms. Dieckmann could not have intended to help Mr. Davis commit the offence of defrauding the government without knowledge of the fraudulent nature of the scheme.

[55] There was no objection to this part of the jury instruction. The direction was adequate.

(vi) The Co-Conspirators' Exception to the Hearsay Rule

[56] The Crown's allegations of a scheme to defraud the CRA engaged the potential application of the co-conspirators' exception to the hearsay rule. That rule admits evidence of acts and declarations done in furtherance of a common criminal design by a party to that criminal design against all other parties to the common design.

[57] Counsel for Ms. Dieckmann submits that the trial judge failed to adequately instruct the jury on the application of the second stage of the co-conspirators' exception. That stage requires that the jury be told that before acts and declarations of others done in furtherance of the common unlawful design can be used against a specific accused, the jury must be satisfied, on the balance of probabilities, based on evidence directly admissible against a specific accused, that he or she is probably a member of the common unlawful design.

[58] The trial judge framed this part of her instruction as follows:

If you find there was in fact an agreement to defraud the Government, you move on to the second question, which is whether each Defendant was probably a participant in that agreement, based on evidence admissible only against her or him.

[59] Counsel submits that the trial judge's use of the phrase "participant in that agreement" would not have conveyed to the jury the requirement that Ms. Dieckmann know the criminal nature of the enterprise she was alleged to have joined.

[60] We do not agree with this submission. Certainly, the phrase "participant in that agreement" can bear more than one meaning. The question is whether the meaning was clear in the context in which it was used. Participation connotes knowing involvement. The wording used by the trial judge was arrived at after extensive pre-charge discussions among the trial judge and counsel. All counsel were satisfied that the phrase "participant in that agreement" would be understood by the jury as meaning knowing participation in the agreement. We take the same meaning from the phrase as used by the trial judge.

(vii) The Alleged Violation by the Crown in Its Closing Address of the Rule in Browne v. Dunn

[61] The appellants submit that the Crown's failure to cross-examine Ms. Dieckmann on an email exchange between her and her husband, which the Crown later relied on in its closing as indicative of Ms. Dieckmann's knowledge of the fraudulent nature of the scheme, rendered the trial unfair and occasioned a miscarriage of justice. There was no objection to Crown counsel's closing at trial. On appeal, counsel did not make any oral argument in support of this submission.

[62] In our view, Crown counsel's failure to cross-examine on this specific email exchange did not result in any unfairness. The defence knew full well the nature of the Crown's allegation and the challenge the Crown made to Ms. Dieckmann's evidence. Ms. Dieckmann had a full opportunity at trial to respond to the Crown's allegations. We adopt Crown counsel's submission as put in the following language in her factum:

The thrust of the cross-examination of [Ms.] Dieckmann was to clearly attack her credibility when she claimed that she lacked any knowledge of the scheme to defraud the government of the source deductions that she had been entrusted to pay to the government in her position as lead accountant. There was no element of surprise or lack of forewarning when the Crown's closing comments suggested that Ms. Dieckmann's conduct was influenced by the knowledge of her guilt.

B. Mr. Salmon's Grounds of Appeal

[63] As indicated above, Mr. Salmon raises grounds of appeal not raised by Ms. Dieckmann, and to the extent that her arguments are applicable to him, he adopts those arguments. To the extent that Mr. Salmon relies on arguments put forward by Ms. Dieckmann, we reject those arguments for the reasons set out in our consideration of Ms. Dieckmann's appeal. We turn to the grounds of appeal advanced only by Mr. Salmon.

(i) Did the Trial Judge Err in Failing to Instruct the Jury that Mr. Salmon May Have Been a Member of an Unlawful Agreement Other Than the Unlawful Agreement Alleged by the Crown?

[64] As we understand this submission, Mr. Salmon argues that the jury should have been instructed to consider whether Mr. Salmon agreed only to the fraud relating to his own companies and not the broader fraud involving companies not related or associated with him. On this argument, if Mr. Salmon was a member only of the more limited unlawful agreement, the co-conspirators' exception could not make acts and declarations of others, done in furtherance of the broader unlawful purpose, admissible against Mr. Salmon.

