Court of Appeal for Ontario

DATE: 20221108 DOCKET: C70039

Doherty, Hoy and Paciocco JJ.A.

BETWEEN

His Majesty the King Respondent

and

Denise Henn Appellant

Counsel: Elliott Willschick, for the appellant Keith Garrett, for the respondent

Heard: October 28, 2022

On appeal from the sentence imposed on October 28, 2021 by Justice Angela L. McLeod of the Ontario Court of Justice, with reasons reported at 2021 ONCJ 547.

By the Court:

[1] The appellant was an account manager and defrauded her former employer, a small business. In 73 individual transactions between 2013 and 2016, she transferred a total of $45,222.26 into three separate accounts. She pled guilty to Fraud Over (s. 380(1)(a) of the Criminal Code, R.S.C. 1985, c. C-46) on September 13, 2021.

[2] The Crown sought a custodial sentence in the range of 15-18 months. The sentencing judge rejected the appellant’s submission that a conditional sentence was appropriate. She concluded at paras. 34 and 36 that there were no “exceptional mitigating circumstances” and that “a conditional sentence would not meet the sentencing principles of denunciation and deterrence in this matter. While the total amount stolen is not exceptional, the number of transactions are.”

[3] She sentenced the appellant to a 12 month custodial sentence, followed by three years’ probation, including a term of restitution, a DNA order, and an order of fine in lieu of forfeiture in the amount of $45,222.26 pursuant to s. 462.37(3) of the Criminal Code. The probation order requires the appellant to make restitution in installments of not less than $200 per month.

[4] The appellant sought leave to appeal the sentence imposed.

[5] At the conclusion of the hearing, we advised that leave was granted, allowed the appeal, and imposed a conditional sentence for two years less a day, followed by three years’ probation, and made a standalone restitution order in the amount of $45,222.26 under s. 738(1) of the Criminal Code. The restitution order shall require the appellant to pay the $5000 amount described in paragraph 9 below forthwith (which counsel agreed is by November 10, 2022). It shall also require the appellant to pay monthly instalments of not less than $200 until restitution in full.

[6] We advised counsel that, in addition to the conditions mandated by s. 742.3(1) of the Criminal Code, the conditional sentence was required to also include a term providing for payment of not less than $200 per month towards restitution, include house arrest (with exceptions for work and other limited, reasonable exceptions), and provide for the $5000 amount described in paragraph 9 below to be paid forthwith (which counsel agreed is by November 10, 2022). We further advised counsel that, like the probation order imposed by the sentencing judge, the probation order should provide for continued payments of not less than $200 per month towards restitution.[^1] With those instructions, and within those parameters, counsel agreed on the form of conditional sentence order and that agreed upon form is the form of conditional sentence that was ordered.

[7] The following are our reasons for doing so.

[8] The appellant was a 38-year-old first offender at the time of sentencing and has three children. At the time of sentencing, one child was in her 20’s, the second was in grade 9, and the third was 2 and one half years of age. The appellant was separated and the sole bread winner for her family. Between the time of her arrest in 2016 and the spring of 2021, she had sporadic employment and relied primarily upon Ontario Works and payments from the Child Tax Credit. Between the spring of 2021 and the time of sentencing, she was steadily employed at a local golf course. Before obtaining that employment, her income was $2150 a month and her bills exceeded $1900. She relied upon food banks. She had “bad credit” and could not borrow the funds required to pay restitution in advance of the plea. At her sentencing hearing, she stated that she had been able to catch up on her bills and to “put money away” and was able to start making restitution. On the eve of sentencing, she provided her counsel with a money order in the amount of $2000.

[9] Counsel for the appellant advised that she has saved at least $200 per month towards restitution since and has $5000 which she is in a position to pay.

[10] This court cannot vary a sentence imposed by a trial court unless the sentence is demonstrably unfit or the sentencing judge made an error in principle that impacted the sentence: R. v. Friesen, 2020 SCC 9, 444 D.L.R. (4th) 1, at para. 26; R. v. Lacasse, 2015 SCC 64, [2015] 3 S.C.R. 1089, at paras. 11 and 44.

[11] In our view, the sentencing judge committed two errors in principle that impacted the sentence: she erroneously considered the appellant’s failure to pay restitution before the guilty plea as an aggravating factor, and she failed to consider relevant mitigating factors.

Lack of restitution is not an aggravating factor

[12] The sentencing judge identified several aggravating factors, including: the breach of trust; the quantum of funds, which she characterized as considerable for a small business; the fact that her employer was a small business that she inferred was having some sort of financial set back; the extended period of time over which the funds were stolen; and the lack of restitution in advance of the plea.

