DATE: 20030912

DOCKET: C33951

COURT OF APPEAL FOR ONTARIO

FELDMAN, MACPHERSON and GILLESE JJ.A.

B E T W E E N :

HER MAJESTY THE QUEEN

Roger A. Pinnock

for the respondent

Respondent

• and -

GREGORY McMILLAN

Melvyn Green

for the appellant

Appellant

Heard: May 22 and 23, 2003

On appeal from the conviction of Justice C. Bruce Noble of the Superior Court of Justice, sitting with a jury, on December 8, 1999 and from the sentence imposed on March 24, 2000.

MACPHERSON J.A.:

A. INTRODUCTION

[1] Following a trial by judge and jury, the appellant, Gregory McMillan, was convicted of fraud, conspiracy to commit fraud and public mischief. McMillan was the manager of a golf shop, Tee to Green, in Sault Ste. Marie. McMillan’s father was the owner of the shop. The Crown alleged that McMillan arranged for several other individuals to burglarize and vandalize the golf shop in order to collect the insurance proceeds.

[2] McMillan received a global sentence of 15 months imprisonment for the three offences. He appeals both his conviction and sentence. The principal issues on the appeal are whether the conduct of the chief investigating police officer amounted to criminal activity in its own right and, if so, whether the trial judge should have stayed the charges against McMillan.

B. FACTS – AN OVERVIEW

[3] On February 19, 1996, McMillan contacted the police to report that a break and enter had occurred at Tee to Green, numerous items had been stolen, and the shop had been vandalized. McMillan subsequently filed an insurance claim with the store’s insurer. As a result, the insurer paid $63,000 to Tee to Green.

[4] On December 16, 1996, Kent Schmidt discovered a letter in the snow while he was walking through the strip mall where Tee to Green had been located. He turned the letter over to the police on January 8, 1997. The letter was from Michael Deraiche; it was addressed to the owner of Tee to Green. In the letter, Deraiche stated that he did not get paid for the “job” he did in the wintertime. He threatened to “go to the cops and write a statement” unless a certain car valued at $1,000 was purchased for him and $400 was transferred to his bank account. Deraiche included his address in Elliot Lake and his bank account information in the letter (“the extortion letter”).

[5] The extortion letter was given to Constable Marty Rowe. Rowe confirmed the existence of the bank account and address given in the letter. He also learned that Deraiche and Terry Beith were under investigation for an unrelated break and enter. Rowe decided to confront Deraiche. Rowe fabricated a one-page police statement in which McMillan purportedly made a complaint against Deraiche for extortion. The statement was hand-written on an official police form and concluded with a “Question and Answer” section.

[6] On January 9, 1997, Rowe confronted Deraiche at his residence in Elliot Lake. Rowe showed Deraiche the extortion letter and led him to believe that he would be charged with extortion. Deraiche accompanied Rowe to the Elliot Lake police station. Initially, Deraiche did not want to talk. Rowe then showed Deraiche the fabricated statement, and “as soon as [Deraiche] saw that, he started talking”. Deraiche gave a written statement regarding the Tee to Green burglary. He implicated himself, McMillan, Terry Beith and several others. Deraiche stated that he attended Tee to Green with Terry Beith. McMillan showed him around the shop, told him what merchandise to take, said that he wanted it to look like a break and enter, said he wanted the place vandalized, said he would pay for a vehicle to transport the equipment out of town, and told Deraiche that he could keep the merchandise as payment. After making the statement, Deraiche was charged with break and enter and conspiracy to commit fraud. Deraiche subsequently made additional cautioned statements - two in writing and two on video.

[7] On January 10, 1997, Deraiche cooperated with the police in a ‘video sting’ at the Villa Inn. At Rowe’s request, Deraiche telephoned McMillan and threatened to go to the police if McMillan did not meet him at the Villa Inn and pay him money. McMillan did not come to the Villa Inn. Instead, on the same day, he attended the police station with counsel and orally reported an attempted blackmail to Constable Marc Cady. McMillan told Cady that a “Mike” had telephoned him and stated he would tell the police that McMillan was involved in the Tee to Green burglary if McMillan did not pay him money. McMillan denied involvement in the burglary and stated he was concerned the allegations would harm his reputation and business.