[65] The Crown charged Mr. Salmon with only a single count of fraud. That count related to Mr. Salmon's companies. The Crown, however, maintained that Mr. Salmon was a member of the broader unlawful design. The potential admissibility of acts and declarations of others to prove the substantive charge against Mr. Salmon was put on the basis that he was a member of that broader unlawful design. If the jury was not satisfied that he was probably a member of the broader unlawful design, none of the evidence of acts and declarations of others could have been used to convict Mr. Salmon on the single substantive count against him. On the instructions given, there was no risk that the jury would use acts and declarations of others done in furtherance of a common design against Mr. Salmon unless the jury was first satisfied that the Crown had proved that Mr. Salmon was probably a member of that same common design. The fact that the common design was broader than the single charge against Mr. Salmon did not affect the operation of the rule, or operate unfairly against Mr. Salmon. There was no objection to the instruction.

(ii) Did the Trial Judge Err in Failing to Instruct the Jury that a Finding that Mr. Salmon Was Probably a Member of the Agreement to Defraud Did Not Establish Mr. Salmon's Guilt?

[66] The trial judge did not tell the jury that a finding that Mr. Salmon was probably a member of the unlawful agreement did not establish beyond a reasonable doubt that he had committed fraud. She could have given this instruction. The failure to give this instruction amounts to reversible error only if the jury could reasonably have taken from what the trial judge did tell them, that they could convict Mr. Salmon based on a finding that he was probably a member of the common unlawful design.

[67] The trial judge correctly instructed the jury on the burden of proof. In respect of the use of acts and declarations of others against Mr. Salmon, she said:

My final instruction in this area is that what I have been describing to you is merely a rule of evidence. Just because you may use acts or declarations of one probable participant in the agreement against another does not change the rule that the Crown must ultimately prove the guilt of each Defendant beyond a reasonable doubt, on each charge.

[68] The jury was clearly instructed on the ultimate burden of proof. The trial judge told the jury that a finding of probable participation in the unlawful agreement could not be equated with a finding of guilt beyond a reasonable doubt on the substantive charge of fraud.

(iii) Did the Trial Judge Fail to Adequately Describe the Ambit of the Charge Against Mr. Salmon?

[69] The charge against Mr. Salmon alleged that he failed to remit source deductions owing "in respect of employees of companies associated with George Salmon". The charge went on to name several companies while expressly indicating that the charge included, but was not limited to, those named companies.

[70] The appellant contends that absent a definition of the phrase "associated with", the jury might find Mr. Salmon guilty based on the activities of companies over which he had no control, even if he had some other connection with, or knowledge of, those companies.

[71] We do not accept this argument. It was clear from the outset of the trial that the case against Mr. Salmon focused on the company or companies through which he operated his business. The Crown put the case that way in her opening and in her closing. At no time did counsel for Mr. Salmon suggest that the charge as framed against Mr. Salmon was in any way ambiguous, or that the judge should provide the jury with a definition of the phrase "associated with" in the charge. No such instruction was necessary.

(iv) Did the Trial Judge Err in Failing to Caution the Jury Against Misuse of Evidence Suggesting that Mr. Salmon Had Committed Criminal or Dishonest Acts Other Than the Fraud Alleged Against Him?

[72] Mr. Salmon gave a lengthy statement to the police. In the statement, he made reference to various business practices which could be considered dishonest or at least disreputable. Mr. Salmon submits that as this conduct was not part of the fraud alleged against him, the jury should have been cautioned against using the evidence to infer that Mr. Salmon was the kind of person who would commit fraud.

[73] Mr. Salmon's statement to the investigators was admitted at trial without any request by the defence that the statement be edited in any way. Counsel at trial did not request the limiting instruction now said to have been essential to a fair trial.

[74] In her charge, the trial judge cautioned the jury that evidence concerning other court proceedings, Mr. Salmon's bankruptcy proceedings, or issues that Mr. Salmon may have with the Ministry of Labour were irrelevant to the jury's consideration. In light of the absence of any request for any further instruction, we are satisfied that the instruction given adequately protected Mr. Salmon's right to a fair trial.

IV. The Sentence Appeals

(a) The Jail Terms

[75] We would not interfere with the four-year sentence imposed by the trial judge on Ms. Dieckmann. She played a central role in a large-scale, long-term fraud on the public purse. Greed was her motivator. The case law is clear that individuals like Ms. Dieckmann who choose to do what she did can expect significant penitentiary sentences, even in the face of strong mitigating factors. Four years was an appropriate sentence.

[76] Mr. Salmon accepts that two years, less one day was an appropriate sentence. He submits, however, that the trial judge erred in failing to make the sentence a conditional one.

