Court File and Parties

COURT FILE NO.: CJ 9444-18 DATE: 2020-05-14 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN Applicant – and – BARRY LEE CHARPENTIER Respondent

Counsel: Simon J. McNaughton, Counsel for Applicant Gregory Lafontaine, Counsel for the Respondent

HEARD: September 26 and 30, 2019 October 1 and 4, 2019 January 8 and 31, 2020 March 5, 2020

The Honourable Mr. Justice D.J. Gordon

Reasons for Decision

[1] Barry Lee Charpentier stands charged with one count of fraud, contrary to section 380(1)(a), Criminal Code of Canada. The indictment, dated August 28, 2018, and amended, on consent, on September 30, 2019, identifies the time period of the alleged offence as occurring between January 1, 2005, and June 30, 2013. The complainant is said to be E & E Seegmiller Limited.

[2] Mr. Charpentier initially elected to be tried by a court composed of a judge and jury. On January 31, 2019, he re-elected, with the consent of Crown counsel, to be tried by a judge alone.

[3] The amount involved in this case is $6,418,699.50, Mr. Charpentier receiving one-half, namely $3,209,349.75, by way of payments from Chym Engineering Limited (“Chym”) to Isle of Innisfree Designs Limited (“Innisfree”). Chym was a sub-contractor on the construction projects hereafter described. Innisfree was a company owned by Andrea Yates, the former spouse of Mr. Charpentier.

[4] There is no dispute regarding the amount involved or with the payments made and received. Rather, the disagreement, in essence, is with the characterization of those payments.

[5] Briefly stated, the essential elements for the offence of fraud are:

(a) a dishonest act; (b) an accompanying deprivation to the victim; and (c) knowledge that the dishonest act will result in deprivation or risk of deprivation.

See: R. v. Olan, [1978] 2 S.C.R. 1175; and R. v. Théroux, [1993] 2 S.C.R. 5.

[6] In this case, the issues raised on the evidence, or lack of evidence, focus on:

(a) the identity of the purported victim; (b) deprivation element of the actus reus; and (c) mens rea.

[7] Further, as Mr. Charpentier testified, the analysis must follow the methodology set out in R. v. W.(D.), [1991] 1 S.C.R. 742.

Background

[8] As previously stated, E & E Seegmiller Limited is referred to as the complainant in the indictment. There is a serious issue raised by the defence as to whether the Crown has proven the identity of the company, particularly having regard to the essential elements of the offence. Accordingly, in the review of the evidence I will simply refer to the business entity as the Seegmiller company.

[9] Keith Nentwig was the former Vice-President of Finance for what he described as the “Seegmiller group of companies”. It is unclear whether this refers to related or subsidiary companies. Regardless, the active business operation was in road construction and other projects in the public and private sector throughout Ontario. Mr. Nentwig reported the business having been established many years ago, the current principals being the third generation of the Seegmiller family.

[10] Mr. Charpentier was an employee of the Seegmiller company from August 1997 to July 2013, when he departed voluntarily. Mr. Charpentier was initially hired as an estimator. Subsequently, he was employed as a project manager and, at some point, designated as the Vice-President of Construction.

[11] Despite their titles, no reference was made to Mr. Nentwig and Mr. Charpentier being officers of the Seegmiller company or the Seegmiller group of companies.

[12] The duties of Mr. Charpentier included identifying potential construction projects, preparing estimates for same and presenting bids to the project owners. Most, if not all, of the projects were put out to tender. If the bid was successful, a contract would be prepared by the project owner. Mr. Charpentier would then be involved as the project manager and was responsible for retaining sub-contractors as needed. Throughout the process, Mr. Charpentier reported to Tim Seegmiller, said to be one of the principals of the Seegmiller company. Mr. Seegmiller approved all bids.

[13] One of the sub-contractors, in all of the forty-three construction projects referred to in evidence, was Chym. Chym was retained to provide construction survey services on the projects. The principal of Chym was Ka-Leung Chau, known as “Buddie” Chau.

[14] Mr. Chau was one of the eight principals, or partners as he described them, in two other companies: Chau, Pulver, Smith & Associates Inc. (“C.P.S.”), and Complete Survey Solutions Inc. (“C.S.S.”). C.P.S. and C.S.S. also provide construction survey services. They appear to be related companies, incorporated separately, according to Mr. Chau, for insurance reasons. For practical purposes, C.P.S. and C.S.S. are considered to be the same entity.

[15] On the construction projects referred to in this case, Chym sub-contracted the actual work to C.P.S. or C.S.S.

Crown’s Case

[16] The evidence tendered by Crown counsel consists of financial and business records, pursuant to sections 29 and 30, Canada Evidence Act, and oral testimony of several witnesses.

[17] The documentary evidence includes:

(a) project booklets; (b) cheques from E & E Seegmiller Limited to Chym; (c) cheques from Chym to C.P.S.; and (d) cheques from Chym to Innisfree.

[18] The project booklets, for each of the forty-three projects, include, with some exceptions:

(a) a screenshot from the business computers to identify the project, project number, project manager and other related information; (b) quotation from C.S.S. for the project; (c) internal progress payment certificate, prepared by the project manager for the accounting department to issue a cheque to Chym; the sub-contractor’s progress payment certificate and cheque from E & E Seegmiller Limited to Chym; and (d) invoice from C.P.S. to Chym for the project.

