Court of Appeal for Ontario

R. v. Davies

Date: 2005-07-04

Counsel: Marie Henein and Jennifer Gleitman, for accused, appellant. David M. Humphrey and Karen M. Erlick, for the Crown, respondent.

Court File No. C41939

The judgment of the court was delivered by

R.A. Blair J.A.:—

Overview

[1] The appellant, a lawyer, pleaded guilty to four serious offences: (1) fraud over $5000 between January 1, 1998 and June 1, 2001, in relation to the W. Bruce Affleck Memorial Scholarship Fund (the “Affleck Fund”); (2) fraud over $5000 on May 23, 2001, in relation to Alexander Lamont, a client; (3) breach of trust on November 30, 1998, in relation to the negotiation of a resolution of criminal charges regarding Ronald O’Connor (who was, in turn, said to have failed to repay Mr. Lamont a large sum of borrowed monies); and (4) breach of trust between December 17, 1998 and August 9, 1999, in relation to the negotiation of a resolution of criminal charges involving Mr. O’Connor. He appeals only the sentence imposed.

[2] The circumstances underlying the appeal are at once poignant and disturbing.

[3] At the time of the commission of these offences, Mr. Davies was a highly regarded and very able Crown Attorney, working very long hours and in other respects representing the Crown and the public with distinction. He has had a history of mental health and psychiatric issues, however, and in particular he suffers from bipolar affective disorder, an illness that causes hypomania and manic depression. There is at least some relationship between his illness and the crimes he committed. In addition, while the appellant did benefit personally to some extent from his actions, he is a man with a deepseated desire to help others and the bulk of the proceeds of his misdeeds were used by him for charitable and other similar purposes.

[4] On the other hand, Mr. Davies pleaded guilty to two counts of serious fraud and two counts of egregious breaches of trust. He diverted funds totalling $48,355.00 from the W. Bruce Affleck Memorial Scholarship Fund, a charity of which he was a director. Part of the source of such funds consisted of diversion payments made by persons who pleaded guilty in cases in which he was the Crown Attorney and who made a contribution to a charity as part of the disposition of those cases. Mr. Davies defrauded a client, Mr. Lament — whom he was not entitled to represent in any event because of his position as a Crown Attorney and because of certain restrictions placed on his practice by the Law Society of Upper Canada — of $19,500.00 (which he used to reimburse the Affleck Fund). He then abused his portion as a Crown Attorney further by negotiating a plea in another matter that resulted in the person who had initially failed to repay Mr. Lamont a sum of money reimbursing certain sums to Mr. Lamont.

[5] At the sentencing hearing, Justice Devlin gave careful and thorough reasons. She declined the defence request to impose a conditional sentence, instead sentencing Mr. Davies to incarceration for eighteen months concurrently on each of the breach of trust charges, eighteen months concurrent on the fraud charge relating to the Affleck Fund, and six months less one day, consecutive, on the additional fraud charge. The issue on this appeal is whether she erred in refusing to impose a conditional sentence.

[6] For the reasons that follow, I would allow the appeal, but only in part. I would vary the sentence to impose a sentence of incarceration for twelve months less one day, concurrent, on each of the breach of trust charges, a conditional sentence of twelve months, consecutive, on the fraud charge relating to Mr. Lamont, and a conditional sentence of twelve months, concurrent to the other fraud charge, on the fraud charge relating to the Affleck Fund.

The Facts

[7] The sentencing hearing proceeded on the basis of a lengthy agreed statement of facts. In addition, the appellant’s family physician, Dr. D’Angelo, and his attending psychiatrist, Dr. Arfai, testified.

[8] The appellant is forty-six years of age. He and his wife — also a lawyer — have been married for over twenty years, and they have two teenage children.

[9] Mr. Davies was called to the Bar in 1984. He practised law in Port Perry, Ontario for a number of years, along with another partner. In 1993, the partner noticed certain irregularities in the firm’s finances, and the appellant admitted he had misappropriated funds from one client to advance to another client. He obtained no personal benefit from this transaction. No charges were laid as a result of the incident, but the Law Society was notified and Mr. Davies voluntarily ceased to practise law for a period of six months pending the outcome of the Law Society’s investigation. He was diagnosed in February 1993 as suffering from bipolar affective disorder. Ultimately, following disciplinary proceedings, the appellant was suspended for a further period of six months and then permitted to resume his career as a lawyer, but only as a Crown Attorney. He was prohibited from engaging in private practice without the further permission of Convocation. No such permission was ever sought or obtained.

