COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Dwyer, 2013 ONCA 34

DATE: 20130122

DOCKET: C54727 & C54734

Rosenberg, Blair and Rouleau JJ.A.

BETWEEN

Her Majesty the Queen

Respondent/Appellant

and

Beverley Dwyer

Appellant/Respondent

Ryan Clements, for Beverley Dwyer

Melissa Adams, for the Crown

Heard: September 7, 2012

On appeal from the conviction entered by Justice Faye E. McWatt of the Superior Court of Justice, sitting without a jury, on July 15, 2011, and from the sentence imposed on November 15, 2011, with reasons reported at 2011 ONSC 6555.

Rosenberg J.A.:

[1] The appellant Beverley Dwyer was convicted by McWatt J. of fraud over $5,000 and four counts of using a forged document. She appeals from the forgery convictions on the basis that they offend the rule against multiple convictions, articulated in R. v. Kienapple, [1975] 1 S.C.R. 729. She also appeals from the sentence of three and one-half years imprisonment. The Crown appeals from the refusal of the trial judge to order a fine in lieu of forfeiture pursuant to s. 462.37(3) of the Criminal Code. For the following reasons, I would dismiss the appeals. In these reasons, I refer to Ms. Dwyer as the appellant, even where she is the respondent on the Crown appeal.

FACTS

[2] For the purposes of these reasons, the facts may be summarized as follows.

[3] The appellant, who had experience as a tax preparer and mortgage broker, obtained control of various pieces of identification belonging to her half-sister, Pauline Barnes. During the relevant time, Ms. Barnes lived in the United States and would occasionally return to Ontario. The fraud relates to the family home where the appellant, her mother, Pauline Barnes’s daughter and other family members lived. The home was in the name of the appellant, her mother and Pauline Barnes’s daughter.

[4] In August 2005, the appellant approached Ms. Barnes to help her refinance the family home. She convinced Ms. Barnes to let her use her name on the mortgage application. Over the next few weeks, the appellant presented various false documents, some of which were the subject of the using-forged-documents charges, to a representative of the Royal Bank of Canada to obtain the mortgage. The bank gave a mortgage for $663,750. These funds were paid into the trust account of a lawyer, Mr. Atuobi-Danso. When the bank learned of the fraud it was able to recover over $400,000 from various sources. Ms. Barnes was criminally charged in relation to the fraud. Those charges were eventually withdrawn. The trial judge found that Ms. Barnes was an innocent dupe. Mr. Atuobi-Danso was disciplined by the Law Society of Upper Canada for his involvement in the transactions.

The Conviction Appeal

[5] The appellant submits that the convictions for forgery should be stayed in accordance with the rule in Kienapple. The appellant submits that the use of the forged documents was the means by which the fraud was committed and accordingly, it was a single transaction. The charges involved are: one count of fraud over $5,000 where the victim is the Royal Bank of Canada; and four counts of using a forged document (a 2003 Revenue Canada Notice of Assessment, a forged 2003 Revenue Canada Tax Return, a forged 2004 Revenue Canada Notice of Assessment, and a forged 2004 Revenue Canada Tax Return). These documents related to Pauline Barnes and had been forged to show that Ms. Barnes had employment income of over $200,000. In fact, Ms. Barnes never made more than $23,000 per year. These documents, along with various other false documents, were presented to a representative of the bank to support the application for a mortgage to refinance the house where the appellant, her mother and various other family members lived.

[6] In my view, the Kienapple rule does not apply. The rule precludes multiple convictions for different offences where there is both a factual and legal nexus connecting the offences. While there is a close factual nexus, the legal nexus is missing. The fraud charge and the charges of using forged documents have different elements and describe different criminal wrongs: see R. v. R.K. (2005), 198 C.C.C. (3d) 232 (Ont. C.A.), at paras. 27-40; and R. v. Prince, [1986] 2 S.C.R. 480, at pp. 493-96. I would dismiss the appeal from conviction.

