Court of Appeal for Ontario

Date: April 9, 2019

Docket: C65413

Judges: Pardu, Nordheimer and Harvison Young JJ.A.

Between

Her Majesty the Queen Appellant

and

Ajay Sharma Respondent

Counsel:

• Lisa Csele, for the appellant
• Robert Lepore, for the respondent

Heard: February 28, 2019

On appeal from the sentence imposed on April 27, 2018 by Justice Kathryn L. Hawke of the Ontario Court of Justice.

Pardu J.A.:

A. Overview

[1] The Crown appeals from a sentence imposed on a guilty plea to fraud. The respondent operated a tax return preparation business. He added false claims of business losses to 37 of his clients' tax returns for the 2009-2012 taxation years, potentially resulting in a loss of federal tax revenue of $488,178.37. The revenue authorities are in the process of reassessing interest and potential penalties for the affected taxpayers, and the amount of the ultimate actual loss, if any, is not known. The respondent personally benefited from the scheme in the amount of $96,946.

B. The Decision of the Sentencing Judge

[2] The sentencing judge imposed a conditional sentence of two years less a day. She added conditions intended to promote the respondent's rehabilitation and reduce the risk that he re-offend. For the first eight months, he was under house arrest; for the next eight months he was subject to a curfew from 10:00 p.m. to 6:00 a.m.; the conditional sentence was followed by probation for three years. He was fined $96,946, with the provision that $70,000 had to be paid towards that fine during the term of the conditional sentence.

[3] The respondent is now 67 years old. The sentencing judge acknowledged that the respondent has generalized anxiety disorder and problems with alcohol. Further, the respondent provided some evidence that he suffers from heart disease and high blood pressure. He has a criminal record including convictions for uttering forged documents in 1990 and 1994, and frauds in 2000 and 2006 for which he was sentenced to one day of imprisonment, and for which the sentence was suspended, respectively. He also has several convictions for impaired driving.

[4] The Crown asked for a two year sentence and a fine, in the amount that was ultimately ordered by the sentencing judge. The defence agreed to the fine and submitted that a conditional sentence of up to two years less a day would be adequate.

[5] The sentencing judge observed that the respondent was working and that he could continue working if he received a conditional sentence. She took note of his health issues. She noted the aggravating factors. This included the planning and deliberation associated with the commission of the offence and the breach of trust, although the latter was somewhat attenuated by the possibility that some of the clients were actively involved in the filing of false returns. Other aggravating factors noted by the sentencing judge included the medium to larger scale of the fraud and the respondent's criminal record.

[6] She then turned to the mitigating factor, the early indication of a guilty plea. The sentencing judge noted that the plea came early and that pleas in fraud cases save the justice system resources.

[7] The sentencing judge then turned to the crux of the issue:

…the issue becomes whether, given the principles of general deterrence and denunciation, is a real jail sentence required in the circumstances or can these principles be satisfied through terms in a conditional sentence order. In thinking about that, certainly there are some symbolic things in terms of general deterrence that a real jail sentence involves but I think it's also fair to consider some practical considerations. And I think that the public is reasonably astute to some of these practical considerations. There is an agreed upon fine in this case. It's a substantial fine. That fine has a general deterrence aspect in and of itself but one of the things that is important with a fine is that it be paid and real incarceration would result in him not working. The defendant is 65. I think it's a very open question if he could re-establish himself in the employment market after being away from it and in jail. And, also there would be competing expenses that would stack up over the time that he'd be in jail, things like housing and such, the cost of that continues whether you are in jail or not. So, there is every reason, I think, to believe that going to jail would hamper his ability to pay the fine. And, as I mentioned before, I think it is an important element as part of this sentencing proposal. And, I think there is a way to have terms satisfy general deterrence and denunciation that would pull the entire sentence together as one package that satisfies the principles of sentence.

C. Parties' Positions

[8] On appeal, the Crown submits that the sentence imposed was manifestly unfit, and that the sentencing judge erred by giving priority to enabling the respondent to continue working and pay the fine by imposing a conditional sentence. The Crown submits that the sentencing judge ignored the legal principles of denunciation and deterrence.

[9] The Crown points to cases in which this court has declined to intervene with custodial sentences imposed in large fraud cases, where the appellant seeks a conditional sentence on appeal: R. v. Mathur, 2017 ONCA 403; R. v. Pastore, 2017 ONCA 487; R. v. Wilson, 2016 ONCA 888.

[10] The respondent takes the position that appellate intervention is not justified. He argues that the sentence imposed is within the range of sentences imposed for this type of offence, and even if it were not within the sentencing range, this would be insufficient to warrant appellate intervention. The respondent submits that the sentence is not manifestly unfit and that the sentencing judge considered all appropriate sentencing principles.