[77] The trial judge gave careful consideration to the submission that Mr. Salmon should receive a conditional sentence. She was alive to the various factors favouring that outcome. She also correctly identified the need to impose a sentence that would both denounce Mr. Salmon's serious misconduct and deter like-minded persons from following that same path. In the end, the trial judge exercised her discretion against granting a conditional sentence.

[78] We must defer to the trial judge's exercise of her discretion on sentence absent an error in principle or a material misapprehension of evidence which had an impact on the sentence, or the imposition of a sentence which is manifestly excessive. We see nothing that would justify our intervention here.

(b) The Fine in Lieu of Forfeiture Order Imposed on Ms. Dieckmann

[79] The trial judge ordered a fine in lieu of forfeiture of $1,285,930 against Ms. Dieckmann and $397,758.65 against Mr. Salmon.

[80] The trial judge applied the three step analysis contemplated by s. 462.37 of the Criminal Code, R.S.C., 1985, c. C-46. First, she noted that the offenders were both convicted of a designated offence, namely fraud, and the monies received by them were the proceeds of the fraud. As such, she concluded that a forfeiture order was mandatory.

[81] Second, forfeiture was impractical because the property could not be recovered. Indeed, the parties agreed that the stolen monies had been spent, used or lost.

[82] Third, she observed that the court "may" impose a fine "in an amount equal to the value of the property" instead of making a forfeiture order. She noted that imprisonment punishes the commission of the offence whereas forfeiture or a fine in lieu of forfeiture deprives the offender of the proceeds of crime and deters other potential offenders.

[83] The trial judge found that both Ms. Dieckmann and Mr. Salmon had received and profited from the stolen funds. She imposed a fine on Ms. Dieckmann in the amount of $1,285,930. This sum represented 25% of the $5,143,732.02 recovered from her and two of the other offenders. The trial judge notionally allocated 50% of the total amount recovered to Mr. Davis, the driving force behind the fraud and the main beneficiary of the spoils, and divided the remaining 50% between Ms. Dieckmann and her sister. Ms. Dieckmann had not benefitted from the entire sum of $5,143,732.02 and the Crown agreed that she was not the ultimate recipient of all of those funds.

[84] The trial judge imposed a fine on Salmon in the amount of $397,758.65 representing the amount that he had siphoned off for his own use.

[85] Ms. Dieckmann seeks leave to appeal her sentence. She argues that she did not have possession or control of the stolen property and that her transitory technical control of the funds was insufficient to impose a fine in lieu of forfeiture against her.

[86] We see no error in the trial judge's finding that Ms. Dieckmann had possession and control of the proceeds of the fraud. She had authority over the accounts into which the proceeds were paid and disbursed and as such the stolen funds were within her possession and control. We therefore grant her request for leave but dismiss her sentence appeal.

[87] The Crown also seeks leave to appeal Ms. Dieckmann's sentence. It challenges the quantum of the fine imposed on Ms. Dieckmann and argues that the trial judge erred in applying traditional sentencing principles to the imposition of the fine against her. The Crown argues that the fact that Ms. Dieckmann gave property that had been in her possession to her co-conspirators was irrelevant. While the Crown acknowledges that had the other offenders been convicted, they would not each be liable for that amount, it asserts that the state is not required to prove how a criminal organization divided the proceeds of crime or to ensure that every member is convicted before all the money can be recovered. It submits that the fine in lieu of forfeiture must be equal to the amount that would have been forfeited. As such, the fine imposed on Ms. Dieckmann ought to have been $5,143,732.02.

[88] Forfeiture concerns recovery of proceeds of crime, not culpability. As noted by Deschamps J. in R. v. Lavigne, [2006] 1 S.C.R. 392, 2006 SCC 10, at para. 9, a case dealing with an offender's ability to pay a fine imposed in lieu of forfeiture, one of the objectives of the forfeiture provisions is to neutralize criminal organizations by depriving them of the profits of their activities. Consistent with that objective, the provisions encompass a wide range of property including property that was originally in the possession or under the control of any person: Lavigne, at para. 13.

[89] Deschamps J. observed, at para. 19, that while the words used by Parliament allow the court no flexibility where the property can be located, it uses more permissive language in respect of a fine imposed instead of forfeiture. She explained, at para. 34, that the discretion granted under s. 462.37(3) is limited. It applied both to the decision of whether to impose a fine and to the determination of the value of the property. At para. 29, she stated that the factual circumstances that may give rise to an exercise of the discretion may vary, and it would be unrealistic to claim to foresee all of them.