[13] The Crown properly concedes that the sentencing judge erred in principle in finding that the lack of restitution paid in advance of the guilty plea was an aggravating factor, when it is simply the absence of a mitigating factor: R. v. Dwyer, 2013 ONCA 34, 301 O.A.C. 191, at para. 11. However, it argues that this error did not impact the sentencing judge’s conclusion that a conditional sentence was not appropriate and, in any event, as the sentencing judge identified several aggravating factors, it is not clear that this factor in fact affected the length of the custodial sentence imposed. Accordingly, the Crown submits, this court should not interfere.

[14] While, given the sentencing judge’s reasoning, this error in principle may not have impacted the sentencing judge’s conclusion that a conditional sentence was not appropriate, she explicitly recognized it as an aggravating factor “for consideration”. It must be taken that it impacted the length of the custodial sentence imposed by the sentencing judge. Accordingly, this error alone permits the court to determine a fit sentence without deference to the sentencing judge’s decision. However, the sentencing judge also failed to consider relevant mitigating factors, and that error directly impacted her decision that a conditional sentence was not appropriate.

Failure to consider relevant mitigating factors

[15] The sentencing judge identified the guilty plea and the lack of criminal record as mitigating factors, although she minimized both: the guilty plea was “very late” and the appellant was able to secure her position of trust because she did not have a criminal record.

[16] She wrote, at para. 20, “A presentence report was not sought.…There are no mental health concerns, no addiction issues identified.” She described, at para. 8, the fraud as having been “committed in support of greed”.

[17] These conclusions, and the failure to consider relevant mitigating factors, rest on a misapprehension of the evidence.

[18] While there was no presentence report, the medical legal report of Dr. David Murphy, a physician who has been providing Forensic Assessments and Forensic Psychotherapy for Adult and Adolescent Sexual Offenders and other Offenders for twenty-five years, was filed with the court. He diagnosed the appellant as suffering from Chronic, Complex, Post-Dramatic Stress Disorder[^2], due to events in both her childhood and her adult life, Alcohol Use Disorder, and that she was an adult child of an alcoholic. The sentencing judge failed to consider these mitigating factors.

[19] Further, Dr. Murphy addressed the cause of the appellant’s fraud. In his report, Dr. Murphy detailed that the appellant’s driver’s licence had been suspended and she had not paid a driving ticket, which, with accumulated interest had mounted to $20,000. Because she could not drive, she started using taxicabs to get to and from work, which contributed to her financial stress. She was unable to pay utility bills and started to take payday loans, which exacerbated the situation.

[20] As the Crown argues on appeal, Dr. Murphy relates the fraud to the appellant’s procrastination by writing that the appellant “appears to have taken the money in order to resolve the immediate crisis of her financial situation, which was created by her procrastination, and without fully taking into account the long-term consequences of her decision.” However, Dr. Murphy links that procrastination to her deteriorating psychosocial status. He noted that the appellant’s “psychosocial status has been steadily deteriorating over the last few years.…She has difficulty making decisions and procrastinates. Her procrastination creates more and more problems, until she becomes overwhelmed, reducing her ability to make decisions.”

[21] The fraud was not committed in support of greed. The appellant struggled to make ends meet, in part because of her deteriorated psychosocial status. Her deteriorated psychosocial status led her to make bad decisions.

[22] The sentencing judge’s conclusion that a conditional sentence was not appropriate rested on her assessment of the mitigating circumstances. It was likely also coloured by her perception that the fraud was committed in support of greed. Her failure to recognize the additional mitigating circumstances identified in Dr. Murphy’s report clearly impacted her conclusion that a conditional sentence was not appropriate in the circumstances.

A conditional sentence is fit and appropriate in the circumstances

[23] We concluded that a conditional sentence is fit and appropriate in the circumstances.

[24] The sentencing judge held that the requirements in s. 742.1 of the Criminal Code for the imposition of a conditional sentence were met, except for the requirement that the service of the sentence in the community be consistent with the fundamental purpose and principles of sentencing set out in ss. 718 to 718.2 of the Criminal Code. She concluded that a conditional sentence would not meet the sentencing principles of denunciation and deterrence.

[25] In our view, in this case a conditional sentence is consistent with the fundamental purpose and principles of sentencing set out in ss. 718 to 718.2 of the Criminal Code. There is no dispute that the other requirements of s. 742.1 have been met.

[26] Two of the objectives of sentencing identified in s. 718 of the Criminal Code are to denounce unlawful conduct and harm done to victims or to the community that is caused by unlawful conduct (s. 718(a)) and to deter the offender and other persons from committing offences (s. 718(b)). Another objective of sentencing is to provide reparations for harm done to victims or to the community (s. 718(e)).