D. Analysis

[11] I would briefly note that a conditional sentence is available here because this offence was committed before the effective date of amendments to the Criminal Code, R.S.C. 1985, c. C-46, s. 742.1 which removed the availability of a conditional sentence for fraud over $5,000.

[12] I accept that the two year sentence sought by the Crown would not have been an unfit sentence in this case, had it been imposed by the sentencing judge, however as indicated in R. v. Lacasse, 2015 SCC 64, [2015] 3 S.C.R. 1089, at paras. 58, 60:

[58] There will always be situations that call for a sentence outside a particular range: although ensuring parity in sentencing is in itself a desirable objective, the fact that each crime is committed in unique circumstances by an offender with a unique profile cannot be disregarded. The determination of a just and appropriate sentence is a highly individualized exercise that goes beyond a purely mathematical calculation. It involves a variety of factors that are difficult to define with precision. This is why it may happen that a sentence that, on its face, falls outside a particular range, and that may never have been imposed in the past for a similar crime, is not demonstrably unfit. Once again, everything depends on the gravity of the offence, the offender's degree of responsibility and the specific circumstances of each case. LeBel J. commented as follows on this subject:

A judge can order a sentence outside that range as long as it is in accordance with the principles and objectives of sentencing. Thus, a sentence falling outside the regular range of appropriate sentences is not necessarily unfit. Regard must be had to all the circumstances of the offence and the offender, and to the needs of the community in which the offence occurred. (Nasogaluak, at para. 44)

[60] In other words, sentencing ranges are primarily guidelines, and not hard and fast rules: Nasogaluak, at para. 44. As a result, a deviation from a sentencing range is not synonymous with an error of law or an error in principle. Sopinka J. stated this clearly in McDonnell, although he was referring in that case to categories of assault:

… in my view it can never be an error in principle in itself to fail to place a particular offence within a judicially created category of assault for the purposes of sentencing…. If the categories are defined narrowly, and deviations from the categorization are generally reversed, the discretion that should be left in the hands of the trial and sentencing judges is shifted considerably to the appellate courts. [para. 32]

[13] Here, the sentencing judge imposed an integrated package of measures intended to promote the public interest, secure the respondent's continued employment, facilitate the respondent's payment of the fine and reduce the risk of re-offence. She expressly considered denunciation and deterrence; as is evidenced by the passage reproduced earlier in my reasons, she gave meaningful thought to whether a real jail sentence was required given the principles of deterrence and denunciation.

[14] I would dismiss the appeal for three reasons.

[15] First, the sentence imposed mirrors in many respects, the course the respondent would have followed had the two year sentence been imposed as requested by the Crown. The respondent would have been eligible for parole after serving one third of a two year sentence, i.e. at eight months: Corrections and Conditional Release Act, S.C. 1992, c. 20, s. 120(1). Incarcerated persons serving fixed sentences of two years or more who are not paroled after serving one third or more of the sentence are almost always released on statutory release after serving two thirds of their sentence, or after 16 months of a two year sentence: CCRA s. 127(3). After that time, the incarcerated person would be supervised on parole until the expiry of the two year sentence: CCRA, s. 127(7).

[16] Here, the respondent was on house arrest for eight months, and subject to a restrictive curfew for the following eight months. The period of probation imposed on the respondent by the sentencing judge substantially increases the time during which he is under supervision, for three years after his two year less a day conditional sentence.

[17] The respondent has now served the eight months of house arrest and several months towards the second period under curfew. Were we to accede to the Crown's request to now impose a two year sentence, he would have to re-serve eight months of the custodial sentence before being eligible for parole, which in a sense he has already served.

[18] Even if this court were to give some credit for the terms of the conditional sentence already served, because of the differences between the federal and provincial prison regimes, the respondent would still substantially re-serve the sentence. For example, if this court were to impose a one year reformatory sentence, he would likely serve 8 months of that sentence, then be released without supervision. Remission in provincial institutions is earned for good behaviour while in custody, credited at 15 days per month served, as calculated under the federal Prisons and Reformatories Act, R.S.C., c. P-20, s. 6 (incorporated by reference to Ontario reformatories by ss. 28 and 28.1 of the Ministry of Correctional Services Act, R.S.O. 1990, c. M. 22): R. v. Plante, 2018 ONCA 251, at para. 4. As per R. v. Summers, 2014 SCC 26, [2014] 1 S.C.R. 575, at para. 25, in the majority of cases, those serving reformatory sentences are released on remission after serving two thirds of their sentence.