[19] Crown counsel also prepared a summary chart, bringing together all of the overpayments, as he describes them, being the amounts previously identified at the outset. As also stated earlier, these amounts are not in dispute.

[20] The Crown’s case may be summarized in the following manner:

(a) Mr. Charpentier, on behalf of the Seegmiller company, would retain Chym as a sub-contractor on each project; (b) Chym would further sub-contract with C.P.S. or C.S.S. to provide the actual construction survey services; (c) C.P.S. and C.S.S. would deliver invoices to Chym for the work; (d) Chym would deliver invoices to the Seegmiller company for amounts in excess of the invoices it received from C.P.S. and C.S.S.; (e) Mr. Charpentier would deliver an internal progress payment certificate to the accounting department, advising it to pay Chym the amount as invoiced; (f) the payment cheque would be forwarded to Chym; (g) Chym would pay C.P.S. and C.S.S. as invoiced; and (h) Chym would pay one-half of the excess amount to Innisfree.

[21] That excess amount was $6,418,699.50 between 2005 and 2013. Innisfree received $3,209,349.75.

[22] Mr. Chau was called as a Crown witness. He has been involved in the construction industry for many years. He has known Mr. Charpentier for more than twenty years. They met when Mr. Charpentier was working for Dufferin Construction. Mr. Chau reported providing construction survey services to the Seegmiller company prior to Mr. Charpentier’s employment. It continued thereafter.

[23] According to Mr. Chau, he was approached by Mr. Charpentier in 2003 or 2004 with a proposal of doing work “under the table”. Mr. Chau agreed to provide quotes on projects that were higher than the value of the work involved. He decided to sub-contract the work to C.P.S. and C.S.S. to cover the overbilling and to avoid questions from his partners.

[24] Mr. Chau indicated the initial cheques were issued by Chym in favour of Ms. Yates, then spouse of Mr. Charpentier, for one half of the excess funds. He made reference to an audit by Canada Revenue Agency at some point and, as a result, subsequent cheques or deposits were made to Innisfree, to give the appearance of business to business.

[25] Mr. Chau acknowledged the excess funds exceeded six million dollars in the relevant time period. Such amount, he said, was divided equally.

[26] After Mr. Charpentier left the Seegmiller company in 2013, Mr. Chau reported being invited to a meeting at the Seegmiller company to explain his dealings with them.

[27] Andrea Yates was married to Mr. Charpentier for twenty-four years, separating in 2016. Innisfree was a company established by her and her husband. The business activity was in costume design. Ms. Yates knew Mr. Seegmiller and Mr. Chau but she had no involvement with Chym. She indicated the company finances were take care of by Mr. Charpentier and that she was unaware of the payments received from Chym at the time. Ms. Yates reported such coming to her attention in 2013 as a result of a civil action.

[28] The documentary evidence, along with the testimony of Mr. Chau and Ms. Yates, is compelling evidence, on its face. Mr. Chau identified what appears to be a scheme to overbill for services and then divide excess funds.

Defence Evidence

[29] Mr. Charpentier testified. Documents were also tendered in evidence through him. In summary, Mr. Charpentier denies being involved in a fraud. He says money received from Chym was compensation, as agreed with Mr. Seegmiller. Innisfree, according to Mr. Charpentier, reported the funds as income and paid income tax on same.

[30] Mr. Charpentier is sixty-two years of age at present. He has worked in the construction industry throughout his adult years, both before and since completing undergraduate studies in 1989. Mr. Charpentier obtained certification in public management of construction projects during his prior employment at Dufferin Construction.

[31] On July 17, 1997, Mr. Charpentier entered into a written employment contract with Mr. Seegmiller, presumably with respect to the Seegmiller company. The essential contract terms at the time were:

(a) annual salary of $68,500.00 reviewable each May for increases; (b) bonus of five per cent of the pre-tax profit of the company paid on an annual basis; (c) consideration and payment for exceptional and unexpected contributions, reviewed as they occur and to be over and above the bonus calculations; (d) consideration of profit sharing in related companies depending on type and the impact on profits of the contributions he made; (e) health benefit plan; (f) company pension plan; (g) vacation time; (h) use of company vehicle; (i) life insurance at two times salary; (j) long term disability insurance plan; (k) golf membership; and (l) he would be reporting to Tim Seegmiller directly.

[32] Mr. Charpentier commenced working at the Seegmiller company in August 1997. He resigned from his position in July 2013.

[33] In 2013, Mr. Charpentier’s salary was $150,000.00. Mr. Nentwig made no mention of payment for a bonus or the other items in the employment contract. Mr. Charpentier provided more detail.

[34] Mr. Charpentier reports his salary increasing over time. He said the bonus was initially paid, but never at the rate of five per cent, and that it was subsequently discontinued. Mr. Charpentier indicated other financial provisions were never honoured. He also referred to an employee ownership program that was promised but never implemented.

