R. v. Duffy, 2016 ONCJ 220

Ontario Court of Justice

Between: Her Majesty the Queen — and — Michael Dennis Duffy

Before: Justice Charles H. Vaillancourt Heard on: April 7-10, 13-17, 20-24, 27-29, May 4-8, June 1-5, 8-12, 15-17, August 12-14, 17-21, 24-25, November 19-20, 23, 25, 27, 30, December 7-11, 14-18, 2015 and February 22-23, 2016 Reasons for Judgment released on: April 21, 2016

Counsel: Mark Holmes and Jason Neubauer, counsel for the Crown Donald Bayne and Jon Doody, counsel for the accused Michael Dennis Duffy

Reasons for Judgment

VAILLANCOURT J.:

[1] Michael Dennis Duffy entered pleas of not guilty to thirty-one criminal charges related to breach of trust allegations, fraudulent practices, and accepting a bribe. For the sake of expediency, the counts have been grouped into the various headings and I propose to deal with each specific category separately.

[2] Prior to embarking on a count by count analysis of this case, it is worthwhile to harken back to some basic principles that are at play in all criminal proceedings.

PRESUMPTION OF INNOCENCE

[3] I would like to relate an interesting encounter that I experienced near the commencement of this trial that demonstrates the difference between the legal presumption of innocence and the application of that presumption by many citizens.

[4] I was returning to the courthouse after a lunch break when I heard a man who was soliciting funds from passersby say, “Sir, sir.” I stopped and began to check out my monetary situation. However, the stranger did not ask me for a financial contribution. Instead, he asked me if I was connected with the Duffy trial. I advised him that I was. He then inquired whether I was counsel. I advised him that I was not but I did tell him that I was the judge hearing the case. Without missing a beat, my new found friend enthusiastically stated, “Throw him in jail.”

[5] The aforementioned exchange highlights two important aspects of Senator Duffy’s trial.

[6] Firstly, the scenario illustrates the public awareness and interest in these proceedings.

[7] Secondly and more importantly, the exchange draws attention to the overarching touchstone principle of criminal law in Canada, namely, that everyone is presumed innocent until the Crown proves them guilty beyond a reasonable doubt. Although, the stranger drew my attention to the principle, his enthusiastic response highlighted a contrary position to the presumption of innocence. I think it is fair to say that many people may share the belief that once someone is charged with a criminal offence they are guilty. This is not the law of the land.

[8] Chief Justice Dickson of the Supreme Court of Canada in R. v. Oakes, 1986 46 (SCC), [1986] 1 S.C.R. 103, [1986] S.C. J. No. 7 wrote about the presumption of innocence and s. 11(d) of the Charter commencing at paragraph 27:

[27] Section 11(d) of the Charter constitutionally entrenches the presumption of innocence as part of the supreme law of Canada. For ease of reference, I set out the provision again:

11. Any person charged with an offence has the right

(d) to be presumed innocent until proven guilty according to law in a fair and public hearing by an independent and impartial tribunal.

[28] To interpret the meaning of s. 11(d), it is important to adopt a purposive approach. As this Court has stated in R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295, at p. 344:

The meaning of a right or freedom guaranteed by the Charter was to be ascertained by an analysis of the purpose of such a guarantee; it was to be understood, in other words, in the light of the interests it was meant to protect.

In my view this analysis is to be undertaken, and the purpose of the right or freedom in question is to be sought by reference to the character and the larger objects of the Charter itself, to the language chosen to articulate the specific right or freedom, to the historical origins of the concepts enshrined, and where applicable, to the meaning and purpose of the other specific rights and freedoms ….

To identify the underlying purpose of the Charter right in question, therefore, it is important to begin by understanding the cardinal values it embodies.

[29] The principle of innocence is a hallowed principle lying at the very heart of criminal law. Although protected expressly in s. 11(d) of the Charter, the presumption of innocence is referable and integral to the general protection of life, liberty and security of the person contained in s. 7 of the Charter (see Re B.C. Motor Vehicle Act, 1985 81 (SCC), [1985] 2 S.C.R. 486, per Lamer J.) The presumption of innocence protects the fundamental liberty and human dignity of any and every person accused by the State of criminal conduct. An individual charged with a criminal offence faces grave social and personal consequences, including potential loss of physical liberty, subjection to social stigma and ostracism from the community, as well as other and social, psychological and economic harms. In light of the gravity of the consequences, the presumption of innocence is crucial. It ensures that until the State proves an accused’s guilt beyond all reasonable doubt, he or she is innocent. This is essential in a society committed to fairness and social justice. The presumption of innocence confirms our faith in humankind; it reflects our belief that individuals are decent and law-abiding members of the community until proven otherwise.

[30] The presumption of innocence has enjoyed longstanding recognition at common law. In the leading case, Woolmington v. Director of Public Prosecutions, [1935] A.C. 462 (H.L.), Viscount Sankey wrote at pp. 481-482:

Throughout the web of the English Criminal Law one golden thread is always to be seen, that it is the duty of the prosecution to prove the prisoner’s guilt subject to what I have already said as to the defence of insanity and subject also to any statutory exception. If, at the end of and on the whole of the case, there is a reasonable doubt, created by the evidence given by either the prosecution or the prisoner, as to whether the prisoner killed the deceased with a malicious intention, the prosecution has not made out the case and the prisoner is entitled to an acquittal. No matter what the charge or where the trial, the principle that the prosecution must prove the guilt of the prisoner is part of the common law of England and no attempt to whittle it down can be entertained.

Subsequent Canadian cases have cited the Woolmington principle with approval (see, for example, Manchuk v. The King, 1938 6 (SCC), [1938] S.C.R. 341, at p. 349; R. v. City of Sault Ste Marie, 1978 11 (SCC), [1978] 2 S.C.R. 1299, at p. 1316).

PRINCIPLES RELATING TO THE ISSUE OF REASONABLE DOUBT, BURDEN OF PROOF AND CREDIBILITY

[9] In R. v. Lifchus, 1997 319 (SCC), [1997] 3 S.C.R. 320, Cory J. at paragraph 27 observed that:

First, it must be made clear to the jury that the standard of proof beyond a reasonable doubt is vitally important since it is inextricably linked to that basic premise which is fundamental to all criminal trials: the presumption of innocence. The two concepts are forever as closely linked as Romeo and Juliet or Oberon with Titania and they must be presented together as a unit. If the presumption of innocence is the golden thread of criminal justice then proof beyond a reasonable doubt is the silver and these two threads are forever intertwined in the fabric of criminal law. Jurors must be reminded that the burden of proving beyond a reasonable doubt that the accused committed the crime rests with the prosecution throughout the trial and never shifts to the accused.

[10] In R. v. W.(D.), 1991 93 (SCC), [1991] 1 S.C.R. 742, at paragraphs 27 and 28, the Court noted that:

[27] In a case where credibility is important, the trial judge must instruct the jury that the rule of reasonable doubt applies to that issue. The trial judge should instruct the jury that they need not firmly believe or disbelieve any witness or set of witnesses. Specifically, the trial judge is required to instruct the jury that they must acquit the accused in two situations. First, if they believe the accused. Second, if they do not believe the accused’s evidence but still have a reasonable doubt as to his guilt after considering the accused’s evidence in the context of the evidence as a whole. See R. v. Challice (1979), 1979 2969 (ON CA), 45 C.C.C. (2d) 546 (Ont. C.A.), approved in R. v. Morin, 1988 8 (SCC), [1988] 2 S.C.R. 345 at p. 357.

[28] Ideally, the appropriate instructions on the issue of credibility should be given, not only during the main charge, but on the recharge. A trial judge might well instruct the jury on the question of credibility along these lines:

First, if you believe the evidence of the accused, obviously you must acquit.

Second, if you do not believe the testimony of the accused but are left in reasonable doubt by it, you must acquit.

Third, even if you are not left in doubt by the evidence of the accused, you must ask yourself whether, on the basis of the evidence by the evidence which you do accept, you are convinced beyond a reasonable doubt by that evidence of the guilt of the accused.

[11] Justice Iacobucci, writing for the majority, in R. v. Starr, 2000 SCC 40, [2000] 2 S.C.R. 144 noted at para. 242 that:

In my view, an effective way to define the reasonable doubt standard for a jury is to explain that it falls much closer to absolute certainty than to proof on a balance of probabilities. As stated in Lifchus, a trial judge is required to explain that something more than probable guilt is required, in order for the jury to convict. Both of these alternative standards are fairly and easily comprehensible. It will be of great assistance for a jury if the trial judge situates the reasonable doubt standard approximately between these two standards.

APPROACHES TAKEN BY COUNSEL

[12] The Crown and the Defence have taken very different views in the presentation of their respective cases. The Crown’s mantra is common sense, common sense, common sense. Meanwhile, Mr. Bayne’s repeated battle cry is rules, rules, rules or alternatively, what rules? These competing views of the world will become apparent as each section of cases is examined.

CREDIBILITY ISSUES AS THEY RELATE TO SENATOR DUFFY

[13] The credibility of a witness is often critical in the determination of criminal charges and the case at bar is no exception to this proposition. Both Mr. Holmes and Mr. Neubauer made extensive comments in their oral presentations as well as their written material as to Senator Duffy’s credibility.

[14] Mr. Bayne observed that his client testified in a fulsome, open, and expansive manner addressing every count and seeking to hide nothing. Furthermore, Mr. Bayne highlighted the fact that the Crown limited its questions to a few specific counts and did not challenge Senator Duffy’s evidence on the great majority of the counts before the court.

[15] The cross-examination of Senator Duffy did cause me to pause. I agree with Mr. Bayne that the majority of the charges were not addressed in cross-examination. Of particular note, there was no cross-examination of Senator Duffy on the key charges involving Nigel Wright. The end result of the lack of cross-examination is that much of Senator Duffy’s testimony is left unchallenged.

[16] I am aware that there is no rule that requires cross-examination of any witness. The decision to cross-examine a witness or conduct a limited and focused cross-examination or to not cross-examine a witness at all is within the complete discretion of counsel and there may be any number of strategic reasons why one option is chosen over another.

[17] Defence Counsel conceded that Senator Duffy presented himself as an emotional and passionate witness at times but asked the court to understand that this was Senator Duffy’s first and only chance to put his position forward after years of wanting to do so.

[18] Mr. Bayne also reminded the court of the Crown’s burden of proof in any criminal trial. Furthermore, he directed the court to the fact that mens rea is an essential element of every one of the charges facing Senator Duffy and that Senator Duffy’s evidence alone provides the foundation to find him not guilty of all the charges. Hence, the issue of credibility takes on an enhanced importance in determining the eventual outcome of these proceedings.

[19] As I have already mentioned both Mr. Holmes and Mr. Neubauer took issue with Senator Duffy’s credibility and I intend to address some of their specific concerns at the outset.

[20] Mr. Holmes posed a number of questions for the court to ponder when assessing Senator Duffy’s credibility. Was Senator Duffy a good listener? Did he supply answers to the questions that were asked [of him] to assist the process? Did he seem to have an agenda of his own? Was there any undue response to questions posed to him? Did he have a good memory of the events that he described? Did his evidence of events change over time? Did he seem to make it [the evidence] up as he went along?

[21] Mr. Holmes stated that Senator Duffy is a practiced public speaker and has for a long time relied on lines written for him. In fact, in his diary for January 6^th, 2009, Senator Duffy jotted, “Check media lines with Corey Tenycke re: Pam and Mike.” This was in reference to the brewing storm regarding the residency issue.

[22] The use of scribed lines also was prevalent as the “Nigel Wright Solution” unfolded. The PMO was producing the appropriate dialogue for not only Senator Duffy but for all of the major players in the scenario.

[23] I do not find that the use of scripted lines to deal with political fallout issues diminishes the credibility of Senator Duffy’s evidence in this trial. Likewise, I do not find that Senator Duffy was a witness who was merely parroting a prewritten script as he gave his evidence.

[24] The Crown considered that the “prepackaged endorsement” of candidates during some of Senator Duffy’s speaking engagement reflected adversely on Senator Duffy’s overall credibility.

[25] I do not find that the practice of politicians spouting “for he’s a jolly good fellow” endorsements for their fellow political colleagues triggers credibility concerns.