[90] Here, the trial judge decided to exercise her discretion to impose a fine. The question then becomes: did she have a discretion, in light of the totality of the circumstances before her, to determine a value that was less than the full amount of the funds that had been under Ms. Dieckmann's possession and control?

[91] In our view, she did.

[92] Lavigne concerned a narrow issue, namely, whether an offender's ability to pay is a factor that a court may consider in deciding to impose a fine instead of ordering a forfeiture of property that is proceeds of crime. The court determined that the discretion granted was limited and that ability to pay may not be taken into consideration either in the decision to impose the fine or in the determination of the amount of the fine. The provisions relating to the proceeds of crime were enacted in an international context. The provisions focus upon the proceeds of crime as opposed to the offender. One of the stated goals was to neutralize criminal organizations by depriving them of the profits of their activities and to take away any motivation to pursue those activities. In sum, the purpose was to ensure that crime does not pay. Forfeiture is mandatory and no discretion is available. More permissive language is used in respect to a fine imposed instead of forfeiture.

[93] In Lavigne, Deschamps J. rejected the interpretation that the word "may" used in s. 462.37(3) provided the court with a broad discretion to adjust the amount of the fine by applying the general principles of sentencing. She noted that the court's discretion was necessarily limited by the purpose of the order to be made. Parliament was seeking to deter not only offenders but also criminal organizations. The purpose of the fine is to replace the proceeds of crime. Moreover, the objective of Part XII.2 is to deal with the proceeds of crime separately from, and in addition to, the punishment for committing a crime. In essence, a fine deprives the offender of the proceeds of the crime and deters potential offenders and accomplices.

[94] She concluded, at para. 27:

The effect of the word "may" cannot therefore be to grant a broad discretion. The exercise of the discretion is necessarily limited by the objective of the provision, the nature of the order and the circumstances in which the order is made.

[95] She also rejected a second possible interpretation that equated the word "may" with "shall". She observed, at para. 28:

[A] court may face circumstances in which the objectives of the provisions do not call for a fine to be imposed. An example of this would be if the offender did not profit from the crime and if it was an isolated crime committed by an offender acting alone. In such a case, none of the objectives would be furthered or frustrated by a decision not to impose a fine instead of forfeiture. The word "may" allows for an exercise of discretion that is consistent with the spirit of the whole of the provisions in question.

[96] Lastly, she determined that the judge has a limited discretion. She expressly noted, however, that the factual circumstances that may give rise to an exercise of the discretion may vary and it would be unrealistic to claim to foresee all of them. She therefore expressly limited her discussion to the single factor that was argued, namely ability to pay.

[97] The objective of the provision must be considered in context and in light of the circumstances on a case by case basis.

[98] Here, Ms. Dieckmann and her co-conspirators qualified as being participants in a criminal organization and as such, were indirect targets of the legislation. That said, they were far removed from the international purpose underlying the enactment, namely pursuit of organized crime.

[99] The Crown conceded that the evidence against the two co-conspirators who had died was intricately wound up with the evidence against Ms. Dieckmann and that they would have been convicted too had they survived. Moreover, had they been alive, the Crown conceded that it would be apportioning the $5.1 million among the two of them and Ms. Dieckmann. Lastly, the Crown also conceded that it was ridiculous to imagine that Ms. Dieckmann kept the entire $5.1 million and, but for their demise, the other two would have absorbed part of the $5.1 million fine. Moreover, there was evidence before the trial judge to make a finding that the two deceased co-conspirators received a sizeable portion of the $5.1 million.

[100] There is no onus on the Crown to establish that an offender has received a benefit: R. v. Piccinini, 2015 ONCA 446; and R. v. Siddiqi, 2015 ONCA 374. That said, if there is evidence before the court that establishes or admits of an allocation of benefit, it is open to the court to exercise its discretion to adjust the quantum of the fine.

[101] While the trial judge erred in applying traditional sentencing principles, it was open to her to exercise her discretion as she did. The existence of such a discretion was not precluded by Lavigne.

[102] For these reasons, we grant leave to appeal sentence but dismiss the Crown's sentence appeal.

V. Conclusion

[103] The conviction appeals are dismissed. Leave to appeal sentence is granted, but the sentence appeals are dismissed.

Released: July 5, 2017

"Doherty J.A."

"Paul Rouleau J.A."

"S.E. Pepall J.A."