DATE: 20031118

DOCKET: C35881

COURT OF APPEAL FOR ONTARIO

DOHERTY, GOUDGE and CRONK JJ.A.

B E T W E E N:

HER MAJESTY THE QUEEN

Clayton C. Ruby and

Mara B. Greene

Respondent

for the appellant

• and -

GAETAN LAGACE

Jennifer Woollcombe

for the respondent

Appellant

Heard: October 21, 2003

On appeal from the convictions entered by Justice M.J. Girard of the Ontario Court of Justice dated December 20, 2000, and the sentence imposed dated February 27, 2001.

DOHERTY J.A.:

I

[1] The appellant was convicted of fraud over $5,000 and possession of stolen property valued at over $5,000. He received a sentence of 15 months. The appellant appeals conviction and sentence.

[2] I would allow the conviction appeal and order a new trial. The trial judge’s reasons fail to come to grips with substantial potentially significant evidence on the only material fact in issue. The deficiency in the reasons forecloses meaningful appellate review of the trial judge’s finding that the appellant was wilfully blind.

II

[3] The Crown alleged that the appellant, who sold used cars in Welland, Ontario, received and sold stolen cars for various car dealers in Quebec. According to the Crown’s theory, vehicles that had been wrecked in crashes, usually in the United States, were purchased at auction by the Quebec dealers. The wrecked vehicles were imported into Canada, where they underwent various registrations, including a registration in Ontario as a “fit” vehicle. By registering the vehicles in Ontario, the Quebec dealers avoided the registration scheme in place in Quebec. Under that scheme, the wrecked vehicles had to be identified as severely damaged and had to undergo one and perhaps two inspections before resale.

[4] It was also the Crown’s theory that vehicles of the same make and model as the purchased wrecked vehicles were stolen from various locations. The vehicle identification numbers (VIN) on the stolen vehicles were removed and replaced with the VIN from the corresponding wrecked vehicles. The revinned stolen vehicles were then sold through various retail outlets, including the appellant’s business, as used vehicles that had been repaired after an accident.

[5] It was the Crown’s position that the appellant was involved in “cleaning” the title of the wrecked vehicles by registering the vehicles in Ontario for the Quebec dealers. The Crown also alleged that between November 1997 and November 1998 the appellant took delivery of some 30 stolen vehicles and sold 24 of those to members of the public. The other six vehicles were in his possession when he was arrested in November 1998. At trial, the defence accepted that the 30 vehicles had been stolen and revinned.

[6] The appellant testified that he registered the wrecked vehicles in Ontario as “fit” for the Quebec dealers. He said that to his knowledge, there was nothing illegal about registering those vehicles in Ontario, and that it was common practice for individuals involved in the car business in Quebec to register vehicles in Ontario to avoid the labelling and inspection requirements imposed when vehicles were registered in Quebec. Ontario later adopted a labelling scheme like Quebec’s, thereby closing this loophole in the Ontario registration scheme. The appellant received a fee of about $200 per vehicle for registering the vehicles in Ontario.

[7] The appellant also testified that he sold vehicles on consignment for the dealers in Quebec during the same period that he was registering vehicles for them. He believed that the vehicles he sold had been involved in accidents and repaired. He was advised orally of the nature of the damage to each vehicle by the Quebec dealers before he sold it. All of the contracts that the appellant completed with the purchasers identified the vehicles as “accident repair”. The appellant testified that the prices he received for those vehicles were consistent with prices that he would expect to obtain for used vehicles that had been damaged in accidents and repaired before resale.

[8] The appellant did business with the dealers in Quebec from 1996 through 1998. He insisted that he was unaware that any of the vehicles provided to him were stolen.

[9] Two Quebec police officers visited the appellant in November 1997. They told him that the individuals with whom he was doing business in Quebec were dealing in stolen automobiles. The officers explained that VINs on the stolen vehicles were replaced with VINs taken from wrecked automobiles. They advised the appellant that by registering the wrecked vehicles in Ontario, he was assisting in the scheme. The officers identified the Labbe brothers and Laurent Laroche as persons who were involved in the car theft scheme. They warned the appellant against continuing to do business with these individuals, but did not accuse the appellant of any wrongdoing in his prior business dealings with them.

[10] The appellant said that after he spoke with the Quebec police officers, he became suspicious that the vehicles being sent to him from Quebec were stolen. He called Mr. Laroche, whom he had never met. Laroche assured him that the cars were not stolen, that he had no criminal record, and that the police had been harassing him since 1992. The appellant said that he was satisfied with Laroche’s explanation and continued to do business with him.