[35] As to the provision regarding compensation for exceptional and unexpected contributions, Mr. Charpentier identified several matters. He spoke of being assigned to renegotiate contracts and to negotiate certain claims. The work was complex but, he said, although the company benefited from his services, the expected compensation was not received.

[36] Mr. Charpentier identified financial problems within the Seegmiller company over the years, in part to explain why the various payments under his contract were not made. In result, Mr. Charpentier reported a change to his compensation being negotiated with Mr. Seegmiller, as later discussed.

[37] Mr. Charpentier was responsible for a number of matters pertaining to the construction projects for the Seegmiller company. His initial role was to monitor trade journals and Ministry of Transportation (“M.T.O.”) postings for pending projects. Mr. Charpentier would conduct a site inspection, often in Northern Ontario, given highway improvement projects being pursued by M.T.O. at the time. He also identified a secondary market involving municipal and private projects, primarily in the Region of Waterloo.

[38] After the site inspection, Mr. Charpentier would review the project specifications, as set out in the postings. He would determine if the project was worth pursuing. If such was the case, Mr. Charpentier would prepare an estimate, taking into consideration a calculation of the anticipated expense for labour, material and for sub-contractors and, as well, margin or profit. The estimate would be reviewed with Mr. Seegmiller. If such was approved by Mr. Seegmiller, Mr. Charpentier would prepare a bid and submit it to the project owner.

[39] After closing of bids, the project owner would notify bidders as to who was successful, usually, if not always, the lowest bid. If it was the Seegmiller company, Mr. Charpentier indicated it had twenty four hours to confirm acceptance. Thereafter, Mr. Charpentier was required to submit certain forms, in the case of M.T.O., certifying there was no conflict of interest or collusion in the bidding process. He would sign those forms on behalf of the Seegmiller company although, as later discussed, he said the certification was not always correct. Finally, the project owner and the Seegmiller company would then execute a written project contract.

[40] As project manager, Mr. Charpentier retained sub-contractors as needed. Construction survey work was one item needed on the projects referred to in this case. As the project proceeded, sub-contractors were entitled to payment for services provided, normally in a number of stages. Mr. Charpentier would advise the accounting department as to the amount to be paid.

[41] The forty three projects referred to proceeded in this fashion. Mr. Charpentier advised that the scope of the work on the projects often changed or expanded. Such, he said, were addressed in change work orders. Mr. Charpentier reported the construction survey work required frequently exceeded the initial quote for this reason.

[42] No complaint was made by Mr. Seegmiller or the Seegmiller company to Mr. Charpentier regarding his employment, conduct or performance during his time there. Such did occur after he left in 2013.

[43] The introduction to the changes in his compensation begins with Mr. Charpentier’s evidence pertaining to bid-rigging or collusion. Mr. Charpentier reported being suspicious as early as 1998 when, he said, Mr. Seegmiller was asking him for the exact amounts involved for a project, not just the usual estimate, before bids were presented. He also reported being instructed by Mr. Seegmiller to increase some bids beyond the amount he recommended. When those bids were unsuccessful, Mr. Charpentier concluded there was collusion with other bidders.

[44] Mr. Charpentier expressed concern as it was his responsibility to sign the conflict of interest and collusion forms. He reported feeling “terrible” doing so, knowing his statement was not correct. Mr. Charpentier spoke of voicing his concerns with Mr. Seegmiller who, he said, acknowledged collusion occurred.

[45] Beginning in 1999, Mr. Charpentier began documenting his concerns. He would print copies of M.T.O. tender award documents and write comments on same. Twenty two of those documents were presented in evidence, from 2009 to 2013. Others were reported as having been misplaced.

[46] On these tender awards, the Seegmiller company was the successful bidder on some, lost out on others and did not bid on at least half of the projects. The notations on these documents were said by Mr. Charpentier to have been made at the time the events occurred.

[47] Mr. Charpentier reported being present in the office with Mr. Seegmiller during telephone conversations with the principals at competing construction companies. He also identified instructions from Mr. Seegmiller regarding bids being prepared or considered. The following illustrates some of the matters identified by Mr. Charpentier regarding M.T.O. projects in Northern Ontario (but without identifying the company or individual as Mr. Charpentier did in his testimony):