[26] Mr. Holmes pointed the court to a number of Senator Duffy’s speaking engagements which he characterized as telling stories and jokes. It is interesting to observe that although Mr. Holmes concedes that there is not a principle of law that anyone who works in the field of entertainment is unworthy of belief he suggested that it was a factor to be considered.

[27] From the evidence, Senator Duffy seems to have been a very popular speaker and was much sought after to make speeches. It appears that Senator Duffy often used humour and stories to convey his message to his audience. I do not conclude that being an entertaining speaker impacts on Senator Duffy’s credibility.

[28] The Crown pointed to the Senator’s use of props as another factor that has an impact on his credibility. More specifically, it is alleged that a pamphlet on Cockrell House morphed into a scenario that showed that Senator Duffy was not particularly familiar with the circumstances surrounding Cockrell House.

[29] As I assessed Senator Duffy’s evidence, I was not swayed by a prop or two.

[30] Mr. Holmes suggested that Senator Duffy has the ability “to sell” a story even if he, himself, does not believe in the truthfulness of that story. By way of example, Counsel referred the court to the incident regarding the television interview wherein Senator Duffy admitted that he was wrong about his housing claims and that he would be repaying them. Throughout the interview, Senator Duffy seemed happy and relaxed and in complete control of the situation.

[31] I agree that Senator Duffy delivered a polished television performance regarding the repayment scenario as scripted by the Prime Minister’s Office. Considering his vast past experience in the media, this “performance” does not come as any great surprise. When assessing ultimate credibility, I take into account Senator Duffy’s experience in the spotlight and his ability to deliver the message.

[32] The next area that caused Mr. Holmes concern focussed on Senator Duffy’s tendency to exaggerate. As an example of this tendency, I was pointed to Senator Duffy’s depiction of Prince Edward Island’s virtues and attributes in terms that “there’s nowhere else you want to be” but I was then reminded that in fact Senator Duffy’s career path took him away from P.E.I.

[33] I attach no significance to this whatsoever. The fact that Senator Duffy pursued employment opportunities away from P.E.I. is a fact of life. Although, he may have physically left P.E.I. to work, Senator Duffy continued to maintain many contacts with his place of birth and he had already secured his retirement home in P.E.I. well in advance of his appointment to the Senate. As to the effusive nature of his praise for P.E.I., I agree that it did seem like a promotional advertisement for the Province. However, I do not find this to impact negatively on the issue of credibility.

[34] I do agree with Mr. Holmes’ observation that Senator Duffy has a tendency to speak in terms of absolutes. I am not swayed by expressions of absolute certainty.

[35] Accordingly, when Senator Duffy proclaims that a Vancouver trip connected with Senate business had absolutely nothing to do about the impending birth of his grandchild, I am not convinced as to the complete accuracy of that statement.

[36] It must be kept in mind that the court does not have to accept all the evidence of any given witness. I can believe all of the evidence of a witness, some of the evidence of a witness, or none of the evidence of a witness.

[37] Another area that concerned Mr. Holmes regarding the issue of Senator Duffy’s credibility was his tendency to drop in extraneous facts when answering questions. An example of this conduct involved the PMO’s office spending a lot of money on photos.

[38] The fact that extraneous nuggets of information are introduced by a witness does not mean that those facts are untrue or that the witnesses’ credibility is impacted in a negative way. Any extraneous evidence that has no bearing on the issues at trial is to be disregarded by the court. I am alive to the fact that a witness that throws extraneous points into the mix might be attempting to confuse the trier of fact and thus be deemed less credible.

[39] I do not find Senator Duffy’s desire to enliven his testimony with the occasional extraneous fact detrimental to his credibility.

[40] I also was directed to the Senator’s comment about Prime Minister Harper mistreating many individuals but when pressed to give examples, Senator Duffy was unable or unwilling to do so.

[41] I note this point but do not attach any significance to it. The Crown could have pressed this matter if they had wished but instead it was left in awkward silence.

[42] Mr. Holmes drew to my attention that Senator Duffy’s evidence with respect to opinions held by certain parties regarding Professor Bulger’s statements about Senator Duffy’s right to sit in the Senate were inconsistent with the timeframe given by Senator Duffy.

[43] Mr. Holmes also provided an example where Senator Duffy was reckless when giving his evidence regarding Herbert Lacroix. This scenario resulted in a discourse on the technique used in broadcasting known as embroidery. The Crown stressed that Senator Duffy was aware of this technique from the days when he was in broadcasting. Embroidery is used to address a mistake or misstated fact by ignoring it thereby removing it from the equation and moving forward.

[44] Mr. Holmes quite rightly stated that embroidery may work in broadcasting but it is outrageous for a witness to do that [in] a criminal trial. I agree.

[45] Mr. Holmes suggested that Senator Duffy was prone to jumping to conclusions and stating authoritatively events that were far less clear than the evidence suggested. The example provided to support this point involved Senator Duffy being escorted into the Prime Minister’s office while the Chief-of-Staff of the Armed Forces was made to wait in the outer office. Senator Duffy expressed his opinion that he thought this was rude. In cross-examination, Senator Duffy admitted that it was possible that the group awaiting an audience with the Prime Minister was waiting on another party to arrive.

[46] This situation has more to do with Senator Duffy’s willingness to admit to the possibility of another possible interpretation of a particular situation than credibility.

[47] The aforementioned incident highlights the dangers associated with unnecessarily detailed evidence that has no real bearing on the issues at hand.

[48] The Crown highlighted what he perceived as a misstatement by Senator Duffy when Senator Duffy was holding up Exhibit 65 and stating that, “There’s lots in this report that the Harper Government would never touch, including death with dignity.” Mr. Holmes noted that there was no mention to death with dignity in any of the recommendations of the report but conceded that there was a passing reference in the report that in terms of enhancing palliative care, some seniors find it more dignified to die in their homes. Mr. Holmes concluded that this evidence amounts to Senator Duffy conjuring up something that is unsupported and untrue and delivering it in a vigorous manner. I do not find that this perceived great divide impacts on Senator Duffy’s credibility. We can leave the debate surrounding death with dignity and enhancing palliative care, some seniors find it more dignified to die in their homes, for another day.

[49] Mr. Holmes pointed out that Senator Duffy’s evidence was internally inconsistent. He stressed that the juxtaposition between Senator Duffy’s testimony that he merely skimmed the rules and his embracement of a very detailed and technical knowledge of the rules to afford him a defence to one of the charges should cause the court concern.

[50] Mr. Neubauer provided another example of a juxtaposition of two at-odds-propositions. He pointed out that Senator Duffy took the position that the rules surrounding the NCR expenses were vague but also maintained that he was eligible under the rules.

[51] When considering both of the preceding examples of internal inconsistency, one must be mindful that when the events were unfolding, Senator Duffy might have skimmed over certain written materials and considered that the rules were vague. However, once he was charged with the offences he is currently facing, he, perhaps with the assistance of his legal counsel, viewed the situation in a more defensive light. The credibility alarm is not triggered by the circumstances referred to by Crown Counsel.

[52] Mr. Holmes suggested that another example of internal inconsistency involved Senator Duffy’s evidence in connection with a meeting with Gary Lunn in Ottawa. Mr. Lunn wanted Senator Duffy to visit an event in his riding with the purpose of enhancing Mr. Lunn’s re-election chances. Senator Duffy had also testified that Mr. Lunn’s earlier election had robo-calling aspects to it that had been orchestrated by a black operation unit within the Conservative Party. Senator Duffy became tongue-tied when the Crown asked him, “Why would you possibly help someone in their bid for re-election, knowing that they previously won a seat through election fraud?”

[53] I take it that the Crown is suggesting that if Senator Duffy was prepared to get involved in such political ugliness that it speaks to his credibility. I think that this is a valid point and a factor to keep in mind when assessing credibility.

[54] Mr. Neubauer highlighted the discrepancies between an email Senator Duffy forwarded to Senator Tkachuk dated February 7, 2013 and other evidence in the trial. The text of the email is as follows:

David:

After speaking to my lawyer, I now understand that the issue in question is not whether I own property in P.E.I.; but rather whether my principal residence is there, thus entitling me to expenses for my home in Kanata.

If this is indeed the issue, then this is the first time a concern has been raised with me by anyone. I have been claiming these expenses routinely, as I was told I could do at the time of my swearing-in in 2009.

However, if there is anything improper about these expense claims, I want to correct it. I have no interest in claiming expenses to which I am not entitled.

Can we discuss this matter before you issue any media release naming me, as I believe we can resolve this expense issue without the need of an audit.

Sincerely,

Mike

[55] Mr. Neubauer pointed out that this email contradicts Senator Duffy’s other evidence at trial, namely, that this is the first time a concern has been raised with him by anyone with respect to the housing claims. Mr. Neubauer then referenced discussions between Senator Duffy and Senator Tkachuk back in January of 2009 that dealt with housing claims.

[56] In fairness to Senator Duffy, it was he who raised concerns about his housing entitlements back in 2009 and it was his understanding from the discussions with Senator Tkachuk that he could and should claim for living expenses.

[57] I find that during the January 2009 discussions with Senator Tkachuk, Senator Duffy was not attempting to deceive him.

[58] Mr. Holmes suggests that Senator Duffy gave internally inconsistent evidence when he said that an income tax specialist in P.E.I. told him that he could not file his income taxes as a P.E.I. resident because it was illegal. When cross-examined, Senator Duffy denied that he used the word illegal.

[59] He did. However, I do not find this point particularly significant in the overall assessment of credibility.

[60] Mr. Holmes referred the court to a number of incidents where Senator Duffy’s evidence was in conflict with other witnesses. I shall address these inconsistencies later in these reasons when I am dealing with the specific charges that relate to the various witnesses in question. (Dean Del Mastro; Andrew Saxton Jr.; Gerry Donohue; Mike Croskery; Troy DeSouza). However, I find that the weight of these alleged inconsistencies do not, at the end of the day, significantly impact the credibility of Senator Duffy’s overall evidence.

[61] The Crown stated that Senator Duffy made misrepresentations to Sonia Makhlouf and others with respect to the Donohue contracts; to Senator Tkachuk at the time of his appointment regarding residency issues; and to the Prime Minister regarding his preference as to his Province of Appointment.

[62] A closer examination of these issues will be discussed as they relate to specific charges. I can say at this time that the discussions surrounding which Province Senator Duffy would represent and what was the key determining factor in that decision does not impact adversely on the credibility of Senator Duffy. It would be expected that each party had reasons for their province of choice and in the end could rationalize the final decision.

[63] Mr. Holmes suggested the Senator Duffy refused to admit even the most obvious things. To illustrate this contention, the Crown referred to Senator Duffy’s use of pre-signed travel forms as a deceptive practice. He highlighted the fact that Senator Duffy acknowledged that although the practice was poor it was not intended to be deceptive or misleading since it was not an uncommon practice and was done out of practicality and necessity. I do not find that this factor impacts negatively on Senator Duffy’s credibility. I shall address the advisability of using pre-signed, blank travel forms later on in this judgment.

[64] The Crown drew the court’s attention to the evidence of Senator Duffy as it pertained to whether Senator Duffy read all the background testimony with respect to the Special Senate Committee Report on aging. After some toing and froing Senator Duffy finally answered a rather straight forward question. This example of quasi-evasiveness, in and of itself, is not determinative of the issue of credibility. However, I am aware of this situation when I determine the issue of credibility.

[65] Mr. Holmes asked the court to consider whether or not the evidence given by Senator Duffy was reasonable. To illustrate this factor, I was referred to the cancellation of Senator Duffy’s appearance at the Saanich Fair. Was the Senator’s evidence surrounding his reaction to the cancellation reasonable? Should Senator Duffy been more proactive in seeking out an explanation as to why he was cancelled at the last second?

[66] I find that Senator Duffy’s response to the situation was just as reasonable as any other potential response. Senator Duffy stated that, “Well I didn’t think it was necessary [to telephone Mr. Lunn for an explanation of the last minute cancellation]. I could read between the lines.”

[67] I acknowledge that Senator Duffy has some areas that require the court to be vigilant about when weighing his evidence. In addition to the specific issues regarding Senator Duffy’s credibility, I must remind myself that he loved the run-on answer providing an inordinate amount of information, much of which was rather peripheral to the questions posed. He also admitted that his memory was not perfect. The truth of the matter is that this characteristic applies to everyone. He had several private agenda matters that he felt compelled to work into his testimony.