The Appellant’s Sentence Appeal

[7] The trial judge sentenced the appellant to three and one-half years imprisonment. The appellant submits that the trial judge erred in principle in several respects. The first alleged error concerns material the Crown filed at the sentence hearing. The Crown filed the reasons in three separate discipline cases before the Law Society of Upper Canada in which the appellant was referenced as having dealings with each of the lawyers involved. The appellant’s role in the transactions is unclear. In her reasons for sentence, the trial judge made reference to those proceedings in the following terms:

Although Ms. Dwyer is not the subject of any of these hearings nor took part as a party in them, her involvement in transactions which the Society found to be fraudulent and deserving of discipline against each of the three lawyers is of concern. That is especially so because the cases set out some starkly similar facts to the features of the case before me.

[8] I agree with the appellant that this information should not have been presented in the form that it was and that the trial judge should have ignored it. These other alleged bad acts and uncharged transactions were never proved beyond a reasonable doubt as required by s. 724(3)(e): see R. v. Angelillo, 2006 SCC 55, [2006] 2 S.C.R. 728, at para. 32. The trial judge should not have taken this material into consideration. However, as her reasons show, the trial judge did take this material into account.

[9] The appellant also submits that the trial judge erred in finding that the appellant committed a breach of trust. The trial judge found that the appellant abused Ms. Barnes’s trust while safe-keeping her identity cards and then in the fraudulent use of her social insurance number, which she had from preparing Ms. Barnes’s tax returns in prior years. The trial judge also stated that the appellant had abused “the public trust given to her as a tax preparer and mortgage broker”.

[10] In my view, the trial judge did not err in her characterization of the offences and the appellant’s history. As the trial judge noted earlier in her reasons, the appellant had been previously convicted of 17 counts of false reporting of inflated expenses and two counts of tax evasion in her tax preparing business. On appeal from conviction and sentence respecting those convictions, the summary appeal court judge described the offences as a “breach of the public trust”. It was also fair to characterize the appellant’s dealings with Ms. Barnes as a form of breach of trust. The evidence shows that Ms. Barnes and the other members of the appellant’s family relied upon the appellant in respect of financial dealings. It was because they trusted her that the appellant was able to place the mortgage on the family home and defraud the bank of over $600,000.

[11] The appellant further submits that the trial judge erred in treating the appellant’s failure to make restitution as an aggravating factor. I agree with that submission. The appellant did not have the advantage of having made restitution as a mitigating factor, but that did not make the offence more serious. The objective gravity of the offence lay in the manner in which the appellant fraudulently obtained the mortgage.

[12] Given the errors in principle in the use of the Law Society proceedings and the mischaracterization of the failure to make restitution, it falls to this court to determine a fit sentence without deference to the trial judge’s decision. In my view, the sentence of three and one-half years imprisonment was fit. As I have noted, the appellant did commit a breach of trust. She used her access to documents and information that had been entrusted to her to obtain the mortgage. She abused the trust that her mother and other members of her family placed in her with respect to financial dealings. Her actions led to Ms. Barnes, her half-sister, being criminally charged. As a result of the fraud, the family lost its home. Remarkably, this was not the first time the appellant had dishonestly dealt with the home. In 1995, when her mother was out of the country, the appellant put the family home up for sale without her mother’s knowledge.

[13] The appellant was a mature offender with a history of dishonesty. In addition to the prior income tax offences, she had been previously convicted of furnishing false information to the Superintendent under the Mortgage Brokers Act, R.S.O. 1990, c. M.39. Given the size of the fraud in this case and its impact on the victims, I am of the view that the sentence was fit.

[14] Accordingly, while I would grant leave to appeal sentence, I would dismiss the appellant’s appeal from sentence.

The Crown’s Sentence Appeal

[15] Section 462.37 of the Criminal Code provides for the forfeiture of the proceeds of crime where an offender is convicted of a designated offence. Fraud over $5,000 is a designated offence: s. 462.3(1). Section 462.37 also provides for a fine in lieu of forfeiture pursuant to subsection (3) if the court is satisfied that a forfeiture order should be made in respect of any property but that property or any part of it cannot be made subject to an order. Subsection (4) requires the court to impose a term of imprisonment in default of payment of the fine, the length of the term depending on the amount of the fine.

[16] The evidence showed that the Royal Bank of Canada was defrauded of $633,750. Once it learned of the fraud, the bank was able to recover $426,049 by the freezing of bank accounts, the repayment of funds from payees and civil actions. The details as to how and from whom the bank recovered these funds were not disclosed during the sentence proceedings. This left $207,700 outstanding. The Crown sought a fine in lieu of forfeiture in that amount.[^1] There is no question that a forfeiture order could not be made in respect of this amount since neither the bank nor the police were able to trace those funds.