(i) 2009 – 5005 - contract awarded to F for $4,412,150.00, the only bidder

• present during phone conversation between Mr. Seegmiller and Mr. M.
• instructed not to bid on project, that we would get the crushing work (ii) 2009 – 5101 - contract awarded to M. for $2,925,000.00
• Seegmiller second lowest bid at $2,982,522.00
• present during phone conversation between Mr. Seegmiller and J.; Mr. Seegmiller asked him for their price, who passed it on to J.
• Mr. Seegmiller advised him that we would get the crushing work (iii) 2009 – 5102 - contract awarded to P. for $8,626,126.00
• Seegmiller not bid as not prequalify
• Mr. Seegmiller advised him of informing P. not bidding and price, that project would go to P. (iv) 2009 – 5104 - contract awarded to P. for $7,726,126.00
• Seegmiller bid was $8,947,104.00
• Mr. Seegmiller spoke to J. at P. disclosing their bid price (v) 2009 – 5126 - contract awarded to Seegmiller for $7,919,011.00
• J. at P. called Mr. Seegmiller advising price to beat was “under 8”, that another company would be bidding “8.4 to 8.5” (vi) 2009 – 6018 - contract awarded to Seegmiller for $7,164,017.00
• J. at P. told Seegmiller they were not interested in project, that the bid of C. would be “7.5” (vii) 2010 – 5117 - contract awarded to P. for $5,867,107.00
• Seegmiller was second lowest bidder at $6,587,017.00
• J. at P. called Mr. Seegmiller
• Mr. Seegmiller informed him this would be P.’s job, we would be owed one and to bid “6.5” (viii) 2010 – 6010 - contract awarded to Seegmiller for $5,085,000.00
• telephone conversation between Mr. Seegmiller and J. at P., informing him P. bidding around “5.4” (ix) 2010 – 6053 - contract awarded to Seegmiller at $6,363,017.00
• telephone conversation between Mr. Seegmiller and J. at P. before he had finished bid
• Mr. Seegmiller informed him P.’s bid would be “north of 6.5” (x) 2010 – 6037 - contract awarded to P. for $6,106,136.00
• Seegmiller not bid as “Keith screwed up”
• Mr. Seegmiller told J. at P. they were not bidding (xi) 2010 – 5122 - contract awarded to P. for $6,136,106.00
• Seegmiller missed the prequalification
• Mr. Seegmiller informed J. at P. they would be “around 6.5”
• Mr. Seegmiller informed him this was P.’s job as it was “on their turf” (xii) 2011 – 5006 - contracted awarded to F for $1,210,608.00
• Seegmiller did not bid
• Mr. Seegmiller spoke to D. at F and informed him we would get the crushing work (xiii) 2011 – 5111 - contract awarded to P. for $7,633,103.00
• Mr. Seegmiller instructed him to be “north of 8.5” as this was P.’s job and to add “owed me”, meaning we would get something back (xiv) 2011 – 6033 - contract awarded to P. for $5,246,106.00
• J. at P. called Mr. Seegmiller and then he was instructed not to submit a bid (xv) 2011 – 6035 - contract awarded to Seegmiller for $6,348,614.00
• Mr. Seegmiller spoke to J. at P. and informed him P. would be higher so that Seegmiller would get the job (xvi) 2012 – 6000 - contract awarded to P. for $4,281,101.00
• Mr. Seegmiller informed J. at P. as to their price and advised him it was not our job (xvii) 2013 – 6004 - contract awarded to P. for $8,437,109.00
• Seegmiller was second lowest bid at $8,444,017.00
• Mr. Seegmiller called J. at P. and declared our price and informed him “we are owed again”.

[48] Mr. Charpentier also reported collusion with respect to projects in the Waterloo Region in 2012. The Seegmiller company, he said, owned one-half of an asphalt plant and, therefore, was able to get the product at a lower price than others. Mr. Charpentier presented a document from the City of Kitchener showing unit prices for various components, including asphalt, for each company. He identified it as an internal document of the municipality, not to be released to the public. Mr. Charpentier reported receiving the document from Mr. Kester, then President of the Seegmiller company. This document, he said, gave the Seegmiller company a competitive advantage as they knew the prices of other companies.

[49] Mr. Charpentier also identified several matters involving what he considered illegal or unethical conduct of Mr. Seegmiller, briefly stated as follows:

(a) directing employees to place contaminated soil, excavated from a construction site, on a subdivision road allowance, rather than delivering it to a designated site as required by prescribed regulations; (b) borrowing approximately $1,000,000.00 from the company pension plan in 2012 for an investment property owned with his brother, despite the pension plan committee obtaining a legal opinion advising such a loan to a related business was improper and despite the committee, of which he was a member, voting against the request (Mr. Nentwig also confirmed the legal opinion and the loan but it was unclear whether such was approved or rejected by the committee); and (c) in 2012, when the Seegmiller company had maximized its line of credit with TD Canada Trust and the account was sent to the special accounts department to monitor, Mr. Seegmiller instructed him to prepare a false and inflated deferred revenue report, regarding a project on Highways 627 and 614, for delivery to the Bank of Montreal who they applied to for new financing. (Mr. Nentwig referred to this report as a “work of fiction” but confirmed the company was having financial problems at that time.)

[50] The financial problems at the Seegmiller company, according to Mr. Charpentier, began in 1998. The company, he said, had “massive claims” outstanding of some “$200,000,000.00. Mr. Charpentier identified the financial problems as the reason he was not receiving all of the compensation he was entitled to under his written contract of employment. In 1998, he reported Mr. Seegmiller advising “we will take care of you”. In result, Mr. Charpentier explained his continued involvement in the bid-rigging, expecting compensation in the future.

[51] The compensation model for Mr. Charpentier later changed, he said, around 2004 or 2005, although later in his testimony he identified the time period as 2007 to 2008.

[52] Mr. Charpentier identified negotiations with Mr. Seegmiller to change his compensation. Such would be over and above his salary and the bonus, that was not being paid, would be discontinued. Mr. Seegmiller, he said, wanted to keep it off the books as the company could not afford to pay him in the manner described in the initial contract. Other employees, according to Mr. Charpentier, were also paid “under the table”.