[68] This case provided me with ample opportunity to assess the credibility of Senator Duffy. He was on the stand for many hours.

[69] At the end of the day, I find that Senator Duffy is an overall credible witness. As I address the various charges contained in the information, I shall keep in mind any concerns that I have noted herein regarding Senator Duffy’s credibility and apply them to the particular fact situations.

GENERAL BACKGROUND OF SENATOR DUFFY

[70] Few accused persons have likely had more background information with respect to their lives put before a court. There has been a thorough examination of Senator Duffy’s life. Senator Duffy’s diaries and calendars outline many of his activities between 2009 and 2012. The Senator’s finances were reviewed extensively by Mr. Grenon, a forensic accountant. In addition, Mr. Bayne explored many of Senator Duffy’s life experiences in his examination-in-chief.

[71] Some of the salient points in Senator Duffy’s life include:

• born May 27, 1946 on Prince Edward Island
• raised in Charlottetown, P.E.I.
• in 1962, while attending high school, became involved with a local television show featuring high school issues
• in 1963, left school and became a junior reporter with the Charlottetown Guardian
• in the summer of 1964, toured with a rock band, The Beavers
• went to Halifax, N.S. in the fall and read the news at CJCH-920
• after a few months went to work for CKDH in Amherst, N.S.
• in 1965 had a brief stint at CKOY in Ottawa, Ontario
• returned to CKDH in Amherst, N.S.
• in 1996, reporter and on-air person with CHNS-FM in Halifax, N.S.
• fall of 1967 went to Toronto, Ontario and covered Progressive Conservative Convention and Robert Stanfield’s election as leader
• between 1969 - 1971 with CFCF in Montreal, Quebec
• married Nancy Mann 1970
• moved to Ottawa in 1971 as a City Hall reporter for CFRA and eventually assigned to cover Parliament Hill
• joined CBC in 1974
• 1979 divorced
• 1979 to 1988 experienced health and alcohol issues
• 1988 commenced employment with CTV
• 1998 met Heather Collins, a nurse, and married her in 1992
• Senator Duffy has had a rather long history of medical issues over the years and continues to deal with various conditions including: heart attacks and bypass surgery; type 2 diabetes; sleep apnea; ulcers; non-cancerous erosion of digestive tract; liver concerns; osteoarthritis; and diabetic retinopathy.
• The aforementioned medical conditions cause Senator Duffy to be involved with various medical specialists and he is required to take many medications in order to stabilize his health.

APPOINTMENT TO THE SENATE OF CANADA ON JANUARY 26, 2009

[72] Senator Duffy was appointed to the Senate of Canada having met the statutory provisions as set out in the Constitution Act, 1867, 30 & 31 Victoria, c. 3 (U.K.).

[73] 23. The Qualifications of a Senator shall be as follows:

(1) He shall be of the full age of Thirty Years;

(2) He shall be either a natural-born Subject of the Queen, or a Subject of the Queen naturalized by an Act of the Parliament of Great Britain, or of the Parliament of the United Kingdom of Great Britain and Ireland, or of the Legislature of One of the Provinces of Upper Canada, Lower Canada, Canada, Nova Scotia, or New Brunswick, before the Union, or of the Parliament of Canada after the Union;

(3) He shall be legally or equitably seised as of Freehold for his own Use and Benefit of Lands or Tenements held in Free and Common Socage, or seised or possessed for his own Use and Benefit of Lands or Tenements held in Franc-alleu or in Roture, within the Province for which he is appointed, of the Value of Four thousand Dollars, over and above all Rents, Dues, Debts, Charges, Mortgages, and Incumbrances due or payable out of or charged on or affecting the same;

(4) His Real and Personal Property shall be together worth Four thousand Dollars over and above his Debts and Liabilities;

(5) He shall be resident in the Province for which he is appointed;

(6) In the Case of Quebec he shall have his Real Property Qualification in the Electoral Division for which he is appointed, or shall be resident in that Division.

[74] Mr. Holmes is of the view that even the most cursory examination of these constitutional prerequisites to being appointed and maintaining a position as a Senator reveals that property ownership and being a “resident” of the province of appointment are distinct. He relies on the testimony of Mark Audcent to assist him in arriving at this conclusion and observes at footnote 18 at page 19 of his written submissions that: “The Prime Minister’s deeply flawed and incomplete understanding of the technical requirements to serve as a Senator also emerged during the testimony of Benjamin Perrin.”

[75] It should be noted that this trial is not about whether Senator Duffy was/is legally qualified to be a Senator from P.E.I. This trial is focussed on whether or not the Crown has proven the criminal allegations against Senator Duffy that are contained in the information beyond a reasonable doubt.

THE SENATE AS AN INSTITUTION

[76] The trial of Senator Duffy has generated much attention from politicians, the media and the public at large regarding issues surrounding the abolishment of the Senate, making major or minor changes to the Senate or maintaining the status quo of the Senate. As interesting as these issues may be, they are not the subject matter before this court. Furthermore, the decisions surrounding these issues fall within the jurisdiction of the legislative branch of our democracy.

PRIMARY RESIDENCY CLAIM

[77] It is alleged that the accused (1) between the 22^nd day of December, 2008 and the 6^th day of March, 2013 at the City of Ottawa, in the East Region, being an official in the Senate of Canada , did commit a breach of trust in connection with the duties of his office by filing expense claims and/or residency declarations containing false or misleading information, contrary to section 122 of the Criminal Code of Canada and further (2) that he between the 22^nd day of December, 2008, and the 6^th day of March, 2013, at the City of Ottawa, in the East Region, did by deceit, falsehood or fraudulent means defraud the Senate of Canada of money, exceeding $5000.00, by filing expense claims and/or residency declarations containing false or misleading information, contrary to section 380(1)(a) of the Criminal Code of Canada.

Crown’s Position

[78] Mr. Holmes noted in his written submissions that with respect to the first two counts on the information that Senator Duffy created a fiction that he lived in Prince Edward Island and incurred additional costs to perform his duties in the Senate.

[79] He drew the court’s attention to the fact that considerable time was devoted to the examination of the meaning given to “primary residence” and “secondary residence” and “designated residence” and “residence in the province for which you are appointed” and “NCR (National Capital Region) residence” and “provincial residence”. Likewise, he alluded to the amount of time devoted to the issue of what it means to be a “resident” for the purpose of satisfying an individual’s eligibility to serve in the Senate.

[80] Mr. Holmes stated that the concentration on definitions ignores the fact that the per diem expenses that were claimed by Senator Duffy and paid to him were designed to compensate him for the financial hardship associated with his presence in the NCR to perform his duties on Parliament Hill. Mr. Holmes maintains that if one were to leave aside all the background noise, the fact is that Senator Duffy did not incur any additional costs to work in the Senate and that he was not entitled to make his claims for per diem compensation.

[81] Crown Counsel contended that the analysis pertaining to counts 1 and 2 boils down to the simple question: Where did Senator Duffy live?

[82] The Crown theory in respect of these offences is based on the fact that Senator Duffy, a long-standing, habitual resident of Ottawa, was primarily resident in Ottawa in the period following his appointment to the Senate. He had resided in Ottawa since the 1970s. His connection with the Province of Ontario was revealed, not only by his whereabouts, but also by his driver’s licence, passport, provincial health coverage and income tax filings that all portray him as a resident of Ontario. Mr. Holmes is of the opinion that Senator Duffy’s designation of “10 Friendly Lane” in Cavendish as his “primary residence” is inaccurate, but benign. The completion of the annual Residency Declaration forms occasioned no payments and thus, standing alone, likely does not represent a criminal fraud.

[83] However, the Crown states that the per diem claims are an entirely different matter. The claims are found in Exhibit 2 and represent Senator Duffy’s claims for compensatory payments in connection with the fiction that he had to venture from afar (in this case from P.E.I.) to come to Ottawa to discharge his Senate duties. It is alleged that as a consequence of his claim for reimbursement of expenses that were never incurred, Senator Duffy was unjustly and fraudulently enriched by approximately $20,000 per year over a period of more than four years. This annual stipend is designed to compensate members of the Senate for additional expenses incurred in connection with their time spent in the National Capital Region to fulfill their Parliamentary functions. With his primary residence in Ottawa – Kanata being a suburb of Ottawa, and most definitely not more than 100km from Parliament Hill – Senator Duffy was not eligible to receive these payments.

[84] Mr. Holmes states that Senator Duffy’s motive in claiming the primary residence designation for his cottage in P.E.I. also fulfilled his desire to establish a link with that province to satisfy constitutional requirements to even serve in the Senate. He points out that the court heard evidence that Senator Duffy’s appointment was decried as constitutionally invalid even before his swearing-in and even before he gave his oath that he was a resident of P.E.I. Mr. Holmes states that Senator Duffy was in reality the Senator from Kanata, Ontario and this was the quandary that he faced when he was appointed to represent P.E.I.

What do we know about “residency”?

[85] Mr. Holmes relies heavily on Mark Audcent’s testimony as it relates to the subject of residency. Mr. Audcent was the Clerk of The Senate and noted that:

(a) Residency is a question of fact;

(b) There are indicators that inform the determination of one’s place of residence, including:

(i) Physical presence;

(ii) Domestic arrangement, meaning where your family lives;

(iii) Where you vote;

(iv) Where you declare yourself as “resident” for income tax purposes;

(v) Where you enjoy government services: drivers’ licence, receipt of health care;

(vi) Where your business or work is located;

(vii) Where you do your banking;

(viii) Where you participate in recreational activities.

(c) He, and consequently other members of Senate administration, assumed that Senator Duffy satisfied the constitutional residency requirement;

(d) In relation to all Senators the issue of residence, for constitutional purposes, boiled down to whether the Senator’s main residence was located in the province for which he/she was appointed;

(e) Senators were on travel status and entitled to compensation “if you’re not from this region”.

[86] Mr. Holmes reminded the court, that during his testimony, Mr. Audcent resisted a suggestion that the factors he cited in evaluating residence were his own “personal” indicators. He testified that the indicators that he cited were derived from the jurisprudence.

[87] The Crown filed Income Tax Folio S5-F1-C1 titled “Determining an Individual’s Residence Status” (Exhibit 112).The salient portions of this document are:

Provincial residence

1.2 Many of the comments in this Chapter apply to determinations of residence status for provincial, as well as federal tax purposes. Generally, an individual is subject to provincial tax on his or her worldwide income from all sources if the individual is resident in a particular province on December 31 of the particular tax year. An individual is considered to be resident in the province where he or she has significant residential ties.

1.3 In some cases, an individual will be considered to be resident in more than one province on December 31 of a particular tax year. This situation usually arises where an individual is physically residing in a province other than the province in which the individual ordinarily resides, on December 31 of the particular tax year. For example, an individual might be away from his or her usual home for a considerable length of time on a temporary job posting or in the course of obtaining a post-secondary education. An individual who is resident in more than one province on December 31 of a particular tax year will be considered to be resident only in the province in which the individual has the most significant residential ties, for purposes of computing his or her provincial tax payable.

Meaning of resident

1.5 The term resident is not defined in the Act, however, its meaning has been considered by the Courts. The leading decision on the meaning of resident is Thomson v Minister of National Revenue, 1946 1 (SCC), [1946] SCR 209, 2 DTC 812. In this decision, Rand J. of Supreme Court of Canada held residence to be "a matter of the degree to which a person in mind and fact settles into or maintains or centralizes his ordinary mode of living with accessories in social relations, interests and conveniences at or in the place in question.”

Meaning of ordinarily resident

1.6 In determining the residence status of an individual for purposes of the Act, it is also necessary to consider subsection 250(3), which provides that, in the Act, a reference to a person resident in Canada includes a person who is ordinarily resident in Canada. In Thomson, Estey J. held that, "one is "ordinarily resident" in the place where in the settled routine of his life he regularly, normally or customarily lives".

1.7 In the same decision, Rand J. stated that the expression ordinarily resident means, "residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application" Justice Rand also went on to say that, "ordinary residence can best be appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would seem clearly to be not only temporary in time and exceptional in circumstances, but also accompanied by a sense of transitoriness and of return." The meaning given to the expressions resident and ordinarily resident as stated by the Supreme Court of Canada in Thomson, have generally been accepted by the Courts.

