Court and Parties

Court: COURT OF APPEAL FOR ONTARIO Date: 2021-09-29 Docket: C66892

Judges: Tulloch, Nordheimer and Jamal JJ.A.

Between:

Her Majesty the Queen Respondent

and

Kumaraguruparan Manickam Appellant

Counsel: Richard Litkowski, for the appellant Jeremy D. Tatum, for the respondent

Heard: April 7, 2021 by video conference

On appeal from: the conviction entered on October 15, 2018, by Justice Susan C. MacLean of the Ontario Court of Justice, and from the sentence imposed on April 29, 2019.

Reasons by: Tulloch J.A.

A. Overview

[1] The appellant was charged with and convicted of two counts of fraud over $5,000 and one count of uttering forged document. He was sentenced to 18 months in jail, 3 years’ probation, and a standalone restitution order.

[2] The appellant appeals his conviction and, in the alternative, appeals his sentence.

B. Factual Background

[3] The appellant was a small business owner. He owned, at various times, a gift store, a restaurant, a convenience store, a video store, and a grocery store.

[4] He financed his restaurant business with private loans at a very high interest rate. By May 2013, he was still indebted to his private lenders and had accumulated substantial credit card debt. He was hoping to obtain loans from banks with lower interest rates.

[5] The appellant testified that he met a man named Arul in January 2013. Arul introduced the appellant to a man named Ramesh. The appellant and Ramesh agreed to an arrangement where Ramesh would assist the appellant in obtaining a loan from a bank. Ramesh would get a 15 percent commission on any loan he obtained.

[6] The appellant did not know Arul’s or Ramesh’s last name.

[7] Ramesh told the appellant that, in order to obtain a loan, he had to build up a transaction history to show the banks that he had an active business. He instructed the appellant to deposit cheques from companies, withdraw cash after the cheques were deposited, and then redeposit some of the money back into the account to create a transaction history.

[8] The fraudulent scheme began with mainly two business accounts at Toronto Dominion Bank (“TD”): the “Gurushoth Inc.” account, which was used for his legitimate business, and the “Twin Bird” account, which was opened by the appellant in May 2013 to trick the bank. The appellant admitted that he knew Twin Bird was not a real business when the account was opened.

[9] Between June 12 and June 18, 2013, the appellant deposited cheques from Ambigai Janitorial Services (a fake business) to his TD bank accounts. All the cheques were fraudulent. Most were cheques deposited in the two TD business accounts, but some were deposited to his personal account and to pay the balance on his credit cards. His TD accounts were blocked on June 17, 2013 and frozen after June 20, 2013.

[10] In April 2013, the appellant opened two Royal Bank of Canada (“RBC”) business accounts for Twin Bird and two personal accounts. The appellant repeated the TD scheme with his RBC business accounts. Between September 19, 2013 and September 23, 2013, the appellant deposited 18 cheques in his RBC business accounts, all of which were fraudulent.

[11] The appellant also made tens of thousands of dollars worth of purchases at Costco using his TD and RBC accounts and made thousands of dollars of withdrawals at a racetrack and casino.

[12] As a result of this scheme, there was a combined loss to both banks of over $250,000.

C. Reasons for Conviction

[13] The main issue at trial was whether the appellant had the mens rea for the offences. He did not dispute that he opened fake business accounts and deposited counterfeit cheques. The core of his defence was that he trusted Ramesh and had no questions about the scheme until he was contacted by the police. He was the dupe of an unscrupulous fraudster who took advantage of him. He did what he was told to do by Ramesh and did not suspect that anything was amiss.

[14] The Crown argued that this defence was not credible. The appellant’s involvement went beyond simply depositing cheques and included activity that would seem suspicious to anyone. It defied belief that the appellant did not appreciate the suspicious nature of the scheme. Instead, he feigned ignorance in an attempt to evade criminal liability. At a minimum, even if the appellant’s evidence is accepted, he was wilfully blind.