[53] The compensation was to come from excess funds. Mr. Charpentier reported being instructed by Mr. Seegmiller to push through additional costs to the project owner. In this manner, he said the Seegmiller company was not losing money, only the project owner. In this regard, Mr. Charpentier referred to “indirect sheets”, an internal document used to identify all expected costs and anticipated profit. The indirect sheets were prepared by Mr. Charpentier and presented to Mr. Seegmiller before approving a bid. Inflated expenses, he said, were included in this document.

[54] Mr. Charpentier approached Mr. Chau with respect to the plan. Mr. Chau, he said, was not made aware as to what was going on in the “back side” as that only involved Mr. Seegmiller. Mr. Seegmiller was reported to be aware of the plan.

[55] The compensation Mr. Charpentier received from this plan was described for two items:

(a) hush money for burying his head in the sand and taking a risk with respect to involvement in the bid-rigging and signing the conflict of interests and collusion forms; and (b) legitimate payment for services provided beyond the scope of his employment, and as identified in the original contract, such as renegotiating contracts for the benefit of the Seegmiller company.

[56] As a further term of the new agreement, Mr. Charpentier said he was required to pay his own expenses, unlike other employees.

[57] Mr. Charpentier advised he understood Mr. Seegmiller had authority to bind the Seegmiller company. His dealings were only with Mr. Seegmiller. He was unaware whether Mr. Seegmiller told others about their agreement.

[58] As previously stated, Mr. Charpentier made reference to Innisfree reporting the funds received from Chym in its income tax returns and paying the required income tax and then GST.

[59] In 2012, Mr. Charpentier says he was approached by a former colleague regarding employment at a new construction company. In June 2013, he accepted their offer and resigned from his position at the Seegmiller company.

[60] Mr. Charpentier reported being aware of an issue at the Seegmiller company on October 22, 2013. He was then working on a bid for his employer in the United States. An email was received from the corporate solicitor for the Seegmiller company, advising him of an injunction. He went on to briefly mention a civil action, necessitating a payment to allow the sale of his former matrimonial home to close. The status of the civil action was not explored by counsel.

Absence of Evidence

[61] To the extent the absence of Crown evidence is a relevant consideration, at this point I simply note there are no documents regarding:

(a) E & E Seegmiller Limited and the Seegmiller Group, their corporate structure and identity of officers, directors and shareholders; (b) project contracts and change work orders; (c) accounting records; and (d) bank account statements.

[62] Further, Mr. Seegmiller was not called as a witness.

Analysis

[63] A number of issues were identified by counsel as requiring determination, namely:

(a) identity of the purported victim; (b) application of W.(D.) principles; and (c) certain essential elements of the offence.

[64] There is no dispute as to the amounts involved, namely the $6,418,699.50 and $3,209,349.75 as previously mentioned. The disagreement is with characterization of the payments. The defence concedes, quite properly, the method of payment was a dishonest act.

(a) Bid-Rigging

[65] Mr. Charpentier testified at some length as to bid-rigging in construction projects. The purpose of this evidence, at least in part, was to establish the basis for the changes to his compensation package.

[66] Bid-rigging is a form of collusion, an illegal act. It involves a conspiracy among two or more persons or entities to fix the outcome in a tender process. The extent of bid-rigging in the construction industry is unknown. It must be of some concern to M.T.O. as they require successful bidders to execute forms certifying there was no conflict of interest or collusion.

[67] The use of forms is merely a token effort to address a complex issue. It is not a meaningful method to eliminate illegal acts. Dishonest persons are rarely concerned with legal niceties. In this case, it is of some interest that it was Mr. Charpentier, an employee, signing the forms, rather than a principal of the company.

[68] As we see in R. v. Canadian Dredge & Dock Co., [1985] 1 S.C.R. 662, and in other cases, bid-rigging and other acts of collusion do occur in the construction industry.

[69] The evidence of Mr. Charpentier, essentially unchallenged on this point as to the critical details, suggests collusion between Mr. Seegmiller and the principals of other companies. Mr. Charpentier recorded some of the events. He was cross-examined on some matters, such as the spread between bids. The critical evidence, however, as to conversations and knowledge of prices, was not challenged. The evidence of Mr. Charpentier on bid-rigging was logical and consistent.

[70] Bid-rigging is not an issue requiring determination in this case. On the evidence of Mr. Charpentier, and the absence of evidence of Mr. Seegmiller, it might be concluded that bid-rigging did occur.

[71] The evidence, in my view, is relevant particularly with respect to W.(D.) principles.

(b) Other Matters Pertaining to Mr. Seegmiller

[72] Mr. Charpentier also testified as to other events involving what he suggested was illegal or unethical conduct of Mr. Seegmiller. These matters included the use of contaminated soil, submitting false records to the bank and use of the employees’ pension plan to fund a personal investment.

[73] He was not challenged in cross-examination as to these events. Crown counsel says these were not relevant to the case.

[74] In part, I agree with that submission. Mr. Seegmiller was not a witness. Nor was he charged.

[75] However, the evidence is relevant as to the purported change in Mr. Charpentier’s compensation. It indicates that Mr. Seegmiller was not concerned with legalities. In this regard, Mr. Nentwig corroborated the evidence of Mr. Charpentier regarding Mr. Seegmiller’s use of the employees’ pension plan funds.

