COURT OF APPEAL FOR ONTARIO

CITATION: R. v. McLellan, 2012 ONCA 717

DATE: 20121026

DOCKET: C51797 & C54990

Rosenberg, Blair and Tulloch JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Myles McLellan

Appellant

Myles McLellan, acting in person on the conviction appeal

Patrice F. Band and Shannon S.W. O’Connor, for the appellant on the sentence appeal

Scott Latimer, for the respondent

Heard: August 17, 2012

On appeal from the conviction entered by Justice Anne Mullins of the Superior Court of Justice, sitting without a jury, on October 9, 2009, and from the sentence imposed on March 10, 2010.

Tulloch J.A.:

Overview

[1] The appellant appeals both his conviction and sentence. However, his conviction appeal is limited to the December 4, 2008 decision of Ferguson J., dismissing his s. 11(b) application for a stay of proceedings due to unreasonable delay: R. v. McLellan, 2009 ONSC 30968 (Ont. S.C.).

[2] At issue for the conviction appeal is whether the application judge erred in holding that his right to be tried within a reasonable time had not been violated.

[3] The appellant also seeks leave to appeal his sentence on the basis that the trial judge erred in failing to impose a conditional sentence because she underemphasized certain mitigating factors, overemphasized deterrence and denunciation, and failed to consider the principle of restraint in the circumstances of a first time offender. The appellant also disputes the trial judge's finding that he lacked remorse and insight into the harm caused by his crimes.

[4] In addition, the appellant has filed a fresh evidence application, adducing fresh evidence with respect to the issues of restitution, his continued education, and his wife’s health issues and her dependency on him for assistance.

[5] For the reasons that follow, I would dismiss the conviction appeal. I would allow the appellant’s application to admit fresh evidence and based on that evidence, I would grant leave to appeal the appellant's sentence, and would allow the appeal against sentence to the extent that I would vary the sentence of 22 months’ incarceration, less time served of 8 months, to a global sentence of 16 months’ incarceration less time served of 8 months.

Factual Background

[6] On October 9, 2009, the appellant, Mr. Myles McLellan, was convicted of fraud over $5,000.00, forgery, and two counts of uttering forged documents. The convictions arose from conduct that took place between January 1st and May 31st, 2006.

[7] Mr. McLellan was a practising lawyer who had been called to the bar in 1980. He practiced real estate, wills and estate law in Simcoe County, and had offices in Barrie, Innisfil and for a time, in Angus. He also engaged in real estate development.

[8] As of January 2006, Mr. McLellan was experiencing financial difficulties. The properties that he owned, including his home, his cottage, a residential property he inherited from his father, his business premises, as well as his investment retirement home, were all subject to multiple collateral mortgages and principal debts. The retirement home did not have enough money to meet its financial obligations and had been in receivership since July 2005. In early 2006, he was actively seeking refinancing in order to regain control of this property.

[9] During this period, Mr. McLellan contacted Mr. Alan Feldman, a mortgage consultant he knew in Toronto, and indicated that he had an employee, Ms. Janet Laurin, who wished to place a first mortgage on her property. He advised that Ms. Laurin needed the money quickly and that he would personally guarantee the debt. In reality, however, Ms. Laurin already had a first mortgage registered on her property, which Mr. McLellan had assisted her in obtaining in 1993. She had also refused Mr. McLellan’s previous request that she obtain a second mortgage in order to assist him with his ongoing business dealings.

[10] In February 2006, Mr. Feldman introduced Mr. McLellan to Mr. Sam Klaiman, who was the owner of Homark Real Estate Ltd. in Toronto. Mr. Klaiman was eighty-five years old and semi-retired. His company invested by providing loans that were secured by mortgages on real property. Based on Mr. McLellan’s representations, Homark agreed to forward $150,400 in return for a first mortgage on Ms. Laurin’s property. On February 23, 2006, that amount was deposited in Mr. McLellan’s trust account, where it was quickly dispersed for his own financial purposes.

[11] In the weeks that followed, Mr. Klaiman and his lawyer made several requests for documentation that demonstrated Homark’s mortgage on Ms. Laurin’s property. After a protracted period of time, Mr. McLellan eventually provided a charge/mortgage document that purported to show that a mortgage had been registered in Homark’s name on Ms. Laurin’s property. However, when Mr. Klaiman’s lawyer investigated the charge document, he determined that it was a forgery. Steps had been taken to alter a legitimate charge/mortgage document, referable to one of Mr. McLellan’s other clients, to make it appear that Homark Real Estate possessed a valid mortgage against Ms. Laurin's property. The police were subsequently notified and the he was arrested for fraud.