[15] The trial judge did not believe the appellant, nor was she left with a reasonable doubt by his evidence. She found that the actus reus for fraud was met: the opening of the Twin Bird accounts was a dishonest act and the depositing of cheques for an illegitimate business created a risk of deprivation for the banks which materialized.

[16] The trial judge also found that the appellant was, at the very least, wilfully blind to the fraud. There were numerous instances during the months-long scheme that raised the appellant’s suspicion. These instances included:

1. He was given several large cheques. His evidence was that he never questioned where the money came from and assumed it was legitimate, even though they came from a man whose last name and address he did not know;
2. He drove to several branches around Oshawa and Scarborough to deposit cheques in the same day;
3. He was using some of the money from Ramesh to pay off his credit card debt;
4. He bought lottery tickets at the casino, purportedly to show the bank that his businesses were legitimate;
5. His TD Bank accounts were blocked and later frozen, including an account associated with his legitimate business. He immediately stopped using the accounts; and
6. He continued the same behaviour with his RBC accounts, even though his TD accounts were already frozen.

D. Analysis

[17] The appellant appeals his conviction on the following grounds:

1. The trial judge erred in her analysis of wilful blindness, and did not provide any legal analysis of the appellant’s liability as a party under s. 21(1)(b) or (c) of the Criminal Code;
2. The trial judge erred in her approach to assessing the appellant’s credibility and reliability; and
3. The trial judge erred by failing to explain how she used the similar fact evidence in her analysis.

[18] The appellant also seeks leave to appeal his sentence, on the basis that the sentencing judge erred by failing to apply the principle of restraint, thereby imposing a sentence that was harsh and excessive in the circumstances.

(1) The Trial Judge’s Analysis of Wilful Blindness

[19] The appellant submits that the trial judge erred in finding that the appellant was, at the very least, wilfully blind to the fraudulent scheme and argues that the evidence only supported a finding of recklessness. He states that his evidence was clear that he had no idea anything illegal was happening and that, when he first learned of it, he cut ties with Ramesh.

[20] In addition, he submits that the trial judge found him to be a party to the offence under s. 21 of the Criminal Code, even though she never conducted an analysis under s. 21. Recklessness, he argues, cannot ground party liability.

[21] Wilful blindness is a substitute for knowledge where knowledge is a component of the mens rea: R. v. Briscoe, 2010 SCC 13, [2010] 1 S.C.R. 411, at para. 21. Wilful blindness “imputes knowledge to an accused whose suspicion is aroused to the point where he or she sees the need for further inquiries, but deliberately chooses not to make those inquiries”: Briscoe, at para. 21 (emphasis in original). It is a state of deliberate ignorance.

[22] In my view, there is no basis to interfere with the trial judge’s finding that the appellant was wilfully blind. His testimony that he had no suspicions about the legality of Ramesh’s scheme was wholly rejected by the trial judge. This finding was well supported by the record.

[23] For example, the appellant was asked whether he thought it unusual that he deposited cheques at multiple banks on the same day:

Appellant: [Ramesh] told me that’s the way to do it and it is good. That is why I followed him. Q: I’m sure he told you that, but didn’t you think that was a little bit unusual? A: I thought it’s a bit unusual, but when he told me this is the way you do it, then I followed him. Q: So, you didn’t ask any more questions? A: No.

[Emphasis added.]

[24] Additionally, in June 2013, the appellant’s TD bank accounts were blocked. When he asked Ramesh about it, he was told that it did not matter. The appellant stopped using his accounts but did not call the bank because he “thought Ramesh was handling that”. The trial judge concluded that he remained in a state of deliberate ignorance by not making inquiries after his TD bank accounts were blocked.

[25] These are just a few examples of instances where the trial judge concluded that the appellant’s suspicions were raised. She found that the appellant “had a handy excuse in the form of Ramesh…whose whereabouts and identity is a complete mystery to all,” that he “insulated himself with a wall of ‘deliberate ignorance’”, and that he “had a ‘readymade mantra for court’”.