[76] This evidence is not conclusive alone but, in my view, relevant for that limited purpose.

(c) Civil Action

[77] Ms. Yates and Mr. Charpentier spoke briefly as to a civil claim against them, apparently at the suit of the Seegmiller company. Their evidence resulted from questions from Crown counsel.

[78] It appears the action was commenced in 2013, several years before Mr. Charpentier was charged. The status of that case is unknown. Neither counsel pursued the matter. It is unclear why the questions were initially put to these witnesses.

[79] I conclude, any reference to a civil claim is not relevant. Such has not been considered in this analysis.

(d) Identity of Purported Victim

[80] The indictment identifies E & E Seegmiller Limited as the victim of the alleged fraud. This corporate name appears on the cheques to Chym and some, but not all, documents tendered in evidence. The company was briefly mentioned by Mr. Nentwig and by Mr. Charpentier in their testimony, but no detail was provided. Mr. Nentwig also referred to the Seegmiller group of companies, but such was never defined.

[81] Defence counsel submits it is incumbent on Crown counsel to prove the identity of the victim on the requisite criminal standard. This, he says, was not accomplished in this case. Proof can be made in a number of ways, normally by presenting a certificate of incorporation from the Director, Companies Branch, pursuant to the Business Corporations Act. Mr. Nentwig, defence counsel argues, was an employee of the Seegmiller group of companies and, not being a director of E & E Seegmiller Limited, did not, and could not conclusively identify the company. Defence counsel further points to the absence of evidence from Mr. Seegmiller, sometimes referred to as a principal, presumably an officer and director, of the company.

[82] Crown counsel submits absolute proof is not necessary, that the court can accept the company’s existence. He relied on R. v. Little, [1976] 1 S.C.R. 20, particularly the following comment by De Grandpré J.:

There is no doubt that, if the owner of the object allegedly stolen is mentioned in the indictment and if his ownership is not proven and there are no other circumstances to indicate to the accused the true nature of the charge, an acquittal should be entered. However, when, as in the present case, there cannot be any possibility for the accused to fail to identify the transaction about which they are charged, there is no reason to discharge the accused for the sole reason that the owner mentioned in the indictment has not been mentioned in the evidence.

[83] Little involved a charge of theft, the issue raised being ownership of stolen property. The essential elements of fraud differ. Crown counsel must prove the victim was deprived of property, money or valuable security. In my view, Little does not assist in that regard.

[84] Crown counsel also argues the evidence establishes an organization and that proof of the company’s existence is not required. With respect, I disagree.

[85] Section 380 refers to “person”. By way of definition in section 2, person includes an organization. But organization is defined as follows:

“organization” means

(a) a public body, body corporate, society, company, firm, partnership, trade union or municipality, or (b) an association of persons that (i) is created for a common purpose, (ii) has an operational structure, and (iii) holds itself out to the public as an association of persons;

[86] There was no evidence to suggest E & E Seegmiller Limited was a public body, society, firm, partnership, trade union, municipality or an association of persons. That leaves only body corporate or company, the obvious entity when dealing with a purported incorporated entity. To the extent some of the documents tendered refer only to E & E Seegmiller, sole proprietorships are not “persons” capable of being defrauded. See: R. v. Campbell, [1986] 2 S.C.R. 376.

[87] In this case, Crown counsel chose to identify E & E Seegmiller Limited as the victim in the indictment. I conclude it is incumbent on Crown counsel to establish the named victim as a legal entity. The evidence presented does not meet the onus of proof beyond a reasonable doubt.

[88] Further, there are other and related matters not addressed by way of evidence. As previously mentioned, there was brief reference to the Seegmiller group of companies and to E & E Seegmiller Limited. But no corporate documents were tendered in evidence. The corporate structure is unknown. So too is ownership of the business operations. It is impossible, on this evidence, to ascertain who owned the assets and who was entitled to the funds arising from the projects. There was no evidence to identify the officers, directors and shareholders of the company or companies.

[89] In addition, no bank account or accounting records were tendered in evidence. Also absent are the project contracts. The only documentation are copies of cheques. Cheques are not proof of a company’s existence.

[90] Defence counsel submits the absence of these documents prevents a determination on the identity of the victim and that a victim was defrauded. He also argues a forensic accounting was required. Crown counsel says none of these matters are necessary.

[91] Mr. Nentwig was described as the Vice-President of Finance for the Seegmiller group of companies. Mr. Charpentier was referred to as the Vice-President of Construction. These are only titles. Neither was designated as an officer of the company or group of companies or, at least, there is an absence of evidence in this regard. Mr. Seegmiller was not called as a witness, nor anyone else who had personal knowledge with respect to the various aspects of the company as previously identified. Further, Mr. Nentwig was not asked about these matters and, as well, he was not involved in the projects and did not supervise Mr. Charpentier.

[92] Forensic accounting is common in fraud cases, but I cannot say such was necessary. But other documents were required as part of the Crown’s case than were presented.

[93] In result, I conclude Crown counsel has not established the existence of E & E Seegmiller or that it was a victim. This, in my view, is fatal to the Crown’s case.