1.8 To determine residence status, all of the relevant facts in each case must be considered, including residential ties with Canada and length of time, object, intention and continuity with respect to stays in Canada and abroad.

1.9 An individual who is ordinarily resident in Canada as described in 1.6-1.7 is considered to be factually resident in Canada. Where an individual is determined not to be factually resident in Canada, the individual may still be deemed to be resident in Canada for tax purposes by virtue of subsection 250(1) (see 1.30- 1 36). In certain situations, an individual who would otherwise be factually or deemed resident in Canada may be deemed not to be resident in Canada, pursuant to subsection 250(5) (see 1.37- 1 39).

[88] Mr. Holmes honed in on the fact that the evidence revealed that Senator Duffy maintained Ontario health coverage during the period up to January 2013 and only applied for health coverage in P.E.I. after the Senate insisted on confirmation that Senators had coverage in the provinces for which they were appointed. Indeed, the proof of residency that Internal Economy would ultimately request of all Senators was confined to driver’s licence, provincial health coverage, residency asserted for purposes of income tax and a declaration of voting.

[89] The Crown takes no issue with Senator Duffy’s claim for health coverage in Ontario since it accords with their position that Senator Duffy is and was a resident of Ontario throughout the period of time under review.

[90] The Health Insurance Act, R.S.O. 1990, c. H.6 and amendments thereto include the following sections:

Right to insurance

11(1) Every person who is a resident of Ontario is entitled to become an insured person upon application therefor to the General Manager in accordance with this Act and the regulations.

Establishing entitlement

11(2) It is the responsibility of every person to establish his or her entitlement to be, or to continue to be, an insured person. 1994, c. 17, s. 70

[91] Regulation 552 relating to the Health Insurance Act includes a definition for “primary place of residence” which is applicable from April 2009 forward and it reads as follows:

“Primary place of residence” means the place with which a person has the greatest connection in terms of present and anticipated future living arrangements, the activities of daily living, family connections, financial connections and social connections, and for greater certainty a person only has one primary place of residence, no matter how many dwelling places he or she may have, inside or outside Ontario.”

[92] Section 2.3(1) of Regulation 552 reads:

An insured person shall surrender his or her health card to the General Manager upon ceasing to be a resident. O. Reg. 218/95, s. 1.

[93] Mr. Holmes noted that Senator Duffy testified that he became a resident of P.E.I. on the 22nd of December 2008 for all purposes. However, in addition to health coverage, Senator Duffy portrayed himself as a resident of Ontario for the purpose of income tax until the end of 2012 (See Exhibit 42, Tab 4A) although he testified that he sought to have his income tax paid in Prince Edward Island but his accountant “refused to do that as a professional, because he said that was illegal”.

[94] The Crown also highlighted the fact that when Senator Duffy made application for a new passport in February 2012, he listed his “current home address” as the residence at 47 Morenz Terrace, Kanata, Ontario.

What do we know about the property in Cavendish?

[95] The Crown referred the court to Clifford Dollar’s evidence with respect to his connection with 10 Friendly Lane. Mr. Dollar explained his role in the construction of the dwelling situate at 10 Friendly Lane. He testified about Senator Duffy’s acquisition of the property. He advised that the property lacked a proper foundation and so it could not be used on a year round basis. From Mr. Dollar, we learned that the property was closed up around the end of October each year and reopened in the spring. Mr. Dollar said he would always see Senator Duffy in late April. The water was shut off, otherwise the “cold would take the pump in winter”. Mr. Dollar stated that the closing routine involved shutting off the power. He said a new foundation was installed in 2013 [he was wrong about that, reliable evidence to the contrary, including Senator Duffy’s diary shows that the cottage was levelled, insulated and was mounted on a foundation in 2012 – still three years after being described by Senator Duffy as his primary residence]. Mr. Dollar said that even after the foundation was added the water had to be turned off in the winter because the pipes ran through the ceiling and into the roof. In the off-season Mr. Dollar kept an eye on the property. He watched for any signs of break-ins and monitored the snow load on the roof. Quite apart from the lack of water, Mr. Dollar advised the court that the residence at 10 Friendly Lane was inaccessible during parts of the winter due to snow.

[96] Clifford Dollar’s suggestion that Senator Duffy used 10 Friendly Lane from April through late October is supported by the entries in Senator Duffy’s diary. The diary reveals other travel to Charlottetown during the off season. However, during those times, since the property was largely inaccessible, Senator Duffy stayed in various hotels. Exhibit 7 reveals a pattern of actual use of 10 Friendly Lane, which showed Senator Duffy’s arrival in the spring and a final departure, usually in the late summer or fall.

[97] Following the construction work in the summer of 2012, which added a foundation and new insulation, it appears as though 10 Friendly Lane was habitable during the colder weather, for at least short periods of time. Mr. Holmes noted that Senator Duffy’s diary referred to an inside temperature of 16 degrees Celsius on 15 December 2012. I attach no particular significance to this fact since one would expect that the temperature had been set to a low level while no one was actually living in the dwelling. This issue was not developed in cross-examination.

[98] Mr. Holmes pointed out that regardless of the temperature there remained the issues of the water being turned off, the road being impassable and the cessation of other services. The police shut down their operation in September and garbage collection stopped at the end of October: see the entry of 31 October 2012 “last date for Island Waste Cottage pick up” [p.236].

[99] The Crown takes the position that prior to his appointment to the Senate, when Senator Duffy described himself as a resident of Ontario, Senator Duffy said he used the property at Cavendish on a seasonal basis and with the exception of three nights in December 2012 that’s precisely how he used the property following his appointment.

[100] The Senate typically breaks in mid-December and suspends its sittings until February, about six weeks per year. The sitting schedule can be determined from Exhibit 66, entered in the course of Diane Pugliese’s testimony. Mr. Holmes highlighted Senator Duffy’s whereabouts during the winter breaks between 2009 and 2012. Overall he spent 14 days in P.E.I. during that period. The break period is more than 28 weeks. He did not make it back to P.E.I. at all during the 2010/2011 break. However, Mr. Holmes pointed out that Senator Duffy did spent 10 days in P.E.I. during the 2012 / 2013 break at a time when the Senate expense issue had attracted the attention of the media.

[101] Mr. Holmes combed the diaries of Senator Duffy and noted that the property at 10 Friendly Lane was consistently referred to as “the cottage” and that 47 Morenz was consistently referred to as “his home.”

[102] Crown counsel rhetorically asks, “Why is this important?” Mr. Holmes points out that Senator Duffy relies on the directions he claims he received from Prime Minister Harper, from a memo prepared by Mr. McCreery, a staffer in Senator LeBreton’s office, and Senator David Tkachuk to legitimize his entitlement to expense claims respecting the NCR. Mr. Holmes urges the court to carefully examine Senator Duffy’s reliance on these directions and advice that was provided by the aforementioned persons regarding the whole residency issue.

[103] Mr. Holmes contends that at the very least these interactions certainly reveal that Senator Duffy was alive to a problem. The Crown raises the issue of potential wilful blindness on the part of Senator Duffy as it relates to his constitutional eligibility to sit as a Senator from P.E.I. based on concerns related to residency issues. Mr. Holmes notes that Senator Duffy was alive to the issues from the outset.

[104] It must be born in mind that Senator Duffy initially expressed a preference to be appointed as an Independent Senator from Ontario and that Senator Duffy himself testified that he believed he was qualified to be appointed from Ontario.

[105] At the very least, Senator Duffy knew back in December of 2008 that he had to be a resident in the Province that he represented in the Senate.

[106] Mr. Holmes observed that during his preliminary discussions with Prime Minister Stephen Harper about his appointment to the Senate, the Prime Minister made it clear to Senator Duffy that he would be entering the Senate as a Conservative and that he would be representing the Province of Prince Edward Island. It would appear from the evidence that Prime Minister Harper seemed focused on the fact that Senator Duffy owned property in Prince Edward Island.

[107] Mr. Holmes takes the position that even if one were to accept Senator Duffy’s recall of the content of the discussions as perfectly accurate, nowhere was there any suggestion that the Prime Minister discussed expense claims, particularly the Senator’s eligibility for financial compensation in connection with the performance of his duties in Ottawa.

[108] Senator Duffy’s appointment to the Senate was announced on 22 December 2008.

[109] Thereafter, Senator Duffy met with representatives of Senate Administration on 23 December 2008, including Mark Audcent, the Clerk of the Senate, who specifically instructed him about the need to maintain his residency status in the province for which he was appointed, namely, P.E.I. All of the representatives of the administration extended the invitation to approach them with any questions on a variety of topics. The letters from the head of Senate Finance and the acting head of Human Resources show a willingness to answer any questions, in a non-partisan and professional way, concerning entitlement to expenses.

[110] On 24 December 2008 an article appeared in Charlottetown’s The Guardian written by Professor David Bulger. The article stated that Senator Duffy’s appointment to the Senate was constitutionally invalid because Senator Duffy was not a resident of P.E.I.

[111] Within a few days of the Bulger article Senator Duffy travelled to P.E.I. He stayed at the Charlottetown Hotel. He obtained a P.E.I. drivers’ license.

[112] Mr. Holmes seemed intrigued as to how Senator Duffy obtained a P.E.I. driver’s licence in early January 2009. Perhaps this mystery could have been resolved by cross-examining Senator Duffy about it.

[113] As a result of the Bulger article, a staffer in Senator LeBreton’s office was conscripted to prepare a memo on the subject. Mr. Holmes takes the position that contrary to Senator Duffy’s testimony, the McCreery memo dated 6 January 2009 provides anything but verification that his claim to being a P.E.I. resident is valid. The memo states that any Senator asserting a particular residence claim would most likely avoid any challenge from the Senate itself: “if they say they are a resident of province X and have a deed to prove it the other Honourable Members do not question this”. Mr. Holmes contends that the McCreery memo only heightens concerns about the validity of Senator Duffy’s claim of P.E.I. residency, it does not alleviate them.

[114] I find that the McCreery memo is open to be interpreted in the way Senator Duffy understood the residency issue.

[115] There is no evidence that Senator Duffy conferred with the Law Clerk of the Senate, Mr. Audcent, about the Bulger article.

[116] Mr. Holmes stated that: “We also know what Mr. Audcent would have said, had such a meeting occurred: residence is a question of fact. And based upon the indicators he identified during his testimony, it is inconceivable that, with awareness of all of the circumstances, Mr. Audcent would have identified Cavendish P.E.I. as Senator Duffy’s residence.”

[117] I am not prepared to consider that the aforementioned hypothetical conversation between Mr. Audcent and Senator Duffy would result in a specific opinion one way or the other. The fact of the matter is that there was no such conversation.

[118] On 7 January 2009 Senator Duffy, who at that point had not been sworn in, attended an orientation session. Mr. Holmes maintains that Senator Duffy was still doubtful and concerned about his residency status. In his testimony Senator Duffy said he was seeking “reassurance” from Senator Tkachuk (Evidence of Senator Duffy 16 December 2015, p.74). Whatever advice or information Senator Duffy elicited from Senator Tkachuk, it is clear from the Crown’s perspective that it was prompted by false and misleading statements by Senator Duffy. There’s no indication in the trial record that Senator Tkachuk knew about Senator Duffy’s personal affairs. Senator Duffy testified that he and Senator Tkachuk were acquaintances (on the basis that he may have interviewed Senator Tkachuk once) (Evidence of Senator Duffy 16 Dec 2015, p.75).

[119] The entire exchange is captured in Senator Duffy’s testimony from 16 December 2015, at pp. 74 to 79. Senator Duffy answered in the affirmative when Senator Tkachuk asked if Senator Duffy owned a house in P.E.I., paid for hydro, paid for gas, insurance and (property) taxes there. But the Crown urges that the information supplied by Senator Duffy was misleading, at the very least:

• The property at 10 Friendly Lane was not a house, it was a cottage
• The hydro was shut off
• The last shipment of propane was delivered in the fall when the cottage was closed up
• Senator Duffy paid property taxes in P.E.I. as a non-resident.

[120] I do not take Senator Duffy’s responses as misleading. It is impossible to assess accurately a conversation when one of the parties is not called to give evidence.