[10] Following the completion of his suspension, Mr. Davies returned to work for the Durham Crown Attorney’s Office. By all accounts — except for the incidents here in question — he was a dedicated and gifted prosecutor. He worked extremely long hours and took the time to mentor younger members of the Crown office. Letters of reference filed at the sentencing indicate that his colleagues found his criminal conduct to be inconsistent with his strong personal, moral and work values.

[11] The nascent problems that would lead to his downfall were only dormant, however.

[12] In 1996, Mr. Davies met Alexander Lamont through their mutual barber. He learned that Mr. Lamont had lost $100,000 in dealings with a Ronald O’Connor.[^1] When payments on these loans had ceased, Mr. Lamont was told by Mr. O’Connor “to back off since he (Mr. O’Connor) knew members of Satan’s Choice and “there would be big trouble”. Mr. Davies was sympathetic to Mr. Lamont’s position and undertook to help him out. In circumstances that are unclear, he received a $1,200 cash retainer from Mr. Lamont. Over the next few years, the appellant falsely led Mr. Lamont to believe that he was taking steps to recover Mr. Lamont’s money from Mr. O’Connor, but no monies were ever received by Mr. Lamont as a result of these supposed efforts (although Mr. Davies told Mr. Lamont that he had received $20,000 in that regard).

[13] Another avenue opened up and was inappropriately exploited by Mr. Davies, however, when Mr. O’Connor was arrested in 1998 on criminal charges unrelated to Mr. Lamont. Mr. Davies called Mr. Lamont and advised him that they now “had” Mr. O’Connor and that he would get restitution for Mr. Lamont from Mr. O’Connor because as a Crown Attorney he had the “power to do anything”. He became involved in the prosecution of Mr. O’Connor and negotiated a plea bargain in which Mr. O’Connor agreed to plead guilty to some lesser charges in exchange, amongst other things, for an agreement to repay Mr. Lamont restitution in the amount of $17,500. The Crown agreed not to pursue any criminal charges against Mr. O’Connor in relation to Mr. Lamont’s losses. The appellant rationalized this disposition in his Crown Attorney reports on the false basis that there were “charges pending re: Lamont, whom O’Connor supposedly fleeced for mega dollars.” There were never any such charges pending. Following the plea and the disposition of the matter, Mr. O’Connor did not pay the monies to Mr. Lamont.

[14] Mr. O’Connor could not stay out of trouble, however. He was soon arrested again on other matters. Once more, the appellant prosecuted the case. Once more, he negotiated a favourable plea for Mr. O’Connor in exchange for the agreement to pay Mr. Lamont $17,500. This time Mr. O’Connor did pay.

[15] Meanwhile, Mr. Davies’ involvement with the Affleck Fund would lead him to further difficulties, including an even more tangled web of deceit concerning Mr. Lamont. The Affleck Fund was set up in memory of W. Bruce Affleck, a prominent Oshawa attorney who died suddenly in 1996. Mr. Davies was one of three initial directors of the Fund. By 2000 he had become the only director. The Affleck Fund had received less than $50,000, and — except for two small scholarships that were awarded, totalling $4,000 — Mr. Davies diverted all of the funds to other purposes, including his own.

[16] The total amount misappropriated was $48,355. Of that amount, the appellant kept $4,300. He obtained these sums by siphoning monies from payments made by two accused people who pleaded guilty and agreed, as part of the Court’s diversion program, to make a payment to a charity — in this case, the Affleck Fund — as part of the plea bargain negotiated by the appellant as prosecutor. One accused paid $5,000. The appellant deposited $4,200 and retained the remaining $800 himself. The second accused made a $30,000 diversionary payment to the Fund. The appellant deposited $26,500 and kept $3,500 in cash.

[17] In all other respects, however, the monies taken by Mr. Davies from the Affleck Fund appear to have been used for altruistic purposes from which the appellant received no personal benefit whatsoever. For example, he gave $3,555 to All Saints Anglican Church Choir — he was a member of that Church — to assist the choir in paying its travelling costs in relation to an exchange trip it was taking. He gave $5,000 to the Pet Valu Discount Store in Uxbridge because it had been the victim of an internal theft by an employee. He issued a cheque for $11,000 to a tax preparation firm to facilitate the issuance of proper tax receipts to the offenders who had made the diversion payments referred to above. He gave $6,300 to the complainant in a sexual assault case so that she could complete her education, simply because he felt sorry for her. It is not clear from the record where the additional monies went, but there is no claim that the appellant benefited personally in any amounts more than the $4,300 mentioned above. The remaining monies taken from the Fund appear to have been put to entirely altruistic uses.