[27] The sentencing judge correctly noted that general deterrence is a core goal of sentencing for a fraud conviction. But a conditional sentence can be appropriate even where deterrence and denunciation are the paramount considerations: R. v. Wells, 2000 SCC 10, [2000] 1 S.C.R. 207, at para. 35. This is particularly so “in circumstances where the offender is forced to take responsibility for his or her actions and make reparations to both the victim and the community, all the while living in the community under tight controls”: R. v. Proulx, 2000 SCC 5, [2000] 1 S.C.R. 61, at para. 41.

[28] That is the case here. Counsel for the appellant advised that the appellant spent 44 days in custody before obtaining bail pending appeal. By providing for a period of house arrest, the conditional sentence further denounces the appellant’s unlawful conduct and includes a further punitive element. It also requires the appellant to make reparations.

[29] In the circumstances, a conditional sentence more effectively achieves the restorative objective of reparations to the victim. While incarcerated, the appellant would not be able to make reparations.

[30] Moreover, in addition to the conditional sentence, restitution is ordered. Restitution orders give effect to several sentencing principles, including denunciation and specific and general deterrence: R. v. Yates, 2002 BCCA 583, 8 C.R. (6th) 98, at para. 7.

[31] A conditional sentence for a period of two years less a day, providing for a period of house arrest and requiring regular restitution payments, followed by three years’ probation during which the appellant must also make regular restitution payments, combined with a restitution order under s. 738(1) of the Criminal Code, is reasonable in the circumstances and consistent with the harm done to her defrauded employer.

No order for fine in lieu of forfeiture

[32] As noted above, the sentencing judge also ordered a fine in lieu of forfeiture pursuant to s. 462.37(3) of the Criminal Code. The order of fine in lieu of forfeiture, dated October 28, 2021, requires the appellant to pay $45,222.26 within 9 years, with the fine amount “to be [reduced] by the amount paid by the restitution order”.[^3] A fine is payable to the state, not to the victim of the fraud.

[33] Section 462.37(4)(a) of the Criminal Code requires that where a court orders an offender to pay a fine pursuant to s. 462.37(3), the court shall impose, in default of payment of that fine, a term of imprisonment,

(iii) of not less than twelve months and not exceeding eighteen months, where the amount of the fine exceeds twenty thousand dollars but does not exceed fifty thousand dollars

[34] The order of fine in lieu of forfeiture leaves blank the term of imprisonment it imposes in default of payment of the fine. This appears to have been an oversight. The Crown urged us to correct this, and make an order for fine in lieu of forfeiture, providing for a term of imprisonment of twelve months in default of payment of the $45,222.26 within nine years, in addition to a restitution order.

[35] An order imposing a fine in lieu of forfeiture is discretionary under s. 462.37(3), albeit the discretion is narrow: R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, at paras. 27-28. In our view, the circumstances of this case bring it within that narrow discretion. A fine in lieu of forfeiture is not appropriate here.

Disposition

[36] Accordingly, leave to appeal the sentence was granted, the appeal was allowed, and the following sanctions were imposed on the appellant:

• A conditional sentence which requires her to make payments to the victim for the two-years less a day period of the conditional sentence. A failure to make the payments can result in incarceration.
• A three-year probation term which begins when the conditional sentence is complete and also requires regular payments. A failure to comply with this order can result in incarceration.
• A restitution order in the amount of $45,222.26 which mirrors the payment obligations in the conditional sentence and the probation order and requires the appellant to continue to pay monthly instalments of not less than $200 following the completion of her probation term until restitution in full. This order can be enforced civilly pursuant to s. 741(1) of the Criminal Code in the event of default in payment.

Released: November 8, 2022 “D.D.” “Doherty J.A.” “Alexandra Hoy J.A.” “David M. Paciocco J.A.”

Footnotes

[^1]: The amounts required to be paid under the conditional sentence and the probation order are not in addition to the amounts required to be paid under the restitution order. They mirror the payment schedule under the restitution order. [^2]: Dr. David Murphy’s medical legal report stated that the appellant was diagnosed with “Chronic, Complex, Post-Dramatic Stress Disorder”. This diagnosis may be referring to “Chronic, Complex, Post-Traumatic Stress Disorder”. [^3]: While the probation order made by the sentencing judge includes a term requiring payment of restitution in the amount of $200 per month during the three-year probation period, there is no restitution order. The court accepted that the sentencing judge meant to make a restitution order, in addition to the order for a fine in lieu of forfeiture and probation order.