[17] The trial judge gave the following reasons for refusing to make the order for a fine in lieu of forfeiture:

As much as it would be appropriate in the circumstances of this case, I cannot see that the provisions of sections 462.37(1), (3) and (4) of the Criminal Code relating to forfeiture of proceeds of crime are practical. If I were to impose a fine in lieu of of forfeiture, that fine must be $207,700 [R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392], and as much as I believe that the defendant still has much of that money, section 462.37(4)(v) of the Criminal Code would necessitate that a two to three year jail sentence be imposed in default of payment of the fine.

During the sentencing hearing, the defendant asserted, through counsel, that she is unable to pay a fine, but adduced no evidence to support that assertion. She has blatantly avoided the issue of where the $207,700 is now and I conclude as a result of that that they are in her possession.

The three and a half year period of incarceration is sufficient in light of the outstanding funds received and kept by the defendant.

[18] As the trial judge recognized, the leading decision on the interpretation and application of s. 462.37(3) and (4) is the Supreme Court of Canada’s decision in R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392. However, in my view, the trial judge erred in her interpretation of s. 462.37(3). In Lavigne, the court held that a trial judge has only a limited discretion to refuse to make an order for a fine in lieu of forfeiture where the pre-requisites for making the order have been made out. In this case, the trial judge refused to order a fine in lieu of forfeiture because it was her view that the three-and-one-half-year sentence was sufficient. In other words, since the principles of sentencing would be satisfied by the three-and-one-half-year prison sentence, that sentence would be a sufficient punishment. However, that basis for refusing to order a fine in lieu of forfeiture was rejected by the Supreme Court in Lavigne, at paras. 25-26:

The amicus curiae argues that the effect of imposing a fine without regard to the general principles of sentencing is to punish the offender twice. What that argument fails to consider is that those principles are not all disregarded and that a fine instead of forfeiture is seen as a separate component of the sentence. While such an order is technically part of the sentence, it is nevertheless distinguished by the fact that its purpose is to replace the proceeds of crime. It is not regarded as punishment specifically for the designated offence.

The actual objective of Part XII.2 is to deal with the proceeds of crime separately from, and in addition to, the punishment for committing a crime. The fine imposed in this instance has some special features: there are specific rules for imprisonment in default of payment (s. 462.37(4) and (5)). The fine or imprisonment imposed as the primary sentence punishes the commission of the designated offence, while forfeiture or a fine instead of forfeiture deprives the offender of the proceeds of his or her crime and deters potential offenders and accomplices. [Emphasis added.]

[19] Further, to the extent that the trial judge may have not imposed a fine in lieu of forfeiture because the appellant did not have an ability to pay the fine, that was not an appropriate consideration, as the court in Lavigne made clear, at para. 37:

Given the clear objective, the fact that the words are equally clear, and the counter‑productive effects of taking ability to pay into consideration, I conclude that the court may not take ability to pay into account in determining the amount of the fine to be imposed instead of forfeiture.

The ability to pay is only a factor in considering how much time the offender should be given to pay the fine: Lavigne, at paras. 47-48.

[20] Given the trial judge’s errors, it falls to this court to determine whether a fine in lieu of forfeiture should be imposed and, if so, the terms for payment. This court has no power to remit the question of sentence to the trial judge: R. v. Kakekagamick (2006), 81 O.R. (3d) 664 (C.A.), at para. 60.

[21] The appellant submits that the order should not be made because the Crown failed to establish that the missing funds were property “of an offender”. This submission turns on the interpretation of ss. 462.37, 462.3 and 2 of the Criminal Code. A pre-requisite to imposing a fine in lieu of forfeiture is that an order of forfeiture under s. 462.37(1) should be made. A pre-requisite to making a forfeiture order is that the court is satisfied on a balance of probabilities that “any property is proceeds of crime and that the designated offence was committed in relation to that property”. “Proceeds of crime” is broadly defined in s. 462.3(1) as “any property, benefit or advantage, within or outside Canada, obtained or derived directly or indirectly as a result of (a) the commission in Canada of a designated offence”.