[11] The appellant next spoke to Laroche after the appellant received a subpoena for Laroche’s trial in September 1998. The appellant was upset and called Laroche. He demanded an explanation for the charges given that Laroche had assured him that the cars were not stolen. Laroche again assured him that nothing untoward was going on. The appellant continued to do business with Laroche.

[12] About a month after the second call, the appellant was advised by the Quebec police that it would be unnecessary for him to attend court in Quebec. The appellant placed a third call to Laroche who told him that the charges had been withdrawn, thereby confirming his earlier assurances to the appellant. The charges against Laroche were in fact withdrawn in November 1998. The appellant was arrested a short time later and charged with fraud and possession of stolen property.

III

The Reasons for Judgment

[13] The evidence at trial was lengthy and in some ways complex, especially as it related to the registration and re-registration of many of these vehicles. However, as Crown counsel observed in this Court, the case ultimately came down to a single issue – had the Crown proved beyond a reasonable doubt that the appellant knew the vehicles were stolen? The Crown could meet this onus by proving actual knowledge or by proving that the appellant was wilfully blind to the fact that the vehicles were stolen. At trial, the Crown placed considerable reliance on wilful blindness.

[14] The reasons for judgment are long. They deal extensively with the history of the 30 stolen vehicles and of various registrations of the corresponding wrecked vehicles. Much of this evidence was not in dispute. The trial judge also describes in detail the registration scheme in Quebec, the appellant’s knowledge of that scheme and the “cleaning” of titles in Ontario to avoid the Quebec registration requirements. The trial judge found that the appellant began “cleaning” the titles of the wrecked vehicles for the Quebec dealers in 1996. Significantly, the trial judge concluded that the appellant’s suspicions that the vehicles he was selling for those dealers were stolen did not arise until the appellant was visited by the Quebec police officers over a year later in November 1997.

[15] The meeting with the Quebec police officers in November 1997 figured prominently at the trial and the trial judge reviewed the evidence of the officers and the appellant concerning that meeting in some detail. He accepted the officers’ evidence.

[16] The trial judge next summarized the appellant’s evidence of the telephone conversation he had with Laroche after the meeting with the Quebec police officers. The trial judge said:

… The accused was informed that his involvement with cleaning titles of seriously damaged vehicles was likely to assist Mr. Laroche in dealing with stolen vehicles and with the sale of vehicles which had been revinned and yet without further investigation or inquiry, the accused proceeds to continue to deal with Mr. Laroche and with Mr. Gilles Labbe and the Labbe brothers.

[17] After summarizing the undisputed evidence concerning the theft and sale of the vehicles between November 1997 and November 1998, the trial judge then said:

In my view, the activities of the accused subsequent to the communications of the 26th of November, 1997 are relevant in assessing his state of mind.

[18] The trial judge referred to three parts of the evidence which, in his view, were relevant to the appellant’s state of mind. The first was a newspaper article dated March 12, 1998 found in the appellant’s office when he was arrested. That article outlined a car theft scheme similar to the one described to the appellant by the Quebec police officers. The trial judge held that the appellant had read the article and would have realized that by “cleaning” the titles for the Quebec dealers, he was engaged in conduct that was consistent with the theft scheme described in the newspaper article.

[19] The trial judge next referred to the labelling system used in the registration scheme in Quebec and the appellant’s knowledge of it. The third area of evidence referred to by the trial judge was the documentation process as it related to the sale of the stolen vehicles. He referred both to the documentation that was prepared and the absence of documentation relating to some aspects of the transactions.

[20] These three areas of the evidence were relevant to the appellant’s state of mind. I would observe, however, that the newspaper article did not contain any information of significance that had not been provided to the appellant by the Quebec police officers four months earlier in November 1997, and that the appellant’s knowledge of the Quebec branding system existed from 1996 when the appellant first began doing business with the Quebec dealers. The trial judge found, however, that the appellant had no reason to suspect that the vehicles were stolen until over a year later.

[21] The trial judge next turned briefly to the doctrine of recent possession, quoting from two of the leading authorities. Thereafter, he made no further reference to this doctrine or its potential applicability until he articulated his ultimate conclusion on count 2 (possession of stolen property):

… I am satisfied that the explanation of the accused for his possession is not one which might reasonably be true having come to the conclusion that for the accused to proceed after the date of the 26th of November, 1997 with transactions involving Mr. Laroche and/or the Labbe brothers constitutes self-deception to the point of wilful blindness.[^1]

[22] The trial judge considered the applicability of the wilful blindness doctrine in some detail. He referred to several authorities, including the often cited passage from Professor Williams, Criminal Law: The General Part, 2d ed. 1961 at p. 157:

… The rule is that if a party has his suspicion aroused but then deliberately omits to make further inquiries, because he wishes to remain in ignorance, he is deemed to have knowledge.