[18] When the father of the sexual assault victim who had received the $6,300 donation disclosed this to the Crown Attorney’s office in December 2000, the Crown’s office began an investigation into what had happened to the monies in the Affleck Fund. The appellant admitted that he had converted some of the monies to his own use. A police investigation ensued.

[19] Unfortunately, Mr. Davies made matters worse in attempting to correct the problems he had created. He repaid a total of $30,018.86 to the Affleck Fund. But he obtained $19,500 of that amount by himself defrauding Mr. Lamont. Mr. Lamont agreed to loan the appellant that amount as a result of Mr. Davies’ false representations that Mr. Lamont would soon be receiving a large sum from the Lawyers’ Professional Indemnity Company (“LPIC”). Mr. Davies said the monies were coming because Mr. Lamont’s counsel had failed to protect his interests in his dealings with Mr. O’Connor. He persuaded Mr. Lamont to sign a release in favour of LPIC and gave him a letter to the bank where the monies were to be deposited. When Mr. Lamont attended at the bank he was told that there were no funds for him. When confronted, Mr. Davies admitted to the Lamonts that he had not done any work for them for the past six years.

The Medical/Psychiatric Evidence

[20] Dr. Arfai first treated Mr. Davies in 1991, at which time he diagnosed earlier depressive episodes in 1985, 1987 and 1989 and concluded that all the major features of a manic episode were present in 1991. In 1993, he saw the appellant again in relation to another manic episode. Dr. Arfai prescribed treatment with lithium, a mood-stabilizing drug. From December 1994 until January 2001, when Dr. Arfai saw Mr. Davies again on referral from Dr. D’Angelo, Mr. Davies was treated with lithium under the supervision of Dr. D’Angelo. Dr. Arfai’s opinion was that Mr. Davies suffered from mood disorder bipolar illness reflected by periods of hypomania and manic depression, and that at the time the offences were committed he was in “an uncontrolled state of hypomania with associated symptoms of self-righteousness, expansive mood, high levels of energy and lack of insight into his behaviour.” Much of the appellant’s behaviour in relation to the offences, including the giving away of money, was typical behaviour of a manic episode.

[21] Dr. D’Angelo began treating Mr. Davies in February 1995. He has no psychiatric training, but understood the appellant suffered from bipolar affective disorder. He monitored the appellant’s lithium levels to ensure that they remained within the required therapeutic range, which he understood at the time to be between 0.5 to 1.5 milligrams per mol/litre. He was satisfied they did.

[22] As Dr. Arfai testified, however, medical science has since concluded that the appropriate range for lithium levels in a patient such as Mr. Davies is higher — between 0.8 and 1.5, and in Mr. Davies’ case it should be about 1.0. Mr. Davies’ levels never reached that range. Dr. Arfai’s opinion was that between 1995 and 2001, the appellant’s lithium levels were wholly inadequate to control his manic episodes. Both doctors felt that Mr. Davies may not have been taking his medication as required because of a misplaced belief that he had beaten his illness.

[23] Although Dr. Arfai was of the view that much of Mr. Davies’ conduct was related to his bipolar affective disorder, he candidly acknowledged he was “not saying that every single sort of offence … [was] directly related to his hypomanic state.” He agreed that the appellant was not in such a state in early 2001 when he saw him, and particularly that he was neither hypomanic nor depressed when assessed on May 24, 2001. May 24, 2001 was the day after the appellant had completed his fraud of Mr. Lamont in relation to the $19,500 used to replenish the Affleck Fund.

The Sentencing

[24] At the sentencing hearing, the Crown sought a total sentence of imprisonment in the range of eighteen months to two years less a day. The defence proposed a conditional sentence of fifteen to eighteen months to be served in the community. The Crown opposed a conditional sentence, but suggested as an alternative option the imposition of a “blended sentence”, i.e., one consisting of incarceration for one or more of the offences, to be followed by a conditional sentence for the remainder (the whole not to exceed two years less a day).

[25] In very thoughtful and careful reasons, the sentencing judge concluded that a conditional sentence was not appropriate in the circumstances of this case. As indicated above, she sentenced the appellant to imprisonment for eighteen months, concurrent, on each of the breach of trust charges and for the first fraud charge, plus incarceration for six months less one day for the second fraud charge. I can find no error in principle in her thorough analysis of the general principles of sentencing or in her approach to the criteria that apply to the imposition of a conditional sentence under s. 742.1 of the Criminal Code. She conscientiously examined the offences in question, the circumstances of this offender, and the various aggravating and mitigating factors. She considered Mr. Davies’ bipolar illness at length. It is obvious the sentencing judge was acutely aware of the difficulties she faced in arriving at an appropriate sentence for the appellant.