[8] McMillan was arrested on February 6, 1997. Prior to his trial, Terry Beith and Deraiche were found guilty of conspiracy to commit fraud arising from the events at Tee to Green. Deraiche was also found guilty of break and enter.

[9] There are other facts relevant to the disposition of the appeal. I find it convenient to mention them in the context of the specific issues to which they relate.

C. ISSUES

[10] The issues on the appeal are:

(1) Did the trial judge err in his charge to the jury on the ‘public mischief’ count in the indictment?

(2) Did the trial judge err in permitting the Crown to cross-examine Deraiche on his prior inconsistent statements?

(3) Did the trial judge err in dismissing the appellant’s application to stay the proceedings as an abuse of process?

(4) Did the trial judge err by not imposing a conditional sentence or, alternatively, by imposing an excessive custodial sentence?

D. ANALYSIS

(1) The ‘public mischief’ count

[11] The third count in the indictment charged McMillan “with intent to mislead M. Rowe, a peace officer . . . cause him to enter upon an investigation by reporting that the offence of break enter and theft had been committed when it had not been committed, contrary to section 140(1)(c) of the Criminal Code of Canada”.

[12] Section 140(1)(c) of the Code provides:

140.(1) Every one commits public mischief who, with intent to mislead, causes a peace officer to enter on or continue an investigation by . . .

(c) reporting that an offence has been committed when it has not been committed;

[13] The trial judge instructed the jury that their task was to determine four factual issues: (1) whether McMillan caused Rowe to enter upon an investigation, (2) whether he did so by making a false statement that the golf shop had been broken into and robbed, (3) whether he made the false statement with intent to mislead, and (4) whether Rowe at the time was a police officer. He then told the jury that it was their duty to convict McMillan of public mischief if the Crown had established these items beyond a reasonable doubt.

[14] Unfortunately, the trial judge did not instruct the jury that they had to determine an additional, and crucial, factual matter – namely, whether a break enter and theft had or had not occurred. This issue was central because the wording of count 3 of the indictment alleged that McMillan had reported this offence “when it had not been committed”.

[15] If there was no real break enter and theft (because it was a sham orchestrated by McMillan), then a conviction on this count would be possible. However, if there was a break enter and theft, there could be no conviction on this count because of the “when it had not been committed” wording in the indictment. It follows that this was a crucial issue which had to be put to the jury.

[16] I would make an additional observation about the ‘public mischief’ count in the indictment. In my view, this count is fundamentally at odds both with the other two counts in the indictment against McMillan and with the Crown’s indictment against Deraiche. The foundation of the fraud and conspiracy to commit fraud charges against McMillan was that there was a break enter and theft at the golf shop with a view to collecting insurance proceeds. Indeed, in his charge to the jury on these counts, the trial judge regularly spoke of “the break enter and theft”. Moreover, the Crown charged Deraiche with break and enter and he was convicted of this offence. Accordingly, it seems to me that count 3 of the McMillan indictment is somewhat disingenuous; it asserts the opposite (“when it had not been committed”) of the premise of the other two counts and the charge against Deraiche.

(2) Cross-examination of Deraiche on prior inconsistent statements

(a) Additional facts

[17] Crown counsel called Deraiche as a witness. Deraiche testified that Terry Beith asked him if he wanted to do an “insurance job” at Tee to Green. When Deraiche agreed, Beith told him that “Greg” would provide the money to rent a van. Deraiche testified that nothing else happened between the time Terry Beith first spoke to Deraiche and the time they “did the store”. Contrary to his several statements to the police, he made no mention of meeting McMillan at Tee to Green or receiving instructions directly from McMillan.

[18] Crown counsel brought an application pursuant to s. 9(2) of the Canada Evidence Act (“the CEA”) to cross-examine Deraiche on the prior written inconsistent statements that Deraiche gave to Constable Rowe. A voir dire was held during which Deraiche and Rowe testified about the circumstances surrounding the making of the statements.

[19] Deraiche testified that prior to making his written statements, Rowe showed him the statement purportedly written by McMillan. Deraiche was told the statement was written by McMillan and he was “pretty sure” the statement was signed “Greg McMillan”.