[12] After his arrest, Mr. McLellan took steps to repay what he had stolen. He provided $50,000 in cash to Homark in May 2006. Prior to the sentencing hearing, a civil settlement had been reached regarding repayment of the outstanding amount.

[13] The matter proceeded to trial following a preliminary hearing in the Ontario Court of Justice, but after the first trial date had been set, Mr. McLellan brought a s. 11(b) motion.

[14] The application judge dismissed the s. 11(b) application, finding that the total amount of time the matter took to proceed to trial of 27 ½ months was not unreasonable in the circumstances. The matter eventually proceeded to trial, however Mr. McLellan fired his counsel and was granted a mistrial. A subsequent trial date was set, following which Mr. McLellan was found guilty and convicted on four counts. He received a global sentence of 22 months’ incarceration, less eight months’ credit for pre-trial custody and time spent on stringent bail conditions.

A. Appeal from dismissal of s. 11(b) application

[15] The appellant submits that the application judge did not undertake a balanced examination of the entire time period at issue, and instead applied a technical and narrow analysis of discrete periods of time. He raises three specific grounds of appeal: that the application judge erred in attributing 9 ½ months of time in the Ontario Court of Justice to inherent delay; that she erred in holding the defence responsible for the 3 ½ months following his pre-trial appearance before the Senior Regional Judge to address his delay concerns; and that she erred in her assessment of prejudice.

[16] I disagree with the submissions of the appellant. The application judge was correct in her characterization of the delay and I agree with her decision to dismiss the s. 11(b) application. In my view, there is no merit to this ground of appeal. The application judge was very thorough in her assessment of the various time periods in the proceedings of the case, and she applied the factors set out in R. v. Morin, 1992 SCC 89, [1992] 1 S.C.R. 771 correctly. I agree with her characterization of the time periods as well as her broader analysis that led to her ultimate dismissal of the delay application. Further, her finding that any prejudice suffered by the appellant was as a result of being charged and not due to subsequent delay was reasonable.

[17] The applicable systemic delay was well below the guidelines set out by the Supreme Court in Morin. Therefore, I do not find the statistical data submitted by the appellant on appeal to be relevant to the disposition of the appeal. It concerns the average length of cases in regions across Canada and institutional efforts to reduce delays. The analysis of the specific reasons for delay in this case has shown that the time frame was reasonable in the circumstances. A broader review of delay in Ontario courts is therefore not necessary in this case.

[18] Accordingly, the conviction appeal is dismissed.

B. Sentence Appeal

(1) Positions of the Parties

[19] The trial judge sentenced the appellant to 22 months in jail, less the eight months he was granted for pre-trial custody and bail conditions. The appellant submits that he should have received a conditional sentence for a shorter time period and submits that the trial judge’s failure to impose such a disposition amounts to the commission of multiple of errors in principle. He submits that the trial judge committed the following errors: underemphasizing the principle of restraint in sentencing a first time offender; overemphasizing the principles of general deterrence and denunciation and as a result disregarding important mitigating factors; overemphasizing the necessity of imposing a jail sentence to achieve general deterrence; and characterizing what she found to be a lack of remorse as an aggravating factor. Finally, he submits that the 22 month sentence of incarceration was demonstrably unfit in the circumstances.

(2) Analysis

[20] I disagree that the trial judge committed the errors in principle complained of by the appellant within the context of this case.

[21] I am satisfied that the trial judge considered all the relevant factors applicable to the appellant’s particular circumstances and the nature of the offences for which he was being sentenced.

(a) Mitigating and Aggravating Factors

[22] The trial judge was thoroughly cognizant of the particular circumstances and background of the appellant.

[23] She considered the appellant’s age and education, his status as a father and partner, and his lack of criminal record. She reviewed the testimonials regarding his trustworthiness and reliability, as well as his community involvement and his prompt efforts to make restitution. She considered that there had been one primary victim within a relatively brief course of misconduct, in circumstances of extraordinary financial pressures, which did not amount to a systemic fraudulent scheme against the vulnerable.

[24] Finally, she took into account his physical health challenges of cancer and a severe bladder issue, as well as his longstanding mood disorder, which caused periods of depression and difficulty in making clear business judgments. She acknowledged that these mental health challenges may have impaired his judgment.

[25] However, the trial judge also noted the seriousness of the offences for which the appellant was being sentenced. She found that they constituted a serious breach of trust, committed by a practicing lawyer who deceived an 85 year-old man to obtain a large sum of monies from his company and in so doing, forged and uttered documents and made false statements in writing in order to facilitate the fraud.

