Court File and Parties

Court File No.: Hamilton 13-3494

Ontario Court of Justice

Between:

Her Majesty the Queen

— and —

Janis Cavanagh

Before: Justice J.D. Takach

Heard on: April 4, 2014, June 25, 2014, November 10, 2014

Reasons for Judgment released on: January 27, 2015

Counsel:

• J. Vincelli, for the Crown
• R. Yachetti, for the accused Janis Cavanagh

Judgment

TAKACH J.:

[1] The offender has pleaded guilty to defrauding her employer of a sum of money exceeding $219,000.00. The facts are fully reflected in Exhibit 1, the agreed statement of fact.

[2] In addition I have heard witnesses called on her behalf to attest to her character and her value as a friend and relative. I have had the benefit of a Presentence Report and lengthy submissions of argument. I have carefully read the Victim Impact Statement filed by the manager of the victim company. Counsel for the offender seeks a conditional sentence while the Crown suggests that a period in custody in the 18-23 month range is appropriate. As well, the Crown argues for restitution and forfeiture or a fine in lieu of forfeiture.

[3] As in any case, there are a number of mitigating and aggravating factors.

Mitigating Factors

[4] Mitigating Factors:

1. Plea of guilt and presumed remorse thereby saving time of trial and the need for witnesses to testify.

2. Stated remorse as stated to friends and probation officer.

3. Some restitution is offered in recompense.

4. Some personal health and family issues to be taken into account. Providing for a handicapped son is clearly a burden that most do not carry.

5. Support of friends and family as evidenced by letters and testimony.

6. Attempts to overcome personal issues with counselling.

7. No previous record.

8. The Presentence Report can be characterized as positive.

Aggravating Factors

[5] Aggravating:

1. A large sum of money was involved in the theft.

2. The theft itself was a breach of trust from an employer.

3. The theft had a devastating effect on the victim company and its employees. Reference may be made to the Victim Impact Statement. Statements made therein are at odds with the character as attested to or written about from the offender's friends and family.

4. The thefts took place over a long period of time, five years, and the opportunity to repay and repent and to come forward was significant, yet the thefts continued until her position became redundant when she accepted severance pay. It took a subsequent audit to the books to reveal her misdeeds.

5. The reality and depth of her personal issues and their connection to the thefts may be more apparent than real.

6. The conduct of the offender was a somewhat sophisticated and diverse scheme.

7. There was no explanation for the disposition of the money except that she shopped to quell her anxiety or depression.

8. The motivation can easily be characterized as greed or an attempt to advance her own lifestyle.

Analysis of Factors

[6] Listing the mitigating and aggravating factors is a relatively straightforward process. Weighing the factors, the one against the other and assessing each of them is more difficult.

[7] For example, there is no doubt that the offender has faced a number of personal issues as outlined by Dr. White and the psychologist Dr. Baker. Some of these are anxiety or emotional issues and some of them are medical issues. Many individuals suffer some or all of these difficulties. In addition some of the issues that the offender faces have recently occurred, in other words, after her deception became apparent. Whatever the extent of her medical and emotional issues, it is not easy to draw connection between the offence and these difficulties as many people suffer from them and are not driven to the commission of criminal offences. Further, excessive shopping does not seem a natural consequence of these physical or emotional maladies considering the large sums appropriated.

[8] A number of individuals wrote letters in support of the offender attesting to her honesty and good character. Some individuals testified to this effect. They appeared somewhat unfazed by her conduct and still thought of her as a moral law-abiding citizen. Loyalty is indeed a commendable quality, however, as will be apparent from the Victim Impact Statement, if it is to be relied on, others at her place of employment clearly thought differently of her. To them she seemed unforgiving in the discharge of her responsibilities and critical of others who took her place in her absence. Naturally, these individuals are those who have been hurt by her conduct and, like friends and relatives of the offender, may not be completely impartial.

[9] I have already noted that the crime in question was committed over a five-year period and that it was committed in a number of different ways. There were three separate methods by which the offender stole from her company. While one may argue that they were not overly sophisticated, clearly some thought and planning went into the three separate methods of taking money, one of which was forging a fellow employee's signature on cheques payable to the offender. The offender was intelligent enough to devise a way of covering up her misdeeds.