[20] Rowe testified that the fabricated statement was not signed. He had consulted with a crown attorney, who told him the statement should not be signed due to forgery concerns. Rowe did not know the present location of the statement; the statement had not been disclosed to defence counsel. Rowe agreed with defence counsel that his notebook did not mention the fabricated statement; he had no explanation for the omission. Nor did Rowe mention the fabricated statement in his testimony at the preliminary inquiry.

[21] Defence counsel submitted that the Crown should not be entitled to cross-examine Deraiche on the prior inconsistent statements because: (1) the fabricated statement was a forgery; (2) the fabricated statement had not been disclosed and was “missing”; and (3) Rowe had not mentioned the fabricated statement in his notebook. Defence counsel submitted these were “classic violations of the principles regarding...obtaining honest and straightforward evidence”, and that there were “too many unanswered questions...about how [Deraiche’s] statements came about”.

[22] Crown counsel submitted that the fabricated statement was not signed, and absent a signature, it was not a forgery but merely a ruse.

(b) Ruling of the trial judge

[23] The trial judge ruled that the prior written statements were materially inconsistent with Deraiche’s oral testimony. Accordingly, cross-examination should be permitted “absent a consideration of the circumstances under which the statements were received.”

[24] The trial judge found that the fabricated statement was not signed. This finding was based on Deraiche’s testimony that he was “pretty sure” the statement was signed compared to Rowe’s certainty that the statement was not signed on the advice of a crown attorney. The trial judge stated that “the use of a ‘forged’ statement, that is, a statement purported to be executed by the accused McMillan, would be a serious matter and could be grounds for refusing the application.” This is consistent with the trial judge’s statement during argument that, if he was satisfied on the evidence that the McMillan statement was in fact a forged document, he would exercise his discretion to not allow cross-examination on the prior statement made by Deraiche. However, the trial judge was satisfied that the fabricated statement was not a forged document. He further stated that “[t]here is no suggestion that there is anything sinister in the unavailability of the fabricated statement.” He ruled that Crown counsel could cross-examine Deraiche on the prior inconsistent statements.

(c) Discussion

[25] The trial judge has a discretion whether to permit cross‑examination of a witness pursuant to s. 9(2) of the CEA: see R. v. McInroy and Rouse, [1979] 1 S.C.R. 588 at 604. In this appeal, the appellant does not contest that the trial judge properly followed the procedure for making a s. 9(2) CEA ruling. It is also clear that Deraiche’s testimony was inconsistent with his previous statements to the police.

[26] The key issue is whether the trial judge erred in not exercising his discretion to refuse cross‑examination on Deraiche’s prior inconsistent statements “in view of the circumstances of the taking of the statements”: see R. v. Carpenter (No.2) (1982), 1 C.C.C. (3d) 149 at 155 (Ont. C.A.), and R. v. Milgaard (1971), 2 C.C.C. (2d) 206 at 222 (Sask. C.A.), leave to appeal to S.C.C. dismissed (1971), 4 C.C.C. (2d) 566. The appellant contends that the presence or absence of a signature on the fabricated statement was irrelevant to a finding that Rowe committed forgery, and had the trial judge properly instructed himself in this regard he would not have permitted the cross‑examination.

(i) Relevant Criminal Code provisions

[27] The relevant Criminal Code provisions are:

321. In this Part …

“false document” means a document

(a) the whole or a material part of which purports to be made by or on behalf of a person

(i) who did not make it or authorize it to be made….

366.(1) Every one commits forgery who makes a false document, knowing it to be false, with intent …

(b) that a person should be induced, by the belief that it is genuine, to do or to refrain from doing anything, whether in Canada or not.

(2) Making a false document includes

(a) altering a genuine document in any material part;

(b) making a material addition to a genuine document or adding to it a false date, attestation, seal or other thing that is material;

(4) Forgery is complete notwithstanding that the false document is incomplete or does not purport to be a document that is binding in law, if it is such as to indicate that it was intended to be acted on as genuine.

(ii) Was the fabricated statement a “false document” under s. 321 of the Criminal Code?