[26] In the end, however, she concluded that “the defendant’s criminal behaviour cannot be attributed to his mental health illness” for the following five reasons that she listed:

1. The defendant is the only source of information that he was non-compliant with his medication.

2. While the defendant was involved in the criminal activities between 1998 and 2001 his medication was always in the therapeutic range although some times at the lower end of the range.

3. The defendant’s criminal activities were ongoing over a period of years and do not correspond to the pattern of a hypomanic episode.

4. When the defendant defrauded Mr. Lamont on May 23rd, 2001 he was taking the increased doses of his medication. He did not appear either manic or depressed when he met with Dr. Arfai the next day, and his blood test showed that his medication was within the optimum targeted range with a result of 1.0 millimoles of lithium.

5. Dr. Arfai himself was unable to say the defendant’s criminal activities were cause by his mental health illness.

[27] The sentencing judge returned to the theme of the cause of the appellant’s criminal activities during her conclusions for not imposing a conditional sentence. She said:

The medical evidence does not support the submission that the defendant’s criminal behaviour was the result of his mental health illness.

Analysis

The Standard of Review

[28] Counsel agree that the standard of review is the following: absent an error in principle, failure to consider a relevant factor, or an overemphasis of the appropriate factors, a court of appeal should only intervene to vary a sentence imposed at trial if the sentence is demonstrably unfit: see R. v. C.A.M. (1996), 105 C.C.C. (3d) 327 (S.C.C.) at 374; R. v. Shropshire (1995), 102 C.C.C. (3d) 193 (S.C.C).

The Error

[29] Respectfully — in what was otherwise a flawless analysis — the sentencing judge misconstrued the evidence respecting the relationship between the appellant’s mental illness and the crimes committed, and she failed to consider certain of the evidence in that regard. These errors justify this court’s reconsideration of the sentence imposed.

[30] First, the sentencing judge’s finding that the appellant’s lithium level “was always in the therapeutic range”, thus supporting her conclusion that Mr. Davies was or should have been in control of his activities, was only part of the story. It ignores Dr. Arfai’s uncontested evidence that the levels of lithium prescribed for the appellant were not sufficient to prevent a manic episode or to control a recurrence of the illness. That evidence, in turn, undermines the sentencing judge’s finding that “the medical evidence does not support the submission that the defendant’s criminal behaviour was the result of his mental health illness”. In addition, the latter finding itself fails to consider the report of Dr. Arfai, that during the relevant periods of time Mr. Davies was in “an uncontrolled state of hypo-mania”. This evidence made it clear that some of the appellant’s conduct, at least, was related to his mental health illness.

The Appropriate Disposition

[31] If the sentencing judge had taken the foregoing evidence into account, she might well have considered the alternative sentencing proposal put forward by the Crown, i.e. the “blended sentence” option. In my view that option presents the appropriate disposition in this case.

[32] I agree completely with the conclusion of the sentencing judge that the principles of denunciation and deterrence require a period of incarceration in the circumstances of this case. As the Supreme Court of Canada has said, while the notions of deterrence and denunciation can be accommodated within the framework of a conditional sentence, there may be circumstances in which the need for deterrence and denunciation is “so pressing that incarceration will be the only suitable way in which to express society’s condemnation of the offenders conduct” or to reflect the deterrence objective: see R. v. Proulx (2000), 2000 SCC 5, 140 C.C.C. (3d) 449 (S.C.C.) at 493-494. The sentencing judge aptly described the circumstances underlying Mr. Davies convictions in the following passages from her reasons:

While the fraud charges are serious and involve significant deception over a lengthy period of time, the breach of trust charges are by far the most alarming. These charges refer to the inappropriate plea bargains the defendant entered into with counsel for O’Connor in an effort to recover the debts O’Connor owed to Lamont. These charges constitute a gross misuse of the defendant’s position as an Assistant Crown Attorney.

The [criminal] conduct involves not only monetary losses to the Bruce Affleck Fund and Mr. Lamont, but also staggering breaches of trust that have brought the administration of justice into disrepute.

[33] However, there are compelling reasons in this case for an approach to sentencing that contemplates the restorative objectives of rehabilitation, reparation and promotion of a sense of responsibility in the offender, as well: see Proulx at 494. Mr. Davies is clearly a good candidate for rehabilitation. He is remorseful and, judging by his statement to the court on sentencing, is prepared to recognize and take responsibility for his actions. He is now on a medication regime that is more likely to control and prevent his manic episodes, thus reducing the risk of repetition of these sorts of incidents. He has no prior criminal record.