The Law

[10] As in any criminal case, section 718 of the Criminal Code governs the imposition of a disposition.

718. The Fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, to the respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives:

a) to denounce unlawful conduct;

b) to deter the offender and other persons from committing offences;

c) to separate offenders from society, where necessary;

d) to assist in rehabilitating offenders;

e) to provide reparations for harm done to victims or to the community; and

f) to promote a sense of responsibility in offenders, and acknowledgement of the harm done to victims and to the community.

[11] S. 718.2 of the Criminal Code provides that offences involving a breach of trust is an aggravating circumstance.

[12] Appellate decisions have long held that individuals who commit breaches of trust will face sentences of incarceration in the absence of exceptional circumstances and that general and specific deterrence are the main considerations.

[13] I refer to R. v. McEachern [1978] No. 987 relied on by the Crown and R. v. Taipow, [2005] O.J. No. 4643 relied on by the offender, both of which support this principle.

[14] See also R. v. Dobis, [2002] 58 O.R. 536 where some of the allegations, but not all, are similar to the case at bar. The principles expressed therein are equally applicable to the offender's situation.

[15] In R. v. Taipow supra the Court of Appeal held that having regard to the principles of general deterrence and the offender's breach of trust involving a large sum of money, depression and a gambling addiction alone would not have affected a 12 month sentence. Only fresh evidence of a critical heart condition untreatable in custody, moved the Court of Appeal to vary the sentence to a conditional sentence.

[16] Counsel for Ms. Cavanagh has forcefully argued for a conditional sentence rather than a traditional sentence of imprisonment on the basis of R. v. Proulx 2000 SCC 5, [2000] 1 S.C.R. 61.

[17] Section 742.1 of the Criminal Code speaks of four criteria that a judge must give consideration to in connection with a submission that such a sentence is appropriate. While generally, no offences are excluded from the conditional sentence regime except those with a minimum term of imprisonment, and, since Proulx, certain statutory amendments have excluded certain offences.

[18] In so far as the case at bar is concerned, there was no minimum punishment for the offence in question specified, and this offence was committed prior to the amendments to 742.1. This is a case where if I were to impose a sentence of imprisonment, it would be for a period of less than two years and in my view in a general sense, the safety of the community would not be endangered by the imposition of a conditional sentence.

[19] It is the fourth requirement however, that stands in the way of a conditional sentence for the offender. In my view, a conditional sentence would not be consistent with the fundamental purpose and principles of sentencing set out in sections 718 to 718.2 of the Criminal Code and the existing jurisprudence with cases involving the breach of trust and the appropriation of significant sums of money.

[20] While noting that a conditional sentence can provide significant denunciation and deterrence, I also note that this is a very serious offence and in my respectful opinion, balancing the mitigating and aggravating factors, the need for denunciation or deterrence is a paramount consideration and can only effectively be met by a traditional form of incarceration.

[21] Of particular concern in the case at bar is not just the sum of money appropriated by the offender, but the methodology used by her to perpetrate her crimes and the period over which these crimes took place. But for the redundancy of her job and subsequent audits when the books would not balance, the fraud in question might have continued much longer. The offender's conduct was not a brief indiscretion, but one that continued over five years. Whatever her other virtues, her conduct was truly a criminal offence marking her dishonesty and lack of regard for the company that had been loyal to her and to her fellow employees.

[22] During the pretrial I expressed to both counsel that my preliminary view was that a sentence in the range of 18-24 months was appropriate, but that I would reserve a final determination until I had read the relevant material and heard from any witnesses to be called and had listened to final argument.

[23] Having heard the foregoing, my view remains that a conditional sentence is not appropriate in this case having balanced all considerations. But for the offender's health considerations and her burdens at home, the sentence that I am imposing would have been more significant and closer to what I originally felt to be appropriate.

[24] Accordingly, I impose a sentence of one year in custody plus ancillary orders of restitution and a fine in lieu of forfeiture.