[28] Under s. 321 of the Criminal Code, a “false document” is a “document the whole or a material part of which purports to be made by...a person who did not make it or authorize it to be made.” In R. v. Gaysek (1971), 15 C.R.N.S. 345 at 348, the Supreme Court of Canada held that “any document that is false in some material particular is ‘a false document’ within the meaning of Part VII of the Code [now Part IX] (offences against rights of property).” The court further held, at p. 352, that “a document which is false in reference to the very purpose for which the document was created is certainly one which is false in a material particular.”

[29] The principles from Gaysek were applied by this court in R. v. Nuosci (1991), 69 C.C.C. (3d) 64. In Nuosci, the appellant altered a cheque, photocopied it, and then photocopied a signature onto the back of that copy. The court held that the photocopy was a false document because it was not what it purported to be. Morden A.C.J.O. reasoned, at pp. 75-76:

[I]t can reasonably by said that the photocopy in this case is false in reference to the very purpose for which it was created. It was created to purport to be a copy of a cheque signed by P. Meffe dated November 8, 1985, in the amount of $30,000 payable to the Nick Di Giovanni Campaign and endorsed on the back by Nick Di Giovanni, when, in fact, it was not a copy of a cheque signed by P. Meffe or one having any of these features. It was, accordingly, false in more than one material particular.

[30] In the present case, it is undisputed that: (1) Constable Rowe wrote the statement; (2) the statement was on an official police form; (3) the statement purported to be an extortion complaint by McMillan against Deraiche; and (4) the statement purported to be written by McMillan. It was a matter of dispute as to whether the statement was signed “Greg McMillan”. The trial judge found that it was not signed.

[31] Pursuant to s. 321 of the Criminal Code, the fabricated statement was a document purported to be made by McMillan and McMillan did not make it or authorize it to be made. On a straightforward application of the statutory provision, the fabricated statement meets the definition of “false document”. Additionally, as in Nuosci, the statement was “false in reference to the very purpose for which it was created.” That is, the statement purported to be an extortion complaint filed by McMillan against Deraiche whereas McMillan had made no such complaint.

[32] It is clear from the case law that a forged signature on a document is itself sufficient to make the document a “false document” within the meaning of s. 321 of the Criminal Code: see R. v. Ogilvie (1993), 81 C.C.C. (3d) 125 (Que. C.A.). However, the parties have not pointed to any case law that states that a document cannot be a “false document” absent a signature.

[33] Both parties cite the decision of this court in R. v. Stevenson and McLean (1980), 57 C.C.C. (2d) 526. In that case, two veteran police officers were charged under s. 126(b) of the Criminal Code for using a writing, purporting to be an affidavit, knowing that it was not sworn by the affiant. The officers had been investigating a murder; they falsified an affidavit, purportedly given by the deceased’s wife, and showed it to a suspect. This court upheld their convictions, stating at pp. 532-33:

In this case it is quite clear, on the appellants’ own evidence, that the sham affidavit was used to obtain an incriminating statement, that is, it was used with the intention of altering Allen’s legal position to his detriment. The casting of the document in a form of an affidavit, rather than an ordinary statement purported to have been made by Mrs. Lorenz (and, with respect to this, the forgery provisions in the Code would have to be consulted), was done deliberately to strengthen its impact on Allen…. [Emphasis added.]

[34] While this case is factually similar to the present case, it does not shed light on whether a signature is required for a statement to be a “false document”. I note, however, that the court held, at p. 533, that the officers’ good motives (apprehending a person they suspected to be a murderer) did not exculpate them from criminal liability if their conduct fell within the legislative prohibition.

[35] In my view, the presence or absence of a signature in the present case is not determinative. The statement was written on a standard police form. At the top of the form, beside “name”, the words “Greg McMillan” were written. The statement was written in the first person, as if McMillan had given it. Unlike a cheque or a letter, there is no place on the form for a signature. Section 321 makes no reference to a signature. In my view, the statement fabricated by Rowe comes within the definition of “false statement” in s. 321 of the Criminal Code.

(iii) Did Constable Rowe commit the offence of forgery?