[26] The trial judge ultimately concluded that the appellant was wilfully blind:

I agree with the Crown’s submissions that the very fact that Ramesh was giving Mr. Manickam reassurances, about the different aspects of the scheme, shows his suspicions were, in fact, raised and in between the TD scheme and the RBC scheme, Mr. Manickam had two months to make inquiries about the TD account and even though he was unable to pay his loans or pay his bills, and was not receiving any more statements from the bank, he did nothing to make any inquiries.

[27] There is no palpable and overriding error in the trial judge’s factual findings that 1) the appellant had suspicions about the scheme, and 2) he did not make any inquiries beyond Ramesh. These findings, which were made after an extensive review of the evidence, support the conclusion that the appellant was wilfully blind.

[28] Although the trial judge referred to the appellant as being a “party” to the fraud, she also concluded that all of the elements of fraud had been met respecting the appellant. While her language was confusing, I think it is clear from her reasons as a whole that she ultimately concluded that he actually committed the offences and not that he aided or abetted someone in committing the offences. I would also note that s. 21(1)(a) of the Code defines “party” as including a person who actually commits the offence.

(2) The Trial Judge’s Assessment of Credibility and Reliability

[29] The appellant argues that the trial judge rejected the appellant’s testimony because it did not match what she would have done in the circumstances. He argues that she did this because she commented, in multiple instances, that no reasonable person would have done what the appellant had done. For example, she stated that a reasonable person would contact their bank once they learned that their accounts had been blocked.

[30] There is no basis to interfere with the trial judge’s assessment of the appellant’s credibility. Her ultimate conclusion was that the appellant’s testimony was not believable and that she was not left in reasonable doubt by it: R. v. W.(D.), [1991] 1 S.C.R. 742. This finding was supported by numerous references to the appellant’s testimony and the record as a whole. Her conclusion that a reasonable person would have had suspicions was only one factor in concluding that he was not credible on this issue.

[31] The trial judge’s use of the term “reasonable person” at multiple points in her reasons when evaluating the appellant’s credibility was unfortunate. The language of “reasonable person” should be avoided when determining whether someone was wilfully blind, as it suggests an objective fault standard. Wilful blindness and criminal negligence are distinct concepts: Briscoe, at para. 24.

[32] Read fairly, however, the trial judge’s reasons show that she did not err. She simply did not find the appellant’s denials credible. The appellant had numerous good reasons to be suspicious, and it was simply not plausible that he did not have any suspicions at all. In referencing what a reasonable person would have thought, she was, in effect, concluding that his testimony was not “in harmony with the way things can and do happen” and was highly implausible: see e.g., R. v. Kiss, 2018 ONCA 184, at paras. 28-34; Faryna v. Chorny, [1952] 2 D.L.R. 354 (B.C.C.A.).

(3) The Trial Judge’s Use of Similar Fact Evidence

[33] Mid-trial, the Crown made a similar fact application in relation to the TD and RBC allegations, to permit the facts to be used across counts. The Crown submitted that the similar fact evidence was probative in four ways:

1. The totality of the conduct demonstrates fraudulent intent;
2. The use of the business account in the name of Twin Bird Construction with TD bank and the subsequent use of an account with the same business name at RBC shows fraudulent intent;
3. The issue of the identity of the person making the transactions; and
4. The conduct after posting the cheques in the TD allegations demonstrate a clear wilful blindness as to the nature of the cheques.

[34] The defence conceded that the application should be granted, and the trial judge accepted the concession and allowed the application. She did not include any analysis on what use, if any, she made of the similar fact evidence.

[35] On appeal, the appellant argues that the trial judge erred because her reasons fail to explain how she used the similar fact evidence. He argues that the lack of discussion does not allow him to understand the ways in which his guilt was decided. He says that this error can only be remedied with a new trial. He does not argue that the evidence was not admissible as similar fact evidence.