[22] As is made clear in para. 12 of Lavigne, the term “property” in these sections has the meaning set out in s. 2:

(a) real and personal property of every description and deeds and instruments relating to or evidencing the title or right to property, or giving a right to recover or receive money or goods,

(b) property originally in the possession or under the control of any person, and any property into or for which it has been converted or exchanged and anything acquired at any time by the conversion or exchange,

[23] The part of the definition that applies in this case is para. (b), being “property originally in the possession or under the control of any person”. I accept that the Crown proved that the designated offence of fraud was committed in relation to the entire $633,750. The difficulty is that the Crown failed to prove that the entire amount was originally in the possession or under the control of the appellant.

[24] In my view, an order for a fine in lieu of forfeiture can be made under s. 462.37(3) only where the offender has possession or control of the property in question or at least had possession of the property at some point. This conclusion flows from the use of the phrase “any property of an offender” in s. 462.37(3) and the definition of “property” in s. 2. Such an interpretation is consistent with the objectives of s. 462.37, which are to deprive offenders of the proceeds of crime and ensure that they do not benefit from those proceeds: see R. v. Appleby, 2009 NLCA 6, 242 C.C.C. (3d) 229, at paras. 26, 32-33. Those objectives would not be furthered by making orders in relation to property that was never in the possession of the offender, over which the offender never had control and from which the offender did not benefit: see also R. v. Mackenzie, [2002] O.J. No. 2512 (C.J.).

[25] The decision to order a fine in lieu of forfeiture must be based on the evidence. As the court in Lavigne said, at para. 35:

The fine, as that provision [s. 462.37(3)] says, is equal to the value of the property. Further, equivalency between the value of the property and the amount of the fine is inherent in the words “instead of”. The fine takes the place of forfeiture. For the substitution to be genuine, the value must be equal. The court’s discretion applies both to the decision whether or not to impose a fine and to the determination of the value of the property. It must be exercised in light of the evidence, and once this process has been completed, the court may not take the offender’s ability to pay into consideration as a basis for deciding either to impose no fine or to reduce the amount of the fine. [Emphasis added.]

[26] In her reasons, the trial judge stated: “I believe that the defendant still has much of that money”; and “She has blatantly avoided the issue of where the $207,700 is now and I conclude, as a result of that, that they are in her possession.” The trial judge did not, however, identify any of the evidence upon which those findings were based and, in my view, that finding is not supported by the evidence. In argument before this court, Crown counsel could point to only one item in the record that showed the appellant had control of the missing funds. This is a direction to the lawyer, Mr. Atuobi-Danso, to pay out certain of the proceeds. It is a reasonable inference that this document was authored by the appellant and is some evidence of her control of the funds referred to in the direction. However, this document and the other supporting documents, such as cheques, only account for $436,756.38. There is no explanation for the remaining funds and thus no evidence that the appellant ever had control of the missing funds. Crown counsel at trial conceded in her submissions that it was difficult to trace the funds. For example, in respect of where the funds went, she told the judge that “all of that would be speculative”. The Crown made no attempt to identify the missing funds, so as to show they were the funds referred to in the direction and had not been recovered by the Bank. At its highest the evidence shows that the appellant had control of $10,700 more than the Bank recovered. I would therefore allow the Crown appeal only to the extent of ordering that the appellant pay a fine of $10,700. In default of payment the appellant is sentenced to a term of 6 months imprisonment consecutive pursuant to s. 462.37(4)(a)(ii) and (b) of the Criminal Code.

[27] In my view, given the Crown’s failure to prove even on a balance of probabilities that the appellant had possession or control of the missing funds, I can see no basis for making the order for a fine in lieu of forfeiture except as stated above.

DISPOSITION

[28] Accordingly, I would dismiss the appellant’s conviction appeal. I would grant leave to appeal sentence to both the appellant and the Crown. I would dismiss the appellant’s sentence appeal. I would allow the sentence appeal by the Crown and impose a fine of $10,700 in lieu of forfeiture. In default of payment I would impose a sentence of 6 months imprisonment consecutive to the sentence of three and one-half years imprisonment.

Released: “MR” January 22, 2013

“M. Rosenberg J.A.”

“I agree R.A. Blair J.A.”

“I agree Paul Rouleau J.A.”

[^1]: The bank was able to recover a further $183,900 from Mr. Atuobi-Danso’s insurer.