[25] My reasons for the ancillary orders are as follows:

Restitution

[26] The Crown has requested restitution and a fine in lieu of forfeiture. The appropriate considerations for such requests are s. 738 and s. 462.37(3) of the Criminal Code and the cases of R. v. Castro 2010 ONCA 718, [2010] O.J. No. 4573, R. v. Waxman [2014] O.J. No. 1606, R. v. Lavigne 2006 SCC 10, [2006] 1 S.C.R. 392, R. v. Dwyer [2013] ONCA 34, and R. v. Maxwell [2014] ONCA.

[27] With respect to restitution in R. v. Castro, supra, the court reviewed R. v. Zelensky [1978] 2 S.C.R. 940 dealing with the appropriate considerations in making a compensation or restitution order. These included the purpose of such an order, the existence of civil proceedings and the means of the offender. Certain of the other considerations are not applicable to the case at bar.

[28] While no single factor may be determinative of such an order, the ability of the offender to pay in my view is a weighty consideration.

[29] There is no significant evidence one way or the other on the ability of the offender to pay restitution. It would not appear that the offender and her husband are wealthy individuals but they do own a house, the sale or financing of which would give rise to the ability to make restitution or a significant portion thereof. However, from a document in the offender's sentencing brief, the assessed MPAC value was $335,000.00 in 2012. During submissions, counsel for the offender referred to the fact that the offender and her husband had a high mortgage and little equity but such a proposition was not in my view substantiated by reliable evidence. I note as well that the theft from the employer started in 2006. Neither are young individuals with a large career ahead of them and they have a son who is in need of care. Much of the "evidence" with respect to ability to pay was made by way of submission rather than viva voce or reliable documentary evidence. It is difficult to conclude that as reported to doctors and the probation officer that $219,000.00 was spent on shopping. There is no indication of what item or items were included in "shopping". I am not, on the evidence, satisfied that the offender does not have the ability to pay.

[30] I make a restitution order in favour of Travelers Casualty and Surety of America in the amount requested by the Crown and $13,767.00 in favour of Pioneer Balloon Canada. As I have said, I am told the offender has placed $40,000.00 for restitution in the hands of counsel and accordingly, I direct that this amount be paid into court within 30 days and that $13,767.00 of that sum be paid to Pioneer Balloon Canada and the balance of the $40,000.00 to wit, $26,233.00 shall be paid to Travelers Casualty similarly, after which the remaining balance shall be dealt with in accordance with s. 741 of the Criminal Code.

Fine in Lieu of Forfeiture

[31] In R. v. Lavigne, supra, the court reviewed s. 462.37 of the Criminal Code dealing with the issue of fine in lieu of forfeiture. At trial, the trial judge took into account the offender's ability to pay and imposed a fine of a lesser amount than the value of the property that was the subject matter of the offence. At issue, included whether or not there reside in a trial judge the ability to take ability to pay into account and the nature of the discretion, if any, of a trial judge when dealing with s. 462.37(3).

[32] Deschamps J. speaking for the court and in reviewing the structure of s. 462.37 and the nature of any such discretion stated at paragraphs 10-15:

10. The sentence imposed for an offence under part XII.2 on proceeds of crime consists of two elements: the penalty for committing a designated offence [s.462.3(1)], and forfeiture of the proceeds of crime [s. 462.37(1)]. The new provisions are in addition to existing methods. The intention of Parliament clear. Not only must the act itself be punished, but it must not benefit the offender. Parliament's purpose in doing this is to ensure that crime does not pay. Although the appeal concerns the discretion of a court that imposes a fine instead of forfeiture, the objective of the primary provision must be correctly established for it to be possible to identify the objective of the provision authorizing this sentence.

11. The primary provision on forfeiture is capable of very broad meaning. It reads as follows:

462.3 (1) Subject to this section and sections 462.39 to 462.41, where an offender is convicted, or discharged under section 730, of a designated offence and the court imposing sentence on the offender, on application of the Attorney General, 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, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law. [Emphasis added.]