[36] I disagree. The trial judge’s reasons were extensive. They spanned almost 100 pages in the court transcript. The judgment canvassed the evidence in detail and clearly laid out the basis for conviction. Read as a whole, the reasons communicate that she disbelieved the appellant’s testimony, that she was not left in a reasonable doubt by it, and that the Crown had met its onus to prove that the appellant committed the actus reus and mens rea for the charged offences.

[37] The primary issue at trial was whether the mens rea was proven. The trial judge gave detailed reasons for why she did not believe that the appellant was not suspicious of the fraudulent scheme he participated in.

[38] A trial judge does not need to discuss every piece of evidence in their reasons. There was ample evidence in the record and in her reasons that supported the conviction, even without considering the similar fact evidence. It was not an error that the trial judge did not refer to other evidence that also could have supported a finding of guilt.

(4) The Appropriateness of the Sentence Imposed

[39] The appellant also seeks leave to appeal his sentence, and if leave is granted, he appeals the sentence on the basis that the trial judge erred in failing to apply the principle of restraint, and as a result, imposed an excessive and harsh sentence.

[40] For this court to intervene with the sentence imposed, the appellant must establish that the sentence is demonstrably unfit, or that the sentencing judge made an error in principle that had an impact on the sentence. For the appellant to establish that the sentencing judge committed an error in principle, he must either show that the sentencing judge committed an error in law, failed to consider a relevant factor, or erroneously took into consideration an aggravating or mitigating factor: R. v. Friesen, 2020 SCC 9, 444 D.L.R. (4th) 1; R. v. Lacasse, 2015 SCC 64, [2015] 3 S.C.R. 1089.

[41] At the sentencing hearing, the Crown sought a sentence of 30 months of incarceration to be served in the penitentiary, while the defence submitted that a sentence of 9 months of incarceration was appropriate. After considering the submissions of the parties, the sentencing judge imposed a sentence of 18 months of incarceration followed by 3 years of probation and a stand-alone restitution order.

[42] The appellant argues that the sentencing judge failed to give effect to the principle of restraint, as the appellant was a first-time offender and had never been sentenced to any period of incarceration before. In my view, a fair reading of the sentencing judge’s reasons for sentence indicates otherwise.

[43] The sentencing judge specifically referred to the fact the appellant was a first-time offender and that while the offence calls for a penitentiary sentence, she would not impose such a sentence. In the reasons, the sentencing judge stated:

This gentleman comes to me as a first offender. That is one of the most significant reasons why I’m not putting you in the penitentiary today, sir, because we try to avoid putting first offenders in the penitentiary. We try to avoid jail, at all, but the extent of his fraud, and the aggravating factors, in my view, require there be a significant jail sentence.

[44] I see no error in the sentencing judge’s reasoning and weighing of the factors under s. 718.2(e) of the Criminal Code. It is clear from the reasons for sentence that the trial judge considered all sanctions other than incarceration and found that due to the seriousness of the fraud and the significant loss that resulted, incarceration was necessary to adequately address the principles of deterrence and denunciation. She specifically turned her mind to the principle of restraint and reminded herself of her obligation on sentencing to impose the shortest available sentence that is proportionate to the gravity of the offence and degree of responsibility of the offender.

[45] The sentencing judge also considered reference letters from the appellant’s family and friends, as well as the impact that incarceration would have on his family, his existing business, and more specifically, his wife and 20-year-old son.

[46] The appellant’s offence was serious and premediated. His moral blameworthiness was high. He committed a premediated fraud purely for his personal gain, and this fraud resulted in a combined loss of over $250,000 to two banks. In the circumstances, the decision of the sentencing judge is owed a high degree of deference.

E. Disposition

[47] For the foregoing reasons, the appeal from conviction is dismissed. Leave to appeal the sentence is granted, but the sentence appeal is denied.

Released: September 29, 2021 “M.T.” “M. Tulloch J.A.” “I agree. I.V.B. Nordheimer J.A.” “I agree. M. Jamal J.A.”