[23] The trial judge found that the appellant was wilfully blind. He said:

… I am satisfied that the accused Mr. Lagace became aware of the need for some inquiry after the communications of November 26, 1997 and he declined to make inquiries other than one telephone call to Mr. Laroche (whom he had never met) because he did not wish to know the truth. He preferred to remain ignorant. In effect, the accused deliberately failed to inquire when he knew there was reason for inquiry. [Emphasis added.]

IV

The Grounds of Appeal

[24] Counsel for the appellant submitted that the convictions were unreasonable. The court did not require argument from the Crown on this issue. There was ample evidence to support the convictions.

[25] Counsel also argued that the trial judge misapplied the wilful blindness doctrine. He submitted that only a suspicion that the vehicles were probably stolen, as opposed to some lower level of suspicion, triggered the requirement for inquiry. Counsel contended that the trial judge did not consider the appellant’s level of suspicion after his conversation with the Quebec police officers.

[26] I would reject this submission. I see no need to quantify the level of suspicion beyond the recognition that it must be a real suspicion in the mind of the accused that causes the accused to see the need for inquiry: R. v. Sansregret (1985), 18 C.C.C. (3d) at 235 (S.C.C.); R. v. Jorgensen (1995), 1995 85 (SCC), 102 C.C.C. (3d) 97 at 135 (S.C.C.); R. v. Duong (1998), 1998 7124 (ON CA), 124 C.C.C. (3d) 392 at 401-402 (Ont. C.A.). The appellant on his own evidence was sufficiently suspicious that the vehicles were stolen that he immediately made an inquiry of the owner of the vehicles. In my view, the potential application of the wilful blindness doctrine did not require that the trial judge describe the level of suspicion beyond the finding that it was sufficient in the appellant’s mind to call for an inquiry.

[27] Counsel for the appellant also argues that as a matter of law, the doctrine of wilful blindness could not operate against the appellant because he made an inquiry after his suspicion was aroused.

[28] I disagree. Culpability on the basis of wilful blindness rests on a finding of deliberate ignorance. An accused who suspects that property is stolen but declines to make the inquiries that will confirm that suspicion, preferring instead to remain ignorant is culpable. Where an accused makes some inquiry, the question remains whether that accused harboured real suspicions after that inquiry and refrained from making further inquiries because she preferred to remain ignorant of the truth. Where some inquiry is made, the nature of that inquiry will be an important consideration in determining whether the accused remained suspicious and chose to refrain from further inquiry because she preferred to remain deliberately ignorant of the truth. For example, a finding that an accused took all reasonable steps to determine the truth would be inconsistent with the conclusion that the accused was wilfully blind: R. v. Mara, 1997 363 (SCC), [1997] 2 S.C.R. 630 at para. 51.

[29] I, of course, do not suggest that there is any onus on the accused to demonstrate that all reasonable steps were taken. In any case where the Crown relies on the doctrine of wilful blindness and some inquiry has been made, the trier of fact will have to decide whether the Crown has proved beyond a reasonable doubt that despite that inquiry the accused remained suspicious and refrained from making any further inquiry because she preferred to remain ignorant of the truth. As I read the trial judge’s reasons, he held that the appellant’s inquiry did not remove his suspicion and that no further inquiry was made because the appellant chose not to confirm his suspicion, preferring ignorance over the truth.

[30] Counsel for the appellant next argues that the trial judge failed to consider many significant parts of the evidence that were potentially probative of the appellant’s state of mind and supported his contention that the Crown had not proved that he was wilfully blind after November 1997. Counsel submits that the trial judge’s failure to address this evidence must leave this court unable to determine how the trial judge reached his verdict.

[31] Despite the able and forceful submissions made by Ms. Woollcombe on behalf of the Crown, I think this submission must succeed. An accused must not be left in doubt as to why he was convicted. An accused must also have a meaningful opportunity to pursue the avenues of appeal open to him under s. 686 of the Criminal Code. Where the reasons for judgment leave the appellate court unable to meaningfully exercise appellate review, the conviction cannot stand: R. v. Sheppard (2002), 2002 SCC 26, 162 C.C.C. (3d) 298 at 309 (S.C.C.). As Binnie J. said in Sheppard at 317:

These cases make it clear, I think, that the duty to give reasons, where it exists, arises out of the circumstances of a particular case. Where it is plain from the record why an accused has been convicted or acquitted, and the absence or inadequacy of reasons provides no significant impediment to the exercise of the right of appeal, the appeal court will not on that account intervene. On the other hand, where the path taken by the trial judge through confused or conflicting evidence is not at all apparent, or there are difficult issues of law that need to be confronted but which the trial judge has circumnavigated without explanation, or where (as here) there are conflicting theories for why the trial judge might have decided as he or she did, at least some of which would clearly constitute reversible error, the appeal court may in some cases consider itself unable to give effect to the statutory right of appeal. In such a case, one or the other of the parties may question the correctness of the result, but will wrongly have been deprived in the absence or inadequacy of reasons of the opportunity to have the trial verdict properly scrutinized on appeal. In such a case, even if the record discloses evidence that on one view could support a reasonable verdict, the deficiencies in the reasons may amount to an error in law and justify appellate intervention. It will be for the appeal court to determine whether, in a particular case, the deficiency in the reasons precludes it from properly carrying out its appellate function. [Emphasis added.]

[32] Sheppard emphasizes that the adequacy of reasons is not measured by the inch or the pound, but rather by the extent to which those reasons allow meaningful exercise of the rights of appeal. Short reasons can make the basis for conviction or acquittal crystal clear, and a weighty judicial tome may obscure entirely how the crucial issue in a case came to be decided the way it was. The former reasons serve their assigned purpose, the latter result in reversible error.

[33] On the trial judge’s analysis, the appellant’s liability turned on a very narrow question. He did not suggest that the appellant had any reason to suspect that the Quebec dealers were dealing in stolen vehicles prior to November 1997 when he was visited by the police. The narrow question was – had the Crown proved beyond a reasonable doubt that after the appellant spoke to Laroche in November 1997 he remained suspicious that the vehicles were stolen and deliberately chose to refrain from further inquiry so that he would not learn the truth? The trial judge’s ultimate finding that the accused was wilfully blind after November 1997 constituted a finding of a culpable state of mind on the edge of criminal liability. That finding could only be properly made after a rigorous analysis of all of the relevant evidence.

[34] The trial judge correctly observed that the appellant’s state of mind after November 1997 could be inferred from his conduct. The trial judge referred to some of that conduct. I agree that the conduct referred to by the trial judge was relevant and potentially supportive of the Crown’s case. The trial judge did not, however, refer to many aspects of the evidence which were at least as probative, if not more probative, of the appellant’s state of mind after November 1997. Much of this evidence, if accepted, pointed away from the finding that the appellant was wilfully blind after November 1997. That evidence comes from several sources none of which are inherently or obviously unworthy of belief, and some of which the trial judge accepted as reliable. I will summarize that evidence.

[35] The defence adduced evidence of the appellant’s good character. The thrust of that evidence, some of which came from Crown witnesses, was that the appellant was an honourable person who conducted his business in an honest and forthright manner. This character evidence was relevant to the appellant’s credibility, but more importantly was potentially significant circumstantial evidence that the appellant was not wilfully blind as to the origin of the vehicles he sold in the course of his business operation. The trial judge does not mention the character evidence in his reasons.

[36] The defence led expert evidence that the prices at which the appellant sold the stolen vehicles were consistent with the prices charged for accident repair vehicles of the same make and model and inconsistent with prices charged for stolen vehicles. The Crown had led evidence from some of the purchasers that they thought they were getting a very good deal on the cars they bought from the appellant, and that one of the stolen cars on the appellant’s car lot when he was arrested was being offered for sale at well below market value. There was also reason to question the applicability of the expert’s evidence to vehicles that had been stolen and revinned. Unfortunately, the trial judge did not deal with the evidence of price at all. The appellant has no way of knowing why evidence from an independent expert supporting his position on pricing did not leave the trial judge with at least a reasonable doubt as to whether the appellant was wilfully blind.

[37] There was also evidence from a Crown witness who had been involved in the theft of some of the cars. He testified as to his dealings with the appellant. In cross-examination, he indicated that false documents were created and given to the appellant to hide the fact that the vehicles were stolen from the appellant. The trial judge referred to and accepted this person’s evidence in the course of summarizing the history of some of the vehicles, but made no reference to his evidence that efforts were made to keep the appellant unaware that the vehicles were stolen. This court does not know what the trial judge made of this part of the accomplice’s evidence, or why evidence from a Crown witness suggesting that the appellant was kept in the dark as to the stolen nature of the vehicles did not factor into the trial judge’s decision that the appellant was wilfully blind.