[26] The trial judge correctly observed that crimes such as the one for which the appellant was being sentenced impact the community in a profound and significant way. Quoting from the decision of Taliano J. in R. v. Gross, [2000] O.J. No. 3479 (S.C.), at paras. 16 to 18, she noted that public confidence in the reliability of financial transactions conducted by lawyers is eroded where, as here, a lawyer breaches the trust he owes to his clients and to his community.

[27] This court and other Canadian appellate courts have dealt with the significance and impact of lawyers who commit fraudulent breaches of trust within the context of their professional capacities. The primary sentencing principle at play in these types of cases is general deterrence and denunciation, or the repudiation of the conduct for which the offender was found guilty. The secondary considerations are specific deterrence, rehabilitation and any mitigating circumstances such as a plea of guilty or cooperation with the authorities: R. v. Scherer (1984), 1984 ONCA 3594, 16 C.C.C. (3d) 30 (Ont. C.A.), at p. 34.

[28] Doherty J.A. outlined why an offender’s status as a lawyer is a significant aggravating factor in R. v. Rosenfeld, 2009 ONCA 307, 94 O.R. (3d) 641, at para. 40:

[A]part from the specifics of the offences committed by the appellant, those privileged to practise law take on a public trust in exchange for that privilege and the many advantages that come with it. Lawyers are duty bound to protect the administration of justice and enhance its reputation within their community. Criminal activity by lawyers in the course of performing functions associated with the practice of law in its broadest sense, has exactly the opposite effect. Lawyers like the appellant who choose to use their skills and abuse the privileges attached to service in the law not only discredit the vast majority of the profession, but also feed public cynicism of the profession. In the long run, that cynicism must undermine public confidence in the justice system: see R. v. Oliver, 1977 BCCA 2190, [1977] 5 W.W.R. 344 (B.C.C.A.).

[29] Therefore, I agree with the trial judge that, notwithstanding the appellant’s personal challenges and triumphs, and despite his reputation in his community and his past good works, the fact that he is a lawyer who has used his professional capacity to facilitate the crimes for which he has been convicted is a significant aggravating factor.

(b) Conditional Sentence

[30] The trial judge noted that as a matter of principle a breach of trust by a professional does not preclude the granting of a conditional sentence, even in circumstances of extensive pre-planned conduct over a lengthy period of time with devastating consequences to vulnerable victims. She then considered the mitigating factors of the appellant’s case, as noted above, and went on to consider the aggravating factors, the most significant of which was the appellant’s breach of trust as a lawyer.

[31] The trial judge further stated that she found the appellant to lack remorse and insight, as illustrated by the appellant’s attempt to blame Ms. Laurin for his offence. She considered these to be aggravating factors that militated against a conditional sentence.

[32] Lack of remorse is not ordinarily an aggravating factor in sentencing, and courts ought to be very careful in treating it as such: see R. v. Giroux (2006), 2006 ONCA 10736, 207 C.C.C. (3d) 512 (Ont. C.A.), at para. 68; R. v. Valentini (1999), 1999 ONCA 1885, 132 C.C.C. (3d) 262 (Ont. C.A.), at para. 82. In my view, a fair reading of the trial judge’s comments indicates that she was solely addressing the issue of whether a conditional sentence was appropriate, and not the quantum of the sentence.

[33] Lack of remorse and insight are factors that the trial judge was entitled to take into account in considering the appropriateness of a conditional sentence: see R. v. Nguyen, [2006] O.J. No. 796 (C.A.); R. v. T.R.J., [2004] O.J. No. 1286 (C.A.). The presence or absence of remorse and an assessment of whether an individual displays insight into his or her offending conduct are relevant considerations for a trial judge in deciding whether a conditional sentence will be consistent with the purposes and principles of sentencing.

[34] Section 718(f) of the Criminal Code, R.S.C. 1985, c. C-46 states that a valid sentencing objective is to “promote a sense of responsibility in offenders, and acknowledgement of the harm done to victims and to the community.”

[35] The trial judge ultimately decided that imposing a conditional sentence was inappropriate in the circumstances of this case. She gave full consideration to the relevant factors as well as the leading authorities from this court. In so doing, she did not err in principle in imposing a custodial sentence: R. v. Bellefeuille, 2003 ONCA 48337, [2003] O.J. No. 4259 (C.A.); R. v. St. Fort, [2003] O.J. No. 5154 (C.A.).

[36] Further, I do not find that the trial judge erred in finding a lack of remorse on behalf of the appellant. The trial judge’s finding must be understood within the context of her perception of the appellant’s lack of insight into his conduct. In considering the appropriateness of a conditional sentence, the trial judge had to consider the totality of the evidence before her. This included the evidence of the appellant at trial, where he blamed his fraudulent conduct on his legal assistant, Ms. Laurin, as well as the evidence that the appellant unsuccessfully attempted to enlist Ms. Laurin into his fraudulent scheme.