(e) Essential Elements – Preliminary Comments

[94] Dishonest act and the amount being in excess of $5,000.00, two of the essential elements, are not in dispute. The remaining matters, deprivation and knowledge, require determination.

[95] The evidence reveals the Seegmiller company to have paid a significantly higher amount to Chym than Chym paid to C.P.S. and C.S.S. Such resulted from an arrangement between Mr. Charpentier and Mr. Chau. Mr. Chau was unaware of the involvement of others at the Seegmiller company, if any.

[96] I am not concerned with the dealings between Chym and C.P.S. or C.S.S. Those are all related companies. Sub-contracting work on projects is not, in itself, unusual. Usually, there are legitimate reasons to do so. Here, such was hide the excess amount from Mr. Chau’s partners. Regardless, sub-contracting is not evidence of fraud regarding Mr. Charpentier as it was only Mr. Chau who arranged such to occur.

[97] It is the division of funds between Chym and Innisfree that attracts attention.

[98] Moving on to the remaining essential elements, as much of the evidence comes from Mr. Charpentier, I must take into account the W.(D.) principles.

(f) Deprivation

[99] The element of deprivation, as we see from Olan, is satisfied by proof of detriment, prejudice or risk of prejudice to the economic interests of the victim. In this case, the Crown alleges $6,418,699.50 was the amount of the fraud. The issue is whether the Seegmiller company was actually deprived of that amount, or any amount, or whether its economic interests were prejudiced or put at risk of prejudice.

[100] Crown counsel submits there was deprivation, as the excess funds came from the Seegmiller company bank account. He further says deprivation exists whether Mr. Seegmiller was involved or not and even if the company was inflating expenses that were paid by project owners. Defence counsel, on the other hand, argues there can be no deprivation when the inflated costs, by agreement between Mr. Charpentier and Mr. Seegmiller, are passed through to the owners. He also refers to the absence of evidence to establish any loss or deprivation.

[101] The Crown’s case, on this issue, is solely documentary. There is no dispute regarding the amount or the scheme, hence the evidence of Mr. Chau is of no assistance regarding deprivation. Similarly, as Mr. Nentwig was not involved in the projects, or in the dealings between Mr. Charpentier and Mr. Seegmiller, his evidence is also not helpful.

[102] The documents tendered in evidence, on their face, do demonstrate the inflated amounts paid by the Seegmiller company to Chym. That, of course, is not evidence of deprivation alone as there is nothing inherently improper with sub-contracting work for profit. It is the evidence of the scheme that makes the payments suspicious. But the issue here goes much further.

[103] Part of the difficulty in analyzing this issue is the absence of evidence, particularly documents. As with the prior issue of identity, documentation necessary to address deprivation were not tendered, including contracts, accounting records and bank statements. Further, Mr. Charpentier tendered documents, from the Crown disclosure of Seegmiller company records, as well as other documents he kept from the company, activities in the purported bid-rigging.

[104] Mr. Charpentier testified at length on a number of topics, including bid-rigging and changes to his compensation package. He provided detail regarding project operations and documentation that necessitate consideration.

[105] Indirect sheets, as well as deferred revenue reports, were identified by Mr. Charpentier as important documents in both the construction and accounting departments at the Seegmiller company. Mr. Nentwig generally agreed with that statement. These documents identify the various components of the project and their related cost.

[106] Of particular relevance, in my view, are the indirect sheets. As I understand the evidence, this document initially brings together the various expenses and anticipated profit for the purposes of considering a bid. The document is then amended as the project moves ahead, such as for changes in the scope of the work.

[107] The relevance is that all bids had to be approved by Mr. Seegmiller. Mr. Charpentier reported preparing the initial indirect sheet for consideration of a bid by Mr. Seegmiller. Mr. Nentwig confirmed that practice.

[108] But Mr. Nentwig was not involved in the projects nor did he attend any meetings with Mr. Seegmiller and Mr. Charpentier regarding consideration of bids. Indeed, Mr. Nentwig advised that Mr. Seegmiller had instructed him to stay out of the process and not to inquire about expenses.

[109] In each of the Crown’s project booklets, an estimate is provided from C.S.S. for survey expense. Mr. Chau indicated this reflected his initial cost for the work. It is unclear how Mr. Chau arrived at the ultimate amount in the inflated invoices from Chym.

[110] Regardless, the estimate is of little assistance in the analysis. Rather, the indirect sheets are more instructive as they were reviewed by Mr. Seegmiller. These documents appear to reflect the actual survey expense of Chym or, at least, is much closer than the C.S.S. estimate. A definitive conclusion is impossible as the contract documents, including change work orders, were not tendered in evidence.

[111] If the direct sheets presented in evidence by Charpentier, in both examination-in-chief and in cross-examination, were reviewed by Mr. Seegmiller, then it appears the inflated expense was, in fact, passed through to the project owners. These documents came from the corporate records. Only Mr. Charpentier and Mr. Seegmiller were present at meetings to discuss potential bids. But, Mr. Seegmiller was not called as a witness.

[112] In the absence of evidence from Mr. Seegmiller and other documents as previously discussed, a determination on this critical issue must be based on W.(D.) principles.