[121] On 16 December 2015 Senator Duffy described his conversation with Senator Tkachuk about per diem claims as follows at p.77:

And I said, well what about per diems. I said I don’t personally believe in per diems. He says you cannot, not claim what every other Senator claims because to do so would show some light between you and the other P.E.I. Senators and it would give some kind of edge or an opening for this professor to come back with this, what they believed was a politically motivated attack.

[122] Mr. Holmes states that to the extent Senator Duffy received any direction to claim per diem expenses, it is clear from his own account this is what occurred:

(a) Senator Duffy identified a problem regarding his residence;

(b) He obtained favourable advice based on misrepresenting and omitting salient facts about the Cavendish property; and

(c) That the need to claim per diems had more to do with Senator Duffy’s portrayal of himself as a resident of P.E.I. – to maintain his constitutional eligibility - than the legitimacy of those claims.

[123] I do not agree with Mr. Holmes’ characterization that Senator Duffy omitted or misrepresented the status of his Cavendish property.

[124] The Crown stated that Senator Duffy was able to overcome his personal opposition to making per diem expense claims and directed his staff to prepare the necessary documentation and submit same in order for him to receive per diem compensation.

[125] Mr. Holmes expressed the opinion that Senator Duffy, fearing that his claims might be denied, pre-signed blank claims forms certifying that the information was accurate and correct and in accordance with Senate policy.

[126] Undoubtedly, Senator Duffy did use pre-signed blank claim forms when claiming some of his per diem allotments. This issue will be dealt with in more detail later in this judgment. Suffice it to say at this point that I do not attach any sinister motive or design in this practice on the part of Senator Duffy.

[127] The Crown emphasized that Senator Duffy testified that he knew that Members of Parliament and Senators alike were entitled to compensatory payments to make up for the fact they have to travel to Parliament Hill to work.

[128] It is the Crown’s position that Senator Duffy did not incur any additional expenses in connection with his work on Parliament Hill. He had worked on Parliament Hill for years before his appointment. His daily routine was largely unaltered following his appointment. He left the same residence in Kanata, drove to the same general location in Ottawa to work, and ate his meals at the same places. The sitting schedule of the Senate was typically three days per week.

[129] Furthermore, Mr. Holmes concludes that all the per diem claims made by Senator Duffy amount to criminal fraud and breach of trust.

Defence Position

[130] Mr. Bayne submits that counts 1 and 2 allege that Senator Michael Duffy committed breach of trust and fraud between December 22, 2008 and March 6, 2013 “by filing expense claims and/or residency declarations containing false or misleading information.” He contends that the counts factually engage Senator Duffy’s designation – under the existing provisions of the SARs (Senate Administrative Rules) and related policies, procedures and guidelines – “For the purposes of the Twenty-Second Report of the Standing Committee on Internal Economy, Budgets and Administration, adopted in the Senate June 18, 1998” of his “primary residence in the province or territory that I represent” (Prince Edward Island) and his related claims for “Living Expenses in the NCR.” Furthermore, he submits that Senator Duffy committed no crime whatsoever – no fraud, no breach of trust – in making a designation (pursuant to the rules as he understood them and had them explained to him by Senate leaders) regarding primary residence “in the province or territory that [he] represent[ed]” and in claiming the related NCR living expense claims. Mr. Bayne asserts that the designation and living expense claims were validly made within the existing administrative Senate rules and practices. They were made in good faith and the belief that they were appropriate. They were in violation of no Senate rule or policy. They involved no deliberate deceit or “corrupt” purpose. They were made pursuant to and in reliance upon the express instructions of the Vice-Chair of the powerful and authoritative Internal Economy Committee. They were made openly to the appropriate Senate authority (Senate Finance) and were for all of the time period under consideration reviewed and verified as appropriate by that Senate authority. Accordingly, counsel urged the court to find that there was no fraud or breach of trust and the essential elements of these criminal offences have not been proved beyond reasonable doubt and that the evidence and law support a finding of not guilty on both counts.

Senator Duffy’s Connection to P.E.I.

[131] When considering the issues surrounding residency, it is useful to consider Senator Duffy’s connection with Prince Edward Island. His family has had roots in the Province for many years and he himself was born and raised in the Charlottetown area. After leaving high school, Senator Duffy pursued journalistic endeavours that eventually brought him to national prominence. This career path resulted in Senator Duffy having to leave his home province. However, he returned regularly to Prince Edward Island to visit friends and family. Senator Duffy advised the court that it was always his intention to return permanently to Prince Edward Island once he retired from media journalism. With this goal in mind, he and his wife, Heather purchased the property at 10 Friendly Lane, Cavendish Beach, P.E.I. in 1998.

[132] Staff Sergeant Mark Todd Crowther of the RCMP described the Cavendish area as a resort municipality with a small permanent population (in 2011 the population was listed as 266) that swells to about 7500 during July and August necessitating a small seasonal satellite detachment at Cavendish Beach between June and September to handle the influx of people.

[133] The Duffy’s current residence in the NCR is at 47 Morenz Terrace, Kanada, Ontario. This property was purchased in 2003.

[134] In anticipation of his appointment to the Senate representing P.E.I., Senator Duffy ended his career in journalism on December 22, 2008 and “became a resident of Prince Edward Island” at 10 Friendly Lane, Hunter River, RR2, P.E.I., C0A 1N0 and was issued a P.E.I. driving licence on January 2, 2009. (Exhibit 42, Tabs 1 and 2). As Senator Duffy put it in his testimony, I was a Prince Edward Islander and wanted to have a Prince Edward Island driver’s licence. (Evidence of Senator Duffy, December 8, 2015, page 66, lines 7-9)

[135] Mr. Bayne noted that Senator Duffy maintained his Ontario Health Insurance Plan card to facilitate his treatment and care for his various health issues. In 2013, the Senate rules changed so that a provincial health card from one’s home province was required.

Reliance by Senator Duffy on Representations and Opinions of Key Authoritative Officials

[136] Senator Duffy advised the court that he spoke with a number of individuals including: Stephen Harper, the Prime Minister of Canada; Senator Tkachuk, the Vice-chair and then Chair of the Internal Economy Committee (see Exhibit A, Tab 2, page 2-3 Governance: “The Committee is responsible for the good internal administration of the Senate”); Senator LeBreton, the Conservative Senate caucus leader and her constitutional assistant Christopher McCreery (confirmed by Exhibit A, Tab 19, dated January 6, 2009) regarding issues surrounding residency and that he relied on their opinions and statements with respect to the residency issue.

Prime Minister Stephen Harper

[137] Senator Duffy testified that he met Prime Minister Stephen Harper on December 8, 2008 (confirmed by Exhibit 76, the Duffy diary for December 2008) at which time the Prime Minister suggested to then Mr. Duffy that he (Duffy) should consider a P.E.I. Senate appointment. The Prime Minister and Mr. Duffy discussed Mr. Duffy’s and his wife’s intention to return permanently to P.E.I. once his journalism career ended and where he had owned his proposed permanent retirement home at 10 Friendly Lane for a full decade. The Prime Minister suggested that Mr. Duffy “speed up” the permanent move to the P.E.I. residence through the acceptance of an appointment – i.e. an appointment as a P.E.I. Senator would both require and effect a change in the status of the P.E.I. residence. Mr. Duffy said he would have to discuss and consider this with his wife Heather (Evidence of Senator Duffy, December 8, 2015 at pages 56-60).

[138] Senator Duffy further gave evidence that he again met Prime Minister Harper, this time at the Centre Block, on December 16, 2008 (again confirmed by Exhibit 76), to discuss the proposed Senate appointment. Mr. Duffy raised an issue of potential local political opposition to his appointment as he had been living in Ottawa as part of his journalism career, although he owned the residence at 10 Friendly Lane in P.E.I. and had intended to make it his permanent home when his journalism career ended. The Prime Minister replied, “They’ll get over it,” and went on to advise Mr. Duffy that accepting the appointment as a P.E.I. Senator simply “accelerated” or “speeded up” making the P.E.I. residence the permanent residence, since being sworn in as a Senator from P.E.I. made P.E.I. (10 Friendly Lane) the permanent and primary residence. The Prime Minister advised Senator Duffy that, upon appointment as a Senator from P.E.I., the effect would be “this is now your primary residence. This is – this is where you live and this is what you represent, the area you represent in the Senate of Canada” (Evidence of Senator Duffy December 8, 2015, page 63). Mr. Duffy would, on appointment, be representing the Province of P.E.I. (an important Constitutional and legal reality of “regional representation” by appointed Senators – see Exhibit A, Tab 15, at pages 20 & 25: “The system of regional representation in the Senate was one of the essential features of that body when it was created”), and his P.E.I. residence would thus, on appointment, become the permanent one just as Mr. Duffy and his wife had intended for a decade. (Evidence of Senator Duffy December 8, 2015, at pages 60-64)

[139] The Prime Minister’s explicit advice was believed and relied upon reasonably by Mr. Duffy. This was not some minor bureaucratic official speaking but the Prime Minister of Canada. This advice made sense. If you are the Senator from P.E.I., representing P.E.I., your address in P.E.I. would now be your prime and permanent address. The advice of the Prime Minister was reinforced by the written and oral advice of Mr. Audcent, the Senate Law Clerk, to Mr. Duffy on December 23^rd, 2008, that, owing to the requirements of the Constitution Act, 1867 (See Exhibit A, Tab 1), the soon-to-be appointed P.E.I. Senator had a “duty to reside at all times in Prince Edward Island” (Exhibit A, Tab 12). The Prince Edward Island residence was of primary constitutional importance going forward (Evidence of Senator Duffy, December 8, 2015 at pages 64-66).

[140] Senator Duffy testified that on December 20^th, 2008, he officially accepted the Prime Minister’s offer of appointment as Senator from P.E.I. (confirmed by Exhibit 76). Mr. Duffy believed that based on the authoritative and inherently reasonable advice from the Prime Minister, that upon his appointment as a Senator from P.E.I., he represented P.E.I. and his P.E.I. residence at 10 Friendly Lane became his constitutionally required, and most important, now permanent residence and address. Appointment by the Prime Minister would transform his status from private citizen to Parliamentarian from P.E.I. and the status of his P.E.I. residence to that of constitutional and permanent residence.

[141] Mr. Bayne stressed that Senator Duffy’s evidence about the aforementioned meetings was not contradicted. The Crown called no evidence, either from former Prime Minister Harper or from Ray Novak who was present at the December 8^th meeting, to challenge or contradict Senator Duffy’s account of the meetings.

Senate Officials

[142] On December 22, 2008, the Prime Minister announced Mr. Duffy’s Senate appointment and that of 17 others (confirmed by Exhibit 76) and on December 23^rd, Mike Duffy met Senate officials (Senate Clerk Belisle, Law Clerk Audcent, Senate Finance Director Proulx and Acting HR Director Poulin) for a welcome and information session. The meeting was less than an hour long. Of relevance to Counts 1 & 2, Senator Duffy received a letter from the Senate Clerk advising him that the Clerk would be sending him “several documents.” Senator Duffy’s evidence confirmed that he later received a box of documents including the Senate Administrative Rules (SARs), the Attendance Policy and other documents. The Clerk’s letter advised that “a short briefing” would follow from the Law Clerk and Directors of Finance and HR (See Exhibit A, Tab 12). The Law Clerk’s letter and oral advice received December 23^rd confirmed in writing the prime constitutional importance as of appointment – “as of the day of your summons” – of the P.E.I. residence at 10 Friendly Lane. Senator Duffy received a letter and 15 pages of documents from Ms. Poulin of HR (see Exhibit A, Tab 12 & 16). Then he received an eight-page-typed letter from Ms. Proulx along with typed documents (Guidelines and Policy and Entitlements). Ms. Proulx testified that she “went through” the eight page letter with Senator Duffy. The letter explained “Parliamentary functions” for which Senate resources may properly be used, sessional and Retiring Allowances (i.e. salary) and Dental, Health Care, Insurance, Travel Insurance, and Post-Retirement Insurance Plans, Death Gratuity, Marital Status Data, Annual Statement of Benefits, Railway Transportation, Travel Card, Telephone Services, Research and Office Expense Budget amounts, and Moving Expenses (Exhibit A Tab 15 A-H) (Evidence of Senator Duffy December 8, 2015 at pages 76-91).