[38] The appellant also testified that he used a service provided by the insurance industry (Auto Check) to check on the history of each of the vehicles before he sold it. According to the appellant, this was the service commonly used by used car dealers. There was evidence that there was another service available that was potentially more reliable than the service used by the appellant. The trial judge made no reference to this evidence and provides no insight as to why the appellant’s evidence that he made the kinds of checks that used car dealers routinely make on vehicles to determine their history did not warrant consideration when determining his state of mind with respect to the vehicles.

[39] Although the trial judge made reference to the documentation kept by the appellant and his failure to keep certain other documentation, he made no finding as to what role, if any, matters relating to the documentation played in his ultimate finding. The appellant relied on the fact that all of the sales were properly recorded in his registry as required by provincial legislation. The trial judge made no reference to this evidence.

[40] There was unchallenged evidence that the appellant provided a warranty with a company called Lubrico with each of the vehicles he sold. He also invited prospective purchasers to have the car examined by their own mechanic before completing the purchase. The defence argued that this conduct was inconsistent with someone who was suspicious that the vehicles were stolen. The Crown countered this submission with the contention that the warranties were designed to discourage purchasers from taking the vehicles to the dealers where it was more likely that the revinning of the vehicles would be discovered. The Crown also argued that the cars were so skilfully revinned that there was little danger in allowing a mechanic to examine the car before a purchase. There seems to be potential merit to both arguments. Unfortunately, the trial judge did not deal with this evidence.

[41] The trial judge also misapprehended the evidence on a potentially significant feature of the case. Misapprehension of evidence can amount to a freestanding error warranting reversal. I, however, include this misapprehension of the evidence with my analysis of the failure to consider relevant evidence, since by misapprehending the evidence the trial judge effectively failed to consider the evidence as it was actually given.

[42] The trial judge indicated that the appellant made a single telephone call to Laroche. In fact, the appellant made three phone calls to Laroche: the one referred to by the trial judge in November 1997, a second telephone call in September 1998 when the appellant received a subpoena to testify at Laroche’s trial, and a third in November 1998 after the appellant had been advised by the police that he would not have to attend at Laroche’s trial.

[43] The second of these conversations was potentially significant in assessing whether the appellant remained wilfully blind after his first conversation with Laroche. The appellant said that after he got the subpoena he was disturbed and called Laroche to demand an explanation because Laroche had assured him in their earlier telephone call that there were no problems. If the trial judge accepted that the appellant made this call, it could have supported the inference, at least to the point of leaving a reasonable doubt, that the appellant had indeed been satisfied that the vehicles were not stolen after his first call to Laroche in November 1997 and became concerned when he received the subpoena. The trial judge’s reasons indicate that he proceeded on the basis that the appellant had only one conversation with Laroche. This court cannot determine what effect, if any, this evidence might have had on the trial judge’s analysis. Nor can it be inferred from the trial judge’s reasons that he must have rejected this part of the appellant’s evidence. The trial judge accepted parts of the appellant’s evidence, including his evidence concerning the first telephone call in November 1997.

V

Conclusion

[44] This was a close case. On the trial judge’s view of the evidence, the appellant’s culpability rested on the very borderline of criminal liability. He did not address a large body of evidence that was potentially, directly probative of the crucial issue. It cannot be inferred from the trial judge’s reasons that he rejected this evidence or preferred the Crown’s position with respect to the evidence. Nor is any of the evidence patently unreliable so as to obviate the need for any express analysis of it. This deficiency in the reasons forecloses effective appellate review of the trial judge’s ultimate conclusion that the appellant was wilfully blind after November 1997. Absent any reference to this significant, diverse and potentially probative body of evidence, this Court cannot meaningfully deconstruct the verdict to determine whether it reflected a consideration of all of the evidence and a proper application of the wilful blindness doctrine to the totality of the evidence. The convictions cannot stand.

[45] Counsel for the appellant argued that if the convictions were quashed, this court should enter a stay of proceedings. He referred to the personal hardships suffered by the appellant after this prosecution was commenced.

[46] There was ample evidence to support the convictions. The respondent’s personal circumstances do not justify a judicial prohibition against further prosecution. I would quash the convictions and direct a new trial. It is for the Crown to decide whether a new trial is in the best interests of the administration of justice.

RELEASED: “DD” “NOV 18 2003”

“Doherty J.A.”

“I agree S.T. Goudge J.A.”

“I agree E.A. Cronk J.A.”

[^1]: It is arguable that the inference of knowledge from recent possession is inconsistent with a finding of wilful blindness. It is also arguable that the inference had no place in this case since it was the Crown’s theory that the appellant had nothing to do with, and no knowledge of the actual thefts. These are matters that may have to be resolved if there is a new trial.