[36] In my view, it is not necessary for this court to determine whether Rowe committed forgery beyond a reasonable doubt. Rowe was not on trial. The hearing was not conducted for the purpose of establishing Rowe’s guilt. In R. v. Shirose (1999), 133 C.C.C. (3d) 257 at 277 (S.C.C.), the court proceeded on the basis that the RCMP had “acted in a manner facially prohibited” by the relevant legislation. The same standard should be applied in this case.

[37] Under s. 366(1)(b) of the Criminal Code, a person commits forgery if he or she “makes a false document, knowing it to be false, with intent...that a person should be induced, by the belief that it is genuine, to do or to refrain from doing anything”. In this case, Rowe fabricated the statement, knowing it to be false, with the intention of using the document to confront Deraiche in order to induce Deraiche to give him information about the break and enter at Tee to Green. Proceeding on the basis that the fabricated statement was a “false statement” pursuant to s. 321, the evidence establishes that Rowe acted in a manner facially prohibited by s. 366(1) of the Criminal Code.

[38] In my view, s. 366(4) further supports a conclusion that the fabricated statement did not need to be signed for the offence of forgery to be committed. Section 366(4) states that “[f]orgery is complete notwithstanding that the false document is incomplete or does not purport to be a document that is binding in law, if it is such as to indicate that it was intended to be acted on as genuine.” In this case, Rowe’s own testimony established that the statement was “intended to be acted on as genuine.”

[39] Accordingly, in my respectful view, the trial judge erred in concluding that Rowe did not commit the offence of forgery.

(d) Assuming a forgery was committed, should the Crown have been permitted to cross-examine Deraiche?

[40] There was a voir dire to determine whether the Crown could cross‑examine Deraiche on his prior statements. The trial judge ruled in the Crown’s favour. In his ruling, the trial judge stated:

I agree with the submissions of counsel for the accused McMillan, that the use of a “forged” statement, that is, a statement purported to be executed by the accused McMillan, would be a serious matter and could be grounds for refusing the application. However, I am satisfied that such is not the case here.

[41] During argument on the voir dire, the trial judge spoke in a similar vein: “. . . frankly, in the exercise of my discretion, if I was satisfied on the evidence that the statement was put forward and was in fact a forged document, I would not admit the cross‑examination on the statement.”

[42] I agree with the trial judge’s inclinations. Accordingly, since I have determined that Constable Rowe’s conduct did amount to the criminal offence of forgery, it follows that I would conclude that the Crown should not have been permitted to cross‑examine Deraiche on his prior inconsistent statements. On this ground alone, a new trial would be required: see R. v. Handy (1978), 45 C.C.C. (2d) 232 (B.C.C.A.)[^1]

(3) The stay application

[43] The appellant brought a stay application during the trial. The core of his submissions was that the conduct of Constable Rowe in the investigation constituted an abuse of process in that: (1) Rowe failed to mention the fabricated statement in his notebook; (2) Rowe failed to refer to the fabricated statement in his Will Say statement; (3) Rowe failed to disclose, in answers at the preliminary inquiry, that the fabricated statement was used as an investigative technique; and (4) Rowe lied under oath, in particular that he had received legal advice from a crown attorney and that the fabricated statement was unsigned.

[44] The trial judge ruled that: (1) Rowe’s failure to mention the fabricated statement in his notes was a “shortcoming”, but the standard of note‑taking varies from situation to situation and officer to officer; (2) Rowe’s failure to mention the fabricated statement in his Will Say was a matter of focus, and no one expects a Will Say to contain every detail; and (3) he was satisfied, largely on the basis of a letter Rowe wrote to the crown attorney after the preliminary inquiry, that Rowe did not attempt to mislead the court with respect to the preparation and use of the fabricated statement; there was no attempt at any time to conceal this investigative technique, as it was discussed with Rowe’s colleagues and the crown attorney. The trial judge did not directly address argument (4). He concluded that he was “not prepared to find” that the fabricated statement was a forgery, stating that it was not necessary for him to do so, and it was not central to his consideration of the application. He stated that he “had no criticism of Constable Rowe in the preparation or use of the fabricated statement.” He was satisfied that this was not one of the “clearest of cases” that warranted a stay of proceedings based on abuse of process.