[143] Mr. Bayne stated that there was no evidence whatsoever that any of the Senate officials at this brief December 23^rd welcome meeting explained, defined, or qualified in any way the concept of “primary residence” for the purpose of claiming living expenses in the NCR. Senator Duffy was encouraged to seek advice if he had questions after reading all the materials and the coming volumes of materials from the Senate Clerk.

[144] Senator Duffy gave evidence that after this brief December 23^rd welcome session there were no subsequent education or training sessions conducted by Senate administration for new Senators (despite their responsibility under the SARs, along with the Internal Economy Committee – see Exhibit A Tab 2 Governance p. 2-10 – for “the good administration of the Senate”) on Senate rules, policies, guidelines, procedures or practices. The evidence reasonably supports the conclusion that there was little or no meaningful education or training of Senators (and is strongly confirmed by Exhibit A, Tab 20, the “Report on Internal Audits”, that expressly identifies “poor communication” of policy to Senators and the need for “updates”). After the brief and summary ‘welcome’ meeting of December 23^rd, there is no evidence from any source that Senators received any organized education or training from Senate administration, and only scant evidence about a non-mandatory, optional, half-day session for office staff of Senators (Evidence of Senator Duffy December 8, 2015 at pages 84-55; Evidence of Senator Furey December 7, 2015 at pages 26 & 60).

Prime Minister’s Office (PMO)

[145] Senator Duffy testified that on December 24^th, 2008, The Guardian newspaper (Exhibit 77) published an article citing a University of Prince Edward Island professor’s challenge to the constitutionality of Prime Minister Harper’s appointment of Mr. Duffy as a P.E.I. Senator. Conceding that the constitutional standard for residence is not defined, the article queried whether Mr. Duffy spent enough time on the Island and stated that he had a duty going forward to make P.E.I. his ‘main residence.’ This article gravely concerned Senator Duffy and reinforced the notion that his P.E.I. residence was his residence of prime constitutional importance. Mr. Duffy immediately contacted Mr. Teneycke of the Prime Minister’s Office (PMO) regarding the newspaper article and was advised that his P.E.I. residence at 10 Friendly Lane, the residence of prime constitutional importance, fully satisfied the constitutional residence requirement. 10 Friendly Lane was not only the primary residence of Mr. Duffy in the Province for which he was to be appointed, but was his only residence in P.E.I. The PMO assured him 10 Friendly Lane qualified and that he should ignore the article (Evidence of Senator Duffy December 8, 2015 pages 92-95).

Senator LeBreton, Senate Leader

[146] Senator Duffy pursued the residency issue further. On January 6, 2009 (confirmed in Exhibit 7), Senator Duffy testified that he attended the office of his Senate Leader and member of the Harper Cabinet, Marjorie LeBreton, to resolve the matter. When he explained his understanding that there was and could be no minimum time requirement to be spent at his residence at 10 Friendly Lane for it to be his primary residence in the Province for which he was to be appointed (because of the Senate attendance requirement in Ottawa and travel on Senate business), he was assured by Senator LeBreton that 10 Friendly Lane fully qualified and there was no such time requirement and The Guardian article was nothing but “politics” that he should ignore. He took this as being consistent with what he’d been advised by the Prime Minister on December 8^th & 16^th, 2008, that upon appointment, 10 Friendly Lane would be his Constitutionally primary and permanent residence, making him a P.E.I. resident. On the same date, January 6^th, Mr. Duffy received from the Senate Leader and her constitutional advisor a written memorandum (Exhibit A Tab 19) advising that the P.E.I. property that he owned (10 Friendly Lane) qualified him as a P.E.I. resident even if he had lived “in Ottawa 99% of the time.” The primary constitutional residence in the province of appointment was not dependent on the amount of time spent there (or the seasons or the relative value or a concept of “ordinarily inhabits”) (Evidence of Senator Duffy December 8, 2015 pages 95-101).

Primary Residence Declaration

[147] The Primary Residence Declaration form that was signed by Senator Duffy is reproduced here. This document has been modified over the course of the last few years.

SENATE

PRIMARY RESIDENCE DECLARATION

I, the Honourable ……………………………………, member of the Senate for the province or territory of…....……………………………………, declare that my primary residence is more than 100 kilometres from Parliament Hill and that I therefore incur additional living expenses while I am in the National Capital Region to carry out my parliamentary functions.

For the purposes of the Twenty-Second Report of the Standing Senate Committee on Internal Economy, Budgets and Administration, adopted in the Senate June 18, 1998, the address of my primary residence in the province or territory that I represent is the following:

The Honourable

(signature)

(date)

Application of Advice

[148] Mr. Bayne suggested that the Crown is seeking to assert a fine line distinction (splitting hairs?) that there was a conflation here of constitutional residence and primary residence for the purpose of living expense claims. However, it is argued that Senator Duffy is not a lawyer and that he sought and relied on the advice he received and was not provided any meaningful instruction from Senate administration. Mr. Bayne states that Senator Duffy honestly and reasonably understood, combining the information and advice received from the most authoritative sources – the Prime Minister, the PMO, the Senate Leader, her constitutional advisor – that 10 Friendly Lane, upon and by virtue of appointment, became and was, going forward, his permanent residence, his primary residence in the province of appointment, his residence of clearly primary constitutional importance, irrespective of the amount or percentage of time or seasons he spent there. And so, when on January 6, 2009, Michael Duffy (he had been by then – on December 22^nd – announced as appointed but was not sworn in until January 26^th, 2009) signed his first declaration on the provided Senate declaration designation form (Exhibit 1 Tab 1) affirming “The address of my primary residence in the province or territory that I represent is…10 Friendly Lane,” he honestly and sincerely and reasonably believed that to be true. He had, as he testified, no fraudulent or corrupt intention to deceive the Senate and believed the declaration was both fully within the rules as he understood them and consistent with the advice received from all authoritative sources he had consulted and relied upon.

[149] Mr. Bayne contends that, if Senator Duffy was confused and conflated constitutional residence with primary residence for living expense claims, that does not make out the deceitful and corrupt mens rea required for fraud or breach of trust. He was not alone in conflating and confusing the issues. Mr. Audcent addressed the McCreery memo (see evidence of Mark Audcent, April 8, 2015 pages 66-72 and April 9, 2015 pages 3-6), by stating that it, “just completely confuses the property qualification with the residency qualification” and is “incorrect from a legal point of view. … I would say it’s confusing.” … “Whether it is incorrect from a political point of view” Mr. Audcent could not say. Yet it was advice to Senator Duffy “coming from the office of the leader of the Senate for the Government of Canada.” Mr. Audcent agreed the Senate leader was and would have been “an authority figure for a rookie Senator” – “absolutely.”

[150] Mr. Duffy did in fact receive a box of materials (including the SARs) from Mr. Belisle’s office. There was a considerable volume of material that Mr. Duffy skimmed and then, when he had questions about one particular matter – the primary residence declaration he had completed the day before on January 6, 2009 (Exhibit 1 Tab 1) – on January 7^th he did as he had been told on December 23^rd: he sought advice from an authority on the Senate rules, policies, procedures and practices, Senator Tkachuk, the Vice-Chair of the Committee responsible for “good internal administration of the Senate,” the Internal Economy Committee. Senator Duffy testified that on January 7^th, 2009, the Senate Tory caucus convened an afternoon orientation session (Exhibit 7, January 7, 2009). The Senate leader, Senator LeBreton, the senior Tory on the Internal Economy Committee, Senator Tkachuk (its vice-chair) and the Tory Whip explained the highly partisan nature of the Senate and the importance of attendance for votes in the Chamber (Evidence of Senator Duffy December 8, 2015 at pages 101-109).

Senator Tkachuk

[151] At the end of the January 7^th caucus orientation session, Senator Duffy approached Senator Tkachuk directly, one-on-one. Senator Duffy testified that Senator Tkachuk was regarded in the Senate Tory caucus as the “guru” on Senate matters. Senator Duffy explained to Senator Tkachuk the history of The Guardian article, his owning a residence in P.E.I. on which he paid taxes, insurance and hydro as well as a residence in Ottawa and questioned whether he could or should claim the housing allowance for the NCR property. Senator Tkachuk informed Senator Duffy without hesitation that he (Duffy) was the Senator from P.E.I., that he (Duffy) had the expenses of 2 houses (the property taxes, insurance and hydro expenses of 2 houses) and that he (Duffy) should most definitely claim the NCR housing allowance as a P.E.I. Senator, exactly as other P.E.I. Senators claimed it. Senator Tkachuk advised Senator Duffy that it was important that he claim all expenses and allowances and not allow “any light” between himself and other P.E.I. Senators (as that would only fuel The Guardian article controversy). Senator Tkachuk advised Senator Duffy that the NCR living expense claims were essential for him to make as a Senator representing P.E.I. and that the claims were entirely within the Senate rules and appropriate. Senator Tkachuk advised Senator Duffy that Senator Duffy was on “travel status” when in Ottawa/the NCR (Evidence of Senator Duffy December 9, 2015 pages 1-9; 12-13; 120 & 128) and that Senator Duffy’s primary residence designation of 10 Friendly Lane was valid (page 4). When Senator Duffy explained that he personally did not believe in per diem claims, Senator Tkachuk told him that he must claim per diems as the failure to do so would only raise questions. Senator Tkachuk’s advice was consistent with the prior advice received from the Prime Minister, the PMO (Mr. Teneycke), Senator LeBreton and Mr. McCreery. It was no secret to any of these authoritative people that Senator Duffy had been, prior to his appointment as a Senator from P.E.I., a long-time Ottawa resident (Evidence of Senator Duffy December 9, 2015, pages 6 & 14). They all had no hesitation in advising Senator Duffy that his primary and permanent residence on appointment was his P.E.I. residence and that his designations/declarations and related NCR living expense claims were valid, and “entirely within the rules” (Evidence of Senator Duffy December 8, 2015 pages 107-109; December 9, 2015 pages 1-9, 79, 116, 120, 126, 128).

[152] Not only is all of Senator Duffy’s evidence about the specific advice given by Senator Tkachuk wholly uncontradicted (Senator Tkachuk was a listed Crown witness never called by the Crown in its case or as a reply witness), it is entirely consistent with Senator Tkachuk’s reported public comments on December 3, 2012, set out at Exhibit 45B Tab 1: “Duffy’s expenses are entirely within the rules”; “many Senators who own houses in Ottawa make similar claims for housing expenses” and then after staying here [Ottawa] “all winter long… they go home for the summer.” “Your primary residence is what you say your primary residence is.”

Senator Duffy’s Conclusion Regarding Primary Residency

[153] Mr. Bayne maintains that Senator Duffy’s reading of the SARs and the declaration form caused him to believe that his primary residence declaration in the province for which he was appointed was valid as were his related NCR living expense (accommodation and per diem) claims. There appeared to be no definition of or criteria for primary residence in the province of appointment in the Senate policies or the declaration form that such a declaration would violate. “I believed it was a valid designation and it was an essential designation in terms of my representing P.E.I. in the Senate of Canada” (Evidence Senator Duffy December 9, 2015 page 43). “They were all 100% valid. They were all 100% within the rules, and they still are” (page 54). Equally important, Senator Duffy had reasonably sought out an authoritative expert on Senate rules, policies, practices and procedures, had solicited that expert’s advice on the very issue and had received unambiguous assurance that the primary residence and living expense claims were entirely within the rules and validly made. “I believed it was completely within the rules, um, I’d been told that by all of the experts, and I followed their advice” (page 43). Mr. Bayne pointed out that none of these experts (the Prime Minister, Mr. Teneycke, Mr. Novak, Senator LeBreton, Mr. McCreery, Senator Tkachuk) were called by the Crown to seek to refute in any way Senator Duffy’s evidence. This advice-seeking was all done at the outset of Senator Duffy’s Senate career, not later as an afterthought. Senator Duffy’s conduct was honest and reasonable. He reasonably relied on all that he had been told from the outset by all the authorities – the Prime Minister, the PMO, the Senate Leader and her assistant, the vice-Chair of Internal Economy. Their advice accorded with his own reading of the provisions of the SARs. He believed that his designation of primary residence was valid as were his living expense claims. Mr. Bayne concludes that the evidence makes out a strong case of most highly probable innocence, far beyond a reasonable doubt and that Senator Duffy had no intent to defraud or to deceive, no corrupt purpose. He did not have the mens rea for either fraud or breach of trust.