[34] A proper balancing of all the foregoing factors leads me to the conclusion, therefore, that a blended sentence combining both incarceration (for the breach of trust offences) and a conditional sentence (for the fraud offences) is the appropriate disposition in the circumstances of this case. This court has held that it is legally permissible to blend a custodial sentence with a conditional sentence, when an offender is being sentenced for more than one offence, so long as the sentences, in total, do not exceed two years less one day and the court is satisfied that the preconditions in s. 742.1(b) have been met in respect of one or more of the offences: R. v. Ploumis (2000), 150 C.C.C. (3d) 424 (Ont. C.A.) at 431-432. See also R. v. R. (R.A.) (2000), 2000 SCC 8, 140 C.C.C. (3d) 523 (S.C.C.). In arriving at this conclusion I draw upon the comprehensive reasons of the sentencing judge analysing this offender and the aggravating and mitigating circumstances at play since — as noted earlier — except for the errors identified above, I think they are flawless.

The Motion to Admit Fresh Evidence

[35] The appellant seeks to admit fresh evidence on the appeal. The proposed fresh evidence takes the form of (a) the affidavit of a lawyer testifying to the fact that Mr. Davies was placed in protective custody and segregated from other prisoners when in custody pending bail on appeal, because of his position as former “criminal justice personnel”; and (b) a second psychiatric assessment of the appellant by Dr. Graham Glancy and a transcript of Dr. Glancy’s examination.

[36] The Crown does not oppose the court taking notice of the fact that the appellant was ranked at the highest security level and housed in segregation prior to his release on bail pending appeal. Mr. Humphrey points out, however, that this does not necessarily mean the appellant will remain in the same institution or be subject to the same segregation, for his entire sentence. The Crown opposes the admission of Dr. Glancy’s evidence.

[37] I would dismiss the motion to admit the fresh evidence.

[38] A second psychiatric assessment, in the form of Dr. Glancy’s evidence or someone else’s, could have been made available at the time of the sentencing hearing. Although the “due diligence” requirement for the admissibility of fresh evidence is not applied as strictly in criminal matters as in civil cases, it seems to me that the submission of Dr. Glancy’s report and his evidence is simply an attempt to shore up the weaknesses disclosed at the hearing in the evidence of Doctors D’Angelo and Arfai. In any event, the proposed fresh evidence would not have altered the disposition of the appeal. Dr. Glancy’s report simply provided more detail in support of the submission that there was a link between Mr. Davies’ illness and the crimes committed. I have concluded that the appeal should be allowed in part because the trial judge misconstrued, or failed to take into account, evidence to that effect that was before her.

[39] In my opinion, the proposed fresh evidence does not meet the requirements for admissibility set out in R. v. Palmer (1979), 50 C.C.C. (2d) 193 (S.C.C.), and reiterated in R. v. Lévesque (2000), 2000 SCC 47, 148 C.C.C. (3d) 193 (S.C.C.) at 203-204.

Disposition

[40] For the foregoing reasons, then, I would vary the sentence imposed by the sentencing judge to provide for the following: on each breach of trust count, a sentence of twelve months less one day in custody, concurrent; on each of the fraud charges, a conditional sentence of twelve months, concurrent to each other but consecutive to the twelve months incarceration.

[41] The terms of the conditional sentence order are to be as follows. The appellant shall:

• For the first six months of the conditional sentence, remain in his place of residence at all times except for scheduled medical appointments, medical emergencies, to meet with the conditional sentence supervisor or to perform community service;

• For the remaining six months of the conditional sentence, remain in his place of residence at all times except for the foregoing exemptions and except for attendance at employment interviews or for purposes of employment;

• remain in the Province of Ontario;

• report to a conditional sentence supervisor within 48 hours of the date of this order and thereafter as required;

• sign any release of information required to monitor compliance with the conditions of this order;

• comply with medical treatment as prescribed by his physician or psychiatrist;

• continue to see Dr. Arfai or his designate as directed;

• abstain from the consumption of alcohol or nonprescription drugs; and

• perform 100 hours of community service.

[42] We thank counsel for their assistance in this matter.

Appeal allowed in part.

Endnote

[^1]: $80,000 by way of a loan secured by a second mortgage on Mr. O’Connor’s home, and $20,000 by way of a loan secured by a promissory note.