12. The property that is liable to forfeiture is property that is "proceeds of crime". This expression is defined as follows in s. 462.3(1):

462.3 (1) "proceeds of crime" means 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, or

b) an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence. The word "property" is defined in s. 2: "property" includes:

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 any thing acquired at any time by the conversion exchange.

13. There is thus a wide range of property that could be proceeds of crime. Such property may consist of real rights or personal rights, of corporeal or incorporeal property. Forfeiture may apply to the original property. It could also apply to a right in a portion of property. The link between the property or right and the designated offence need not be direct. It is enough that the offence be committed "in relation to" the property or the right.

14. As is clearly stated in s. 462.37(1), a court imposing sentence on an offender convicted of an offence involving the proceeds of crime "shall", on application of the Attorney General, order the forfeiture of the property where the offence was committed in relation to that property.

15. The broad meaning of the expressions "proceeds of crime" and "in relation to", combined with the fact that no discretion whatsoever is provided for in s. 462.37(1), is significant. Parliament has made this provision mandatory by requiring forfeiture and making the provision apply to the widest possible range of property.

[33] Deschamps J. then went on to consider s. 462.37(3) and the apparently permissive "may" when dealing with the imposition of a fine in lieu of forfeiture. S. 462.37(3) of the Criminal Code provides:

(3) If a court is satisfied that an order of forfeiture under subsection (1) or (2.01) should be made in respect of any property of an offender but that the property or any part of or interest in the property cannot be made subject to any order, the court may, instead of ordering the property or any part of or interest in the property to be forfeited, order the offender to pay a fine in an amount equal to the value of the property or the part of or interest in the property. In particular, a court may order the offender to pay a fine if the property or any part of or interest in the property,

(a) cannot, on the exercise of due diligence, be located;

(b) has been transferred to a third party;

(c) is located outside Canada;

(d) has been substantially diminished in value or rendered worthless; or

(e) has been commingled with other property that cannot be divided without difficulty.

[34] The larger issue on appeal whether the trial judge had a broad discretion in ordering fine and forfeiture, whether he had no discretion or whether he had a limited discretion but one did not allow for ability to pay to be taken into consideration. Deschamps J concluded that there was a limited discretion only and that such a discretion did not include ability to pay considerations. The court's discretion was held to apply only to the decision as to whether or not to impose a fine and the value of the property.

[35] Deschamps J stated at para 34:

34. The limits on the court's discretion can be deduced from the objective and context of s. 462.37(3) Cr. C. They are also incorporated into the words of the provision itself. The court's discretion is limited not only by the circumstances in which the substitution may be made, in particular those listed in paras. (a) to (e), but, even more importantly, by the clear words of the provision itself. The amount of the fine is established by the Criminal Code: The court "may, instead of ordering that property...to be forfeited..., order the offender to pay a fine in an amount equal to the value of that property..." (emphasis added). The words are crystal clear. Parliament has itself determined the amount of the fine.

[36] Earlier Deschamps J stated that any discretion with respect to the fine itself would appear to be extremely narrow as in the example posed where an offender did not profit from the crime and if it were an isolated event with the offender acting alone. At para 29 he stated:

29. I said earlier that in my opinion the judge has limited discretion in imposing a fine instead of forfeiture. I also gave examples of limits on that discretion and cited a case in which it might be exercised. The factual circumstances that may give rise to an exercise of the discretion may vary, and it would be unrealistic to claim to foresee all of them. I will therefore, limit my discussion to the single factor that was argued: ability to pay.

[37] However, the court also held that ability to pay was a consideration in deciding how much time the offender should be given to pay the fine because this issue along with warrant committal issues were not addressed in part XII.2 of the Criminal Code. Accordingly, common law principles and general sentencing rules were held to apply.

[38] Deschamps J stated in paragraphs 46-48:

46. In R. v. Wu, [2003] 3 S.C.R. 530, 2003 SCC 73, at para. 31, the Court considered the terms of payment of a minimum fine, except that it is even more restrictive. There can be no variation in the amount of the fine, which is not only a minimum, but also a maximum.