[45] In Shirose, supra, at p. 275, the Supreme Court of Canada confirmed the test for abuse of process, citing from R. v. Jewitt (1985), 21 C.C.C. (3d) 7 (S.C.C.):

I would adopt the conclusion of the Ontario Court of Appeal in R. v. Young (1984), 40 C.R. (3d) 289, and affirm that “there is a residual discretion in a trial judge to stay proceedings where compelling an accused to stand trial would violate those fundamental principles of justice which underlie the community’s sense of fair play and decency and to prevent the abuse of a court’s process through oppressive or vexatious proceedings”. I would also adopt the caveat added by the Court in Young that this is a power which can be exercised only in the “clearest of cases”.

[46] In Shirose, at p. 285, Binnie J. explained that “[t]he underlying rationale of the doctrine of abuse of process is to protect the integrity of the courts’ process and the administration of justice from disrepute”. In R. v. Mack (1988), 44 C.C.C. (3d) 513 at 540, the court held that disrepute to the administration of justice may arise from judicial condonation of unacceptable conduct by the investigatory and prosecutorial agencies.

[47] In my view, the conduct of Constable Rowe did amount to an abuse of process. The commission of a criminal offence by a police officer is always a serious matter. Moreover, when he fabricated the purported statement by McMillan, there was neither an investigative necessity nor exigent circumstances to justify his conduct.

[48] Nevertheless, I do not think that this is one of the “clearest of cases” in which a stay of proceedings is appropriate. I reach this conclusion for three reasons.

[49] First, Constable Rowe did not know that his conduct amounted to forgery. Indeed, he sought and received legal advice that his proposed investigative technique was lawful. In Shirose, at p. 287, Binnie J. observed: “A police force that chooses to operate outside the law is not the same thing as a police force that made an honest mistake on the basis of erroneous advice”.

[50] Second, although the non‑disclosure of the fabricated statement is a matter of concern, the factual findings concerning Rowe’s conduct made by the trial judge on the stay application (set out above) are entitled to substantial deference.

[51] Third, and importantly, there is an alternative remedy for the abuse of process in this case. In R. v. Xenos (1991), 70 C.C.C. (3d) 362, the Quebec Court of Appeal declined to order a stay and instead ordered a new trial in which the tainted evidence of a Crown witness would be excluded. In R .v. O’Connor (1995), 103 C.C.C. (3d) 1 at 36 (S.C.C.), L’Heureux-Dubé J. cited this as “an excellent example [of] finding appropriate remedies in lieu of stays for abuses of process”.

[52] In my view, the remedy employed in Xenos, and approved by the Supreme Court of Canada in O’Connor, is appropriate in this appeal. Constable Rowe’s investigative conduct amounting to the commission of a criminal offence and an abuse of process was directed at a witness, not at the appellant. The abuse of process can be corrected, and a fair trial of the appellant on the serious charges he faces can be achieved, by an order for a new trial at which the evidence of Deraiche, including his statements and his testimony, will be excluded.

[53] The appellant argues that much of the other evidence at trial was derivative of Deraiche’s statements and should also be excluded from a new trial. In my view, this matter was not sufficiently canvassed at trial. It is a matter that should be decided by the trial judge at the new trial.

(4) The sentence appeal

[54] In light of the foregoing, this issue does not arise.

E. DISPOSITION

[55] I would allow the appeal, set aside the conviction and sentence and order a new trial at which the statements and testimony of Michael Deraiche would be excluded. I would invite the Crown, before proceeding with a new trial, to seriously consider whether it is logical and fair to proceed against the appellant on count 3 of the indictment.

RELEASED: September 12, 2003 (“KMF”)

“J. C. MacPherson J.A.”

“I agree K. Feldman J.A.”

“I agree E. E. Gillese J.A.”

[^1] I note that the appellant also contends that Constable Rowe’s conduct in a different aspect of the investigation, namely, the proposed ‘video sting’ at the Villa Inn, amounted to the offence of extortion. Since this was not an issue on the CEA s. 9(2) voir dire at the trial and since it would not change my analysis or proposed disposition of this ground of appeal, I see no need to address it.