Senator Duffy’s Efforts to Upgrade the Dwelling at 10 Friendly Lane

[154] Through Senator Duffy, detailed documentary evidence, (Exhibit 80), none of it effectively challenged by the Crown, was led of the almost $100,000 of his own money spent from his appointment in 2009 to upgrade and renovate 10 Friendly Lane. A real and significant investment was made in the P.E.I. residence. This evidence of action speaks louder than words. It is completely consistent with and confirms Senator Duffy’s evidence that, from his 2009 appointment, 10 Friendly Lane became and was his permanent home (as he had intended since1998). Mr. Bayne advised the court that Senator Duffy did not sell the Kanata bungalow as that would only have required his renting another NCR residence or incurring Ottawa hotel costs daily (the “secondary residence in the NCR” required of Senators working in Ottawa). Mr. Bayne suggested that Senator Duffy could have done that and had he done so, almost assuredly these charges would not have been brought against him. His reasonable decision to retain the Kanata residence as his “NCR” residence, however, does not detract from the fact that 10 Friendly Lane was now, from appointment, his permanent residence, his primary residence in the Province that he represented, his residence of prime Constitutional importance as a newly appointed P.E.I. Senator (Evidence Senator Duffy December 9, 2015 at pages 56-78, 84-98).

[155] The uncontradicted evidence that Senator Duffy and his wife spent $98,292.49 of their own personal money to fund the extensive renovation of 10 Friendly Lane is also entirely inconsistent with an intent to defraud in order to gain what the evidence reveals was approximately $80,000 in living expenses over the next 4 fiscal years (2008-09; 2009-10; 2010-11; 2011-12). Mr. Bayne contents that it is simply unreasonable to believe that a fraudster, motivated to deceive in order to gain money, would spend a considerable sum of personal money (the evidence reveals the Duffys are not wealthy people nor do they live a lavish lifestyle) in order to effect a risky scheme to gain a relatively modest annual expense amount. This evidence is inconsistent with proof beyond reasonable doubt of the required mens rea for fraud or breach of trust, but is wholly consistent with the fact and belief of Senator Duffy that 10 Friendly Lane was his permanent and primary residence in the Province he now represented as a Senator.

[156] The extensive work on 10 Friendly Lane was done in 2 phases, starting in 2009 (planning and retention of contractors preceded the work) and completed in 2012. The work in 2009 made the residence an all-season one; the additional work in 2012 addressed foundation and site issues that the 2009 work had not fully resolved. Significantly, all of this work and all of this personal Duffy family money spent on 10 Friendly Lane was done before the issue of living expenses ever first surfaced. This was not money spent and work done in a desperate and after-the-fact response to a live issue about the validity of primary residence and/or living expense claims. Mr. Bayne stresses how telling this fact is.

The Duffys’ Financial State

[157] Further evidence inconsistent with and contrary to Senator Duffy having the criminal mens rea for fraud and/or breach of trust in respect of counts 1 and 2 exists with respect to the financial evidence and documents (see also Evidence of Senator Duffy December 9, 2015 pages 16-42).

[158] The Crown led the evidence of Mr. Grenon, a forensic accountant, in an effort to prove that Senator Duffy may have had a motive to commit monetary crimes as he and his wife allegedly “overspent” beyond their lawful means. The oral evidence of Mr. Grenon was in addition to his reports (Exhibits 52, 53 and 54). These reports are “preliminary” and significantly incomplete in terms of financial information. Exhibit 52 is such a “preliminary” report that states that, over the 4.5 year period between December 2008 and June 2013 and based upon “available information,” Mr. Grenon “could not determine the source” of $139,784 in unknown deposits to Senator Duffy’s bank account (page 2 of 86 of Exhibit 52). He could not determine the source of this $139,784, he said “because the information was not provided.” He stated that he needed “additional information” about the sources of the deposits. Nevertheless, he offered evidence that, in its incomplete state, left the invidious (and speculative) innuendo that Senator Duffy had nefarious and unreported sources of income. This then fed the Crown argument (offered in paragraph 49 of the Crown’s “Factum Regarding Admissibility of Expert Opinion”) that Senator Duffy had a motive to seek to obtain illicit funds (the Exhibits 4 & 5 on the voir dire referred to in paragraph 49 are Exhibits 52 and 53 now being referenced). For the year 2011, Mr. Grenon in his oral evidence and the preliminary and incomplete Exhibit 52 stated that there was an unexplained difference of $71,703 between the deposits into Senator Duffy’s account and the disposable income reported on his 2011 Income tax return. If, however, the $71,703 represented non-taxable deposits, “the unexplained difference may be reduced to zero” (page 7 of 86 of Exhibit 52). Finally, Exhibit 52 stated that on average Senator Duffy’s bank account withdrawals exceeded his deposits and the shortfall was funded by a LOC account (a credit line at the bank) (page 4 of 84 of Exhibit 52).

[159] In Exhibit 53, Mr. Grenon summarized the full 6-year period between January 1, 2008 and December 31, 2013 of Senator Duffy’s personal income tax and banking information, information that was, as in Exhibit 52, incomplete, so much so that Mr. Grenon cautioned that “I reserve the right to modify the results of this analysis should additional documents or information be made available at a later date” (page 2 of 14 of Exhibit 53). Mr. Grenon posited in Exhibit 53 that for this six-year period, he could not account for $159,477 in bank deposits when compared with Senator Duffy’s reported taxable income during these years. While Mr. Grenon conceded that if the deposits represented funds not subject to taxation that would change his findings, there was yet again left, as with Exhibit 52, the insinuation of improper cash receipts by Senator Duffy (useful to the Crown in suggesting diversion of Senate monies) and possibly even income tax fraud. (My emphasis)

[160] Mr. Bayne pointed out that there was no evidence whatsoever offered by Mr. Grenon, orally or in his Exhibit reports that Senator Duffy was ever, during the years of his detailed forensic investigation and analysis, in financial straits or was being pressed by any creditor (bank, credit card provider, tax department); that any foreclosure or bankruptcy proceedings were considered or commenced against Senator Duffy; that Senator Duffy experienced any difficulty at all in accessing lawful credit from his long-time bank, the RBC; or, significantly, that Senator Duffy ever resorted to anything but perfectly lawful credit (line of credit, mortgage funds – like the majority of Canadians) in order to fund the Duffy household.

[161] Indeed, the evidence given by Senator Duffy was entirely consistent with that given by Mr. Grenon with the exception that Senator Duffy’s oral and documentary evidence filled in the missing (and critical) information lacking in the Grenon analysis. Senator Duffy testified that he never spent beyond his lawful means, that he was never in financial straits or being pressed by creditors, that his long-term relationship with the Royal bank (an experienced, professional, creditor with expertise in risk-assessment and credit-worthiness) afforded him ready, lawful credit if and when needed, that he was never in default to any creditor or unable to pay his bills, and that he routinely accessed a Royal Bank line of credit when he needed funds – and paid down the line later. Mr. Grenon conceded in cross-examination that the lawful use of debt appears to be extremely common among Canadians: the data reveal that 71% of Canadians finance their lifestyle with debt and over 40% of those use revolving lines of credit. Lawful use of debt is so normal in Canada as to show that Senator Duffy’s limited and prudent use of debt is not an abnormal motivator of crime at all.

[162] The law governing motive was canvassed at length in the argument concerning the admissibility of Mr. Grenon’s evidence. Courts should look for conduct “seriously tending” to establish motive, when “reasonably viewed” (R. v. Barbour, [1938] S.C.J. No. 26 at page 5) where Duff C.J. writes:

If you have acts seriously tending, when reasonably viewed, to establish motive for the commission of a crime, then there can be no doubt that such evidence is admissible, not merely to prove intent, but to prove the fact as well. But I think, with the greatest possible respect, it is rather important that the courts should not slip into the habit of admitting evidence which, reasonably viewed, cannot tend to prove motive or to explain the acts charged merely because it discloses some incident in the history of the relations of the parties.

[163] Motive is a question of fact for the trial judge and its weight will in each case turn on its own facts. The evidence of motive here is so negligible as to approach “proved absence of motive”; which is “an important fact in favour of the accused.” (R. v. Lewis, [1979] S.J.C. No. 73 at pages 12-14). Mr. Bayne respectfully submits that the evidence of motive in this case, on these facts, being far from “seriously tending” to demonstrate criminal motive, has no probative inculpatory weight at all.

[164] At the top of page 12 in Lewis, Dickson, J. notes that, “Proved absence of motive is always an important fact in favour of the accused and ordinarily worthy of note in a charge to the jury.”

[165] Furthermore, Counsel suggests that Senator Duffy’s evidence was complete in significant ways that Mr. Grenon’s was not. Again, Senator Duffy gave his financial evidence in a reasonable, clear, straightforward, detailed manner. He provided important documentary evidence (Exhibits 78 & 79) that corroborated his oral evidence. In the six-year time period for which Mr. Grenon suggested $159,477 of unexplained bank deposits as compared with reported income of Senator Duffy, a total of $162,595.22 in non-taxable cash legacies was received by Mike and Heather Duffy. In addition, a total of $186,888.55 of tax-paid income (employment and pension) was received by Heather Duffy. These two amounts total $349,483.77 of monies received, none of which would be (or have to be) reported in Senator Duffy’s income tax returns. Senator Duffy explained that he and his wife Heather freely transfer funds between their RBC accounts. The $159,477 of deposits has been fully explained. There was no nefarious acquisition of cash and absolutely no evidence in support of that proposition. All of the deposit monies are clearly lawful funds, lawfully received and deposited. The extensive documentary records in Exhibits 78 and 79 are unchallenged evidence.

[166] In respect of Mr. Grenon’s evidence in Exhibit 52 that his incomplete information left him an unexplained difference in 2011 of $71,703 between Senator Duffy’s RBC bank deposits and his reported disposable income, Exhibits 78 and 79, together with Senator Duffy’s oral evidence demonstrate that in July, 2011 Senator Duffy received a non-taxable legacy in the amount of $55,595.22 and Heather Duffy’s tax-paid income for that year brought another $21,824.10 into the Duffy family bank accounts, for a total of $77,419.32. Mr. Bayne suggests that Mr. Grenon’s “unexplained difference,” and the Crown’s speculative insinuations and weak motive argument have been fully answered and refuted by uncontested evidence of lawful sources and deposits.

[167] An additional important fact is that, during the six-year period of Mr. Grenon’s financial analysis, namely in 2009 and 2012, Senator and Mrs. Duffy incurred almost $100,000 in extraordinary expenses, the significant expense to renovate 10 Friendly Lane. Not surprisingly, they accessed bank credit to help with this home renovation project, not unlike many Canadians. This explained the increase in the line of bank credit and the paying it down with a re-mortgage of the Kanata bungalow. There is no true overspending beyond lawful means at all, no living of a lavish or extravagant life-style that has to be funded by crime. Instead, there was a costly and extensive home renovation that was lawfully funded and is now being paid off in regular, perfectly lawful mortgage payments which have never been missed. On top of this, there remains available equity in real estate (10 Friendly Lane is unencumbered) and not-insignificant investment assets (Exhibit 79) that further prove clearly that there is no financial distress whatsoever and never was. There was simply routine and lawful bank financing of a home project.

[168] Mr. Bayne emphatically proclaims that in an important way, this entire area of financial evidence – of alleged unexplained differences, of unsupported motive assertion – demonstrates the weakness of the Crown case on all 31 counts. The underlying theme of the Crown’s case is that Senator Duffy was motivated to commit a series of fraudulent transactions because of financial duress and that he deposited mysterious amounts of money from unknown sources. Mr. Grenon’s evidence put it thusly, at paragraph 63, “the inference that the impugned claims were part of a continued and deliberate effort by [Senator Duffy] to seek compensation to which he was not entitled.” This is an unsubstantiated fiction and one that is contrary to the actual evidence. There is no probative evidence of this motive rationale at all. Mr. Bayne submits that based on all the evidence Senator Duffy never committed any crimes and never intended to commit any crimes.

Additional Evidence that Negates or Tends to Disprove Any Criminal Mens Rea for Fraud and Breach of Trust Respecting Counts 1 and 2

(i) Senator Duffy openly submitted all declarations and living expense claims to the appropriate authority (Senate Finance) for review and verification as appropriate within the SARs.