[19] Second, I am not satisfied that the sentencing judge erred in principle. In R. v. Klundert, 2011 ONCA 646, 107 O.R. (3d) 561, leave to appeal refused, [2011] S.C.C.A. No. 512, an analogous case of tax evasion, this court allowed the sentence appeal and imposed a one year conditional sentence instead of the one year prison term originally imposed. As Klundert held, there is no absolute rule that a conditional sentence is not appropriate in tax evasion cases: at para. 21. In my view, under the operative version of s. 742.1, the same is true for this analogous conviction for fraud over $5000.

[20] It was open to the sentencing judge here to conclude that the public interest and the objectives of sentencing would be better met by a package allowing the respondent to continue his employment, pay the fine and remain under supervision for an extended time on terms designed to reduce the risk of re-offence. This was not a violent offence. Given the nature of the fraud, where the ultimate actual loss is unknown, and given the age, circumstances and health of the respondent, I am not satisfied that incarceration in an institution was the only option. The sentencing judge expressly considered the need for denunciation and deterrence and imposed an integrated package of measures that satisfied these sentencing principles.

[21] Deference applies to sentences which might be viewed as more lenient as well as those which are stiffer.

[22] As explained by Laskin J.A. in R. v. McKnight, 44 O.R. (3d) 263 at p. 273:

Moreover, this court has held that over-emphasizing a relevant factor or failing to give enough weight to a relevant factor may amount to an error in principle. This does not mean, however, that an appellate court is justified in interfering with a trial judge's exercise of discretion merely because it would have given different weight or emphasis to a factor relevant to the sentence. To suggest that a trial judge commits an error in principle because in an appellate court's opinion the trial judge gave too much weight to one relevant factor or not enough weight to another is to abandon deference altogether. The weighing of relevant factors, the balancing process is what the exercise of discretion is all about. To maintain deference to the trial judge's exercise of discretion, the weighing or balancing of relevant factors must be assessed against the reasonableness standard of review. Only if by emphasizing one factor or by not giving enough weight to another, the trial judge exercises his or her discretion unreasonably should an appellate court interfere with the sentence on the ground that the trial judge erred in principle.

[23] In addition, the principle of restraint in sentencing still means that incarceration is the sanction of last resort: R. v. Hamilton, 72 O.R. (3d) 1, at para. 96. In light of the position taken by Crown counsel at the sentencing, that an appropriate sentence was one of two years, it is difficult to characterize the sentence imposed by the trial judge as manifestly unfit, even though the prevailing caselaw might suggest it was exceptional.

[24] Third, it would be unfair to re-incarcerate the respondent after he has substantially served the house arrest portion of the conditional sentence. In R. v. Hamilton, Doherty J.A. for this court concluded that a sentencing judge erred in imposing a conditional sentence on cocaine couriers, where the usual sentence would have been in the two year range, and where conditional sentences were rarely available because of the serious nature of the offence and the damage done by those crimes to Canadian society. He concluded that actual incarceration for 20 months and two years less a day would have been appropriate for one of the offenders, and actual incarceration of two years less a day would have been appropriate for the other offender: Hamilton, at para. 164. This court declined however to re-incarcerate the offenders after they had served close to 17 months of the conditional sentence, as was explained at paras. 165-66:

[165] The ultimate question is, however, should these respondents be sent to jail now? They have served close to seventeen months of their conditional sentences. There is no suggestion that they have not complied with the terms of those sentences or that they have committed any further offences. This court has recognized both the need to give offenders credit for conditional sentences being served pending appeal and the added hardship occasioned by imposing sentences of imprisonment on appeal. The hardship is readily apparent in these cases. Had the respondents received the appropriate sentences at trial, they would have been released from custody on parole many months ago, and this sad episode in their lives would have been a bad memory by now.

[166] This was a significant appeal for the administration of justice. The decision of the trial judge raised important issues that required the attention of this court. Appeals take time. Lives go on. Things change. These human realities cannot be ignored when the Court of Appeal is called upon to impose sentences well after the event. The administration of justice would not be served by incarcerating the respondents for a few months at this time. They have served significant, albeit, inadequate sentences. To impose now, what would have been a fit sentence at trial, would work an undue hardship on the respondents. The administration of justice is best served by allowing the respondents to complete their conditional sentences. [Emphasis added.]

[25] As in Hamilton, the administration of justice would not be served by re-incarcerating the respondent after he has served the house arrest portion of the conditional sentence. To require him to serve a custodial type sentence twice would work an undue hardship on the respondent, and the public interest is better served by allowing him to complete the conditional sentence and observe the terms of the three year probation term imposed.

[26] Accordingly, I would dismiss the appeal.

Released: April 9, 2019

"GP"

"G. Pardu J.A."

"I agree I.V.B. Nordheimer J.A."

"I agree A. Harvison Young J.A."