47. In Wu, the Court reviewed a few principles recognized by the common law, included the following: (1) "if it is clear that the offender does not have the means to pay immediately, he or she should be given time to pay", and (2) "the time should be what is reasonable in all the circumstances" (at para. 31). These general principles apply with equal force to fine instead of forfeiture. While the court that imposes the fine has no discretion to vary the amount of the fine based on ability to pay, the ability to pay may nonetheless be taken into consideration in determining the time limit for payment. In addition, under s. 734.7(1)(b) Cr. C., when the time allowed for payment of the fine instead of forfeiture has expired, the court asked to issue a Warrant of Committal, but may not do so unless it is satisfied that the offender has, without reasonable excuse, refused to pay the fine. According to Wu, failure to pay because of poverty cannot be equated to refusal to pay. The same factors do not apply at the various stages – the decision to impose the fine, the determination of the value of the property and the setting of a time limit- and these stages must not be confused.

48. Accordingly, while ability to pay may not be taken into consideration by the court either in deciding to impose a fine instead of forfeiture or in determining the amount of the fine, it nonetheless comes into play at later stages that are not affected by the specific provisions relating to the proceeds of crime.

[39] R. v. Lavigne was applied in R. v. Dwyer 2013 ONCA 34, [2013] O.J. No 277 where the "property" referred to in 462.37 as in the case at bar was money. In that case there was an issue as to how much money the offender actually had in her possession but the general principles laid out in Lavigne were applicable.

[40] Similar issues were considered in R. v. Maxwell 2014 ONCA 316, [2014] O.J. No 1921. The offender was found guilty of defrauding the Bank of Montreal of $375,000.00. In addition to upholding a sentence of four years custody, the Court of Appeal upheld an order of a fine in lieu of forfeiture under section 462.37(1).

[41] In so doing, the court stated at paragraphs 7-8:

7. Second, in connection with the fine in lieu of forfeiture, s. 462.37(1) makes an order of forfeiture mandatory, provided the conditions precedent to the operation of the subsection have been met. The appellant was convicted of the designated offence. He obtained $375,000.00 in cash by fraud. The cash was proceeds of crime. The fraud was committed in relation to that property. Forfeiture of the property and the funds was mandatory.

8. The trial judge recognized that he had a discretion to impose a fine in lieu of forfeiture. The cash obtained by the fraud could not be located. Counsel agreed that the funds could not be traced. The victimized bank, through its own efforts, recouped some funds, for which the appellant was credited. The imposition of a fine in lieu of forfeiture, in our view, reflects no error in principle.

[42] In the case at bar, there is little evidence if any on the issue of what happened to the sum of money appropriated by the offender. The offender has indicated that she spent it shopping to alleviate pressures on her because of difficulties caused by one son and needs of the handicapped son. As I indicated earlier, both the explanation and the cause are difficult to accept. The amounts may have been spent on the house she and her husband purchased in 2006, or indeed may have been frittered away along with other money that she and her husband had. Whichever case is true, I am of the view that it had been commingled with her other funds or funds that she had access to and that these amounts cannot be divided without difficulty.

[43] The money appropriated by the offender, his property in every sense of the word and falls within section 462.37(1) of the Criminal Code. Section 462.37(3) is also applicable since the property in question has either been spent or is figuratively buried within the equity of the home. This is not a case where it is apparent that here is any discretion that resides in me under section 462.37(3) of the Criminal Code. This is not an instance where the offender did not profit from her misdeeds or any analogous situation as spoken of by Deschamps J. in R. v. Lavigne, supra.

[44] Having regard to the undertaking of counsel that $40,000.00 restitution will be paid, I deduct that sum from the fine in lieu of forfeiture and impose such a fine in the amount of $179,144.00. I give the offender four years to pay that sum from the date of release from custody.

[45] Section 462.37(4)(iv) of the Criminal Code governs in default of payment of the fine.

[46] The restitution order shall take priority over payment of the fine in lieu of forfeiture ordered herein and the fine in lieu of forfeiture shall be reduced by any amount paid pursuant to the restitution order.

Released: January 27, 2015

Signed: "Justice J.D. Takach"