[113] Given the admission of dishonesty, it is difficult to conclude that Mr. Charpentier’s evidence is believable. But, does it raise a reasonable doubt? I conclude it does.

[114] Crown counsel argues Mr. Charpentier’s claim as to involvement of Mr. Seegmiller in the scheme is implausible. He further askes why Mr. Seegmiller would investigate the matter and then report it to the police if he was involved. The problem with this submission is that Mr. Seegmiller did not testify. Conclusions cannot be based on speculation.

[115] Crown counsel goes on to point out Mr. Charpentier’s reference to involvement in bid-rigging from 1998 but was not compensated for it until 2005. But, Mr. Nentwig confirmed the company had financial problems. Counsel also refers to Mr. Charpentier’s statement he felt uncomfortable with his involvement in bid-rigging, yet he continued in that role until 2013. This is a valid comment; however, there is the admission of dishonesty and I would not reject Mr. Charpentier’s evidence based solely on this statement. The issue does not involve morality.

[116] Mr. Chau was not involved in bid-rigging nor with Mr. Seegmiller in the scheme, Crown counsel submits. Another good point and, perhaps, the most troubling aspect in this case. Mr. Chau had no recollection of being made aware of bid-rigging nor of any discussion with Mr. Charpentier about the Seegmiller company. I have concerns about the completeness of Mr. Chau’s evidence. Much more should have been asked of a purported co-conspirator.

[117] Lastly, Crown counsel directly attacks Mr. Charpentier’s credibility, saying he was a terrible witness, evasive and slippery, concluding he “displayed all of the hallmarks of a liar”. Certainly, there were some inconsistencies in Mr. Charpentier’s evidence but not so drastic as to negate what he said. Some inconsistency is expected; otherwise, perfect evidence gives the appearance of being staged. I would not describe Mr. Charpentier as evasive or slippery. He was a difficult witness for Crown counsel. Mr. Charpentier routinely rejected propositions put to him by counsel. He also frequently pointed out what he considered to be errors in the financial analysis by counsel in cross-examination.

[118] Mr. Charpentier’s testimony must be considered having regard to the documents presented and in the absence of other evidence. The documents support the proposition of excess cost being passed through to the owners. Mr. Charpentier was not receiving the compensation as set out in his employment contract. The potential for bid-rigging cannot be ignored. It is not necessary to conclude that Mr. Charpentier and Mr. Seegmiller had an agreement to pass costs to owners and divert same as compensation. But it is not so far fetched as to reject.

[119] Dishonesty alone is not fraud. While the evidence of Mr. Charpentier is offensive, I must conclude there is a reasonable doubt on this essential element of deprivation. Mr. Charpentier’s evidence was logical.

[120] As to the issue of risk of prejudice, Crown counsel argues the Seegmiller company was put in a position of liability to project owners for inflated costs due to the actions of Mr. Charpentier. The company, he says, was at risk of being sued. However, as set out in Olan, there must be proof of the risk. Here, no evidence was presented. The submission is based on speculation. Given that the Seegmiller company was the low bidder on these projects, it would be far too remote to infer a risk of prejudice.

[121] In result, I am not persuaded Crown counsel has proven deprivation beyond a reasonable doubt.

(g) Knowledge

[122] The test, as set out in Théroux, is whether Mr. Charpentier had the knowledge his acts would result in deprivation or risk of deprivation. As stated therein “the question is whether the accused subjectively appreciated that certain consequences would follow from his or her acts, not whether the accused believed the acts or their consequences to be moral”.

[123] Absent deprivation, this issue need not be addressed. Nevertheless, it would involve the same evidence and analysis as above.

[124] There is reasonable doubt. Mr. Charpentier’s actions, he said, were based on an agreement with Mr. Seegmiller changing his method of compensation. The evidence demonstrated that the terms of his initial employment contract were not being honoured. The Seegmiller company was experiencing financial problems, as confirmed by Mr. Nentwig.

[125] Mr. Charpentier reported to Mr. Seegmiller. He understood Mr. Seegmiller had authority to bind the corporation. In the absence of evidence regarding the corporate structure and the identity of the officers, directors and shareholders of the company, Mr. Charpentier’s evidence is logical. At least, it cannot be rejected.

[126] The agreement, as reported by Mr. Charpentier, was one of dishonesty. The basis was to pass through excess expense. But there was evidence of similar dishonesty by Mr. Seegmiller regarding the use of pension plan funds, in particular. This makes Mr. Charpentier’s evidence credible. It also reveals the importance of Mr. Seegmiller’s involvement in business operations. But, as said previously, he was not called as a witness.

[127] On the evidence tendered, I cannot reject Mr. Charpentier’s testimony outright. I conclude it raises a reasonable doubt on the issue of knowledge.

Summary

[128] For these reasons, I am not persuaded Crown counsel has established the offence beyond a reasonable doubt. While the documentary evidence tendered by the prosecution is troubling on its face, the critical issues of identity of the victim, deprivation and mens rea have not been proven. I am satisfied Mr. Charpentier, who bears no evidentiary onus, has established a reasonable doubt.

[129] In result, I find Mr. Charpentier not guilty.

D.J. Gordon J.

Released: May 14, 2020