[37] The primary sentencing principles of general deterrence, denunciation, and the public perception of justice are most appropriately addressed in this case by a sentence of incarceration. In R. v. Sahaidak, [1990] O.J. No. 2792 (H.C.), Doherty J., as he then was, imposed a three-year custodial sentence on a lawyer convicted of fraud for his participation in a fraudulent mortgage scheme. Doherty J.’s comments, at para. 11, apply to the facts of the present case:

If my job was to sentence Mr. Sahaidak, the man, and if my sentence did not have to concern itself with the details of the crimes, and if I didn’t have to be concerned for the effect of my sentence on others and the effect of my sentence on the public perception of justice, I would impose a most lenient sentence in recognition of Mr. Sahaidak’s positive antecedents, his contribution to the community, and perhaps most importantly to save his family from further pain. My concerns and responsibilities on sentencing, however, go beyond the antecedents of Mr. Sahaidak and considerations of what sentence is in his best interest and the best interest of his family.

(c) Fresh Evidence

[38] Finally, the appellant applies to introduce fresh evidence on appeal in the following three areas: i) his pursuit of higher education; ii) his caregiver status; and iii) his efforts at restitution. The three aspects of fresh evidence are summarized as follows.

[39] First, the appellant returned to law school after his licence to practice law was revoked. He has now completed an LL.M. He has also completed the first year of a Ph.D. program in criminology at the University of Ottawa, and has been accepted into a double Ph.D. program which includes a period of study in Scotland. The appellant submits that these efforts at self-rehabilitation should be considered as a mitigating factor.

[40] Second, the appellant’s wife explained in her affidavit that she depends on the appellant as her primary caregiver. She was forced to suspend her work as a registered nurse due to a series of health concerns, including back injury, fibromyalgia, a stroke and depression. She is currently not receiving unemployment benefits.

[41] Third, while the trial judge noted that the appellant had made $50,000 in restitution, she went on to state that it was unlikely “given the multilayered securities on his properties” that the appellant would ever repay the full amount of the fraud. The fresh evidence makes it clear that the second mortgage in favour of the victim was not subject to other multilayered security interests. In the result, there was a reasonable prospect that full restitution would be made to the victim. This was an important mitigating circumstance. I am satisfied that had the trial judge been aware of the true state of affairs respecting restitution, she would have imposed a lower custodial sentence.

[42] However, the trial judge did not have before her evidence of the terms of the civil settlement between the appellant and Mr. Klaiman, nor did she have evidence of the title register for the property upon which the security was registered. The fresh evidence introduced on appeal shows that the appellant agreed to secure the outstanding $100,400 in the form of a second mortgage in favour of Mr. Klaiman, which is registered against the appellant’s Innisfil property. This evidence further shows that all but one of the other mortgages on the property have been discharged.

[43] I am not satisfied that the evidence of the appellant’s pursuit of higher education or his role in providing for his wife justifies interfering with the sentence imposed by the trial judge. The appellant was already a highly educated individual prior to committing the offences in question. The evidence concerning his role in providing for his wife does not justify a reduction in sentence, particularly considering that his capacity to support his wife is limited by his current status as a student and by his plans to study abroad.

[44] However, I am satisfied that the new evidence regarding his efforts at restitution would have resulted in a reduced sentence had the trial judge been aware of this evidence. An offender’s ability and willingness to pay restitution is an important consideration in the sentencing of fraud and related offences: see R. v. Smolyar, [2003] O.J. No. 3542; R. v. Chamczuk, 2010 ABCA 380, 499 A.R. 212; R. v. Quinlan (1999), 1999 NLCA 18952, 173 Nfld. & PE.I.R. 1 (Nfld. C.A.). The trial judge credited the appellant for his prompt efforts at making restitution. I am satisfied that if the trial judge had before her the fresh evidence demonstrating that the appellant placed a second mortgage on his property in favour of Mr. Klaiman’s company, which interest was not subject to other multilayered security interests, she would have imposed a lower custodial sentence.

[45] The fresh evidence of the appellant’s laudable efforts at providing restitution to the victim lead me to conclude that the appropriate length of sentence is 16 months’ incarceration, less time served for pre-trial custody.

(3) Conclusion

[46] Accordingly, leave to appeal the sentence is granted. The sentence appeal is allowed and the sentence is varied to 16 months’ incarceration, less time served of 8 months for pre-trial custody.

Released:

“MR” “M. Tulloch J.A.”

“OCT 26 2012” “I agree M. Rosenberg J.A.”

“I agree R.A. Blair J.A.”