[169] Mr. Justice Belanger of the Ontario Court of Justice, in R. v. Radwanski, [2009] O.J. No. 617, found this practice relevant and probative in respect of fraud and breach of trust allegations. Senator Duffy did submit his declarations and living expense claims openly over the full four-year time period embraced by the information. He testified that he was willing, and the documentary evidence as well as evidence of Ms. Proulx and Ms. Bourgeon of Senate Finance confirms this, to answer any questions about his declarations and/or living expense claims and provide additional information if and when requested. The evidence is that he and his office were cooperative with such queries and requests (see Exhibit 6 Tab 6: Senator Duffy “is comfortable providing any further details for all travel or claims submitted”). All claims paid were verified by Senate officials as being within the rules. This pattern of conduct over many years of open submission of the declarations and living expense claims and cooperative response to any and all queries about them is inconsistent with an intention to deceive or defraud or for a corrupt purpose. The pattern of consistent verification of the expense claims (subject to routine corrections which Senate Financial officials testified were common to all Senators’ expense claims) and primary residence declarations as being within the SARs provided a powerful feedback loop of re-assurance from one declaration to the next and one living expense claim to the next, that all declarations, having been reviewed by Senate Finance, were valid as were the submitted living expense claims.

(ii) Senator Duffy’s Statements to Senate Finance

[170] Senator Duffy openly made frank statements or admissions of fact quite inconsistent with fraudulent or corrupt mens rea in the course of his cooperative dealings with Senate Finance, the very people, allegedly, he sought to defraud

[171] In his response to a Senate Finance inquiry about his signed declaration form and designation of 47 Morenz Terrace as his “Secondary Residence in the NCR” (Exhibit 1 Tab 4), Senator Duffy openly stated in his May 20, 2011 memo to France Lagacé that “our home for the past 7 years is located at 47 Morenz Terrace, (Kanata) K2K 3H2”. Six days later, in an email to Ms. Lagacé (Exhibit 1, Tab 4), Senator Duffy advised that “I am usually in P.E.I. in July.” It is contended that no one who believed that his claim of primary residence in the province he represented (10 Friendly Lane) was fraudulent, corrupt and prohibited by the rules and who was trying to deceive Senate Finance officials about such a fact, would make such statements to Senate Finance. The statements, to a person with a guilty mind and something to hide, would seriously risk Senate Finance inquiries that could expose the fraud (if there was one). That Senator Duffy made such statements openly and voluntarily to the very people the Crown asserts he was trying to defraud negatives fraudulent or corrupt mens rea, according to Mr. Bayne.

(iii) Exhibit 29- Wife’s Travel Claim

[172] Similarly, in Exhibit 29, Senator Duffy submitted a travel claim for his wife Heather who, according to the submitted expense form, travelled (return) Ottawa to Charlottetown to “prepare opening of cottage.” It is submitted that a person truly having a fraudulent and criminal mens rea concerning the designation of the P.E.I. residence as the primary residence would not risk such a statement to Senate Financial officials for obvious reasons.

(iv) Exhibit 22 - Payment of Income Tax in P.E.I.

[173] Exhibit 22 is a January 22-28, 2009, email trail from Senator Duffy to his Executive Assistant, Melanie Vos and to France Lagacé of Senate Finance. Senator Duffy’s email asks Melanie to pass on his query to “the finance people” about where he should pay his taxes. His email states that although Senate Finance has previously advised him that “all of the other Senators paid their taxes in Ontario,” Senator Duffy felt “I must pay P.E.I. taxes to reinforce my status as an islander.” This voluntary statement, early in his Senate career in 2009, affirms and is consistent with Senator Duffy’s concern to “reinforce” his P.E.I. status because of his appointment as a P.E.I. Senator which changed his status in his mind (and is consistent with the evidence of Mr. Audcent) – he was henceforth a P.E.I. resident with a primary residence in the province of his appointment at 10 Friendly Lane. This evidence is consistent with Senator Duffy’s evidence that he believed this and had no criminal mens rea when he was making his declarations and living expense claims.

(v) Where did Senator Duffy stay in P.E.I. during the winter?

[174] Senator Duffy openly admitted (to Nigel Wright and others) that when he was in P.E.I. in the winter he stayed in a Charlottetown hotel room because he could not get into his residence on Friendly Lane. He paid for this accommodation personally. Mr. Bayne says that his freely given information is inconsistent with criminal intent to deceive and defraud as it would foreseeably raise questions about the time spent at 10 Friendly Lane.

(vi) Consistent Assertions As To No Wrongdoing

[175] Senator Duffy’s made repeated and consistent assertions in his emails with Nigel Wright, Ray Novak and Senator Tkachuk, and conversations that Senator Duffy would reasonably have regarded as confidential (within an inner, PMO/Senate leadership circle) that are inconsistent with mens rea, inconsistent with a guilty mind: “The rules have been followed… All within the rules” (Exhibit 45A Page 3 Email #6); “I have no interest in claiming expenses to which I am not entitled” (Email #39); “I did nothing wrong… If I take a dive when I am innocent I am totally at the mercy of the media the opposition, etc.” (Email #198).

(vii) Exhibit 82 – the Senator Wallace Memo

[176] Mr. Bayne points out that Exhibit 82, the Senator Wallace memo, is documentary support that another Senator had exactly the same view of the SARs, and the “primary residence” declaration forms as Senator Duffy had and the validity of NCR expense claims. Such evidence is supportive (going to Senator Duffy’s state of mind) of the proposition that Senator Duffy had no criminal mens rea making the declarations and expense claims. The same may validly be said of Nigel Wright’s evidence that he assessed the SARs and concluded that Senator Duffy’s declarations and living expense claims were likely all within the rules (Evidence of Nigel Wright; August 13, 2015). It appears that other intelligent, authoritative persons were of the same view as Senator Duffy – that his declarations and living expense claims were within the rules and thus in making these declarations and living claims, Senator Duffy had no criminal mens rea.

(viii) Circumstances Surrounding the Preparation of the Primary Residence Declaration

[177] Melanie Mercer Vos and Margaret Bourgeau were witnesses called by the Crown as part of the prosecution case. Ms. Vos, Senator Duffy’s Executive Assistant, in Ottawa, testified that Ms. Bourgeau, a Financial Clerk in the Senate Finance Directorate, advised her (Ms. Vos) how to fill out the primary residence declaration form: “The first form I had to fill out, I was actually, I sought guidance from Senate Finance with Maggie, and she sat down with me and, and instructed me on how to fill out the form, and all subsequent years were, were based on the first form ever filled out” (Evidence of Melanie Mercer Vos June 8, 2015 page 130). This discussion, Ms. Vos testified took place in “our office on the 5^th floor” (i.e. before the move to the 3^rd floor, so “very early” in 2009) (page 135-136). In the discussion, Ms. Vos was told by Ms. Bourgeau, the Senate Finance official, that if Senator Duffy was appointed for P.E.I. and if he owned a residence there, then that was his primary residence for the purpose of the declaration and the declaration would be properly completed: “that’s his primary residence,” “that met the criteria, yes” (page 135-139). Ms. Bourgeau’s advice to Ms. Vos confirmed Ms. Vos’ own reading of the declaration form – “my primary residence in the province or territory that I represent” – and led Ms. Vos to be confident that Senator Duffy’s declaration was valid: “I believed this declaration to be valid” (page 140). Ms. Vos further testified that she told Senator Duffy about this Senate Finance advice, assuring him the declaration was completed appropriately: “… I’m sure I indicated to him at this time, at that time, so that would’ve been in 2009, that this was the appropriate way to fill out the form” and was an “appropriate declaration of primary residence.” (page141).

[178] Ms. Bourgeau testified in-chief that she recalled a meeting in Senator Duffy’s office where she discussed “living accommodations in the NCR region, which is Ottawa” (Evidence of M. Bourgeau, June 12, 2015, pages 38 and 40), but she could not remember if she was asked her views about Senator Duffy’s residence. “Q. Were you asked your views about his residence? A. I don’t remember” (page 140). She testified that she did not assist Senator Duffy to complete the declaration form (page 141). Ms. Vos had not said that Ms. Bourgeau had helped Senator Duffy to complete the form, only that Ms. Bourgeau had discussed with Ms. Vos how properly to complete a valid declaration. Although, in chief, Ms. Bourgeau said that she could “not recall” discussing primary residence declarations with Ms. Vos (page 43), in cross-examination (June 12, 2015 at page 4) she conceded that “the issue about his [Senator Duffy’s] residence” in fact “may have been” discussed with Ms. Vos. When Ms. Vos’s evidence was put directly to Ms. Bourgeau, she agreed that it was “possible” that Ms. Vos was correct about the declaration form discussions, that she – Ms. Bourgeau – simply couldn’t remember (page 8). Ms. Bourgeau first tried to recall these conversations 6.5 years after they had taken place, without notes or any aide memoire (page 1). Ms. Bourgeau indicated that she routinely dealt with six to thirty-five expense claims daily, involving fifty different Senators and could not recall all the conversations she had with all the different staff members of the Senators over the years (pages 1-5). Ms. Bourgeau said that she had a number of meetings with Ms. Vos (“maybe three or four” (page 6) concerning “questions” that Ms. Vos had about “certain things”, but that she could not be certain what was discussed. Ms. Bourgeau’s evidence of uncertainty and lack of accurate recall may be contrasted with the detailed recall and evidence of Ms. Vos.

[179] I find as a fact that Ms. Vos’ testimony is more reliable than Ms. Bourgeau’s on the matter before the court because Ms. Vos had only Senator Duffy to deal with whereas Ms. Bourgeau was dealing with many Senators and/or their staff members.

[180] This evidence, in sum, therefore, creates a reasonable basis on which to find that Senator Duffy was assured from the outset, from his very first primary residence declaration, that his declarations of 10 Friendly Lane as his primary residence in the province of his appointment were all valid and within the rules. Mr. Bayne stresses that such evidence powerfully negates proof of the required criminal mens rea.

Senator Duffy’s Assertions

[181] Mr. Bayne guided the court to Senator Duffy’s direct, straightforward, and firm evidence that “All of the claims I have made, whether for housing, travel, whatever, were all made openly, honestly and in complete good faith” (Evidence Senator Duffy December 9, 2015 page 45). Senator Duffy stated clearly that he “never” attempted to deceive the Senate or knowingly filed false living expense claims (page 83).

[182] Mr. Bayne reminded the court that Senator Duffy is presumed innocent and that the Crown must displace that presumption with evidence of a guilty mind beyond reasonable doubt. He asserted that based on all the evidence, Senator Duffy’s lack of mens rea is a strong probability, but assuredly reasonably possible.

Actus Reus

[183] Counsel for Senator Duffy further noted that apart altogether from there being no proof beyond reasonable doubt of the mens rea required for fraud and breach of trust, and apart altogether from Senator Duffy’s extensive and reliable oral and documentary evidence relating to mens rea, the Crown case on Counts 1 and 2 must fail because there is no proof beyond reasonable doubt of the actus reus of fraud or breach of trust, no proof beyond a reasonable doubt of a prohibited act of dishonesty or of a marked and substantial departure from the proven standards expected and accepted of similarly situated officials (Senators).

The [Constitution Act 1867](https://www.canlii.org/en/ca/laws/stat/30---31-vict-c-3/latest/30---31-vict-c-3.html)

[184] The relevant provisions of The Constitution Act 1867 are set out at Tab 1 of Exhibit A: “The Qualifications of a Senator shall be as follows:…”(5) He shall be resident in the Province for which he is appointed.” Mr. Bayne takes the position that the constitutional anchor for every Senator appointed from the Province of P.E.I. is her/his P.E.I. residence and that Senator Duffy had such a residence, his provincial (P.E.I.) residence at 10 Friendly Lane.

SARs Provisions

[185] Tab 2 of Exhibit A and Exhibit 20 set out the SARs provisions in, respectively, 2012 and 2009. They do not differ in respect of the provisions relating to Counts 1 and 2 except concerning a new and separate travel policy which replaced Chapter 4:03 of the 2009 version. The SARs “codify comprehensively the fundamental principles and rules governing the internal administration of the Senate and its allocation and use of resources.” The SARs are the governing code for the administration of Senate resources such as living expenses.

[186] It is noteworthy that the SARs nowhere defines nor sets out any required criteria for the concept of “primary residence”. Chapter 1:03 of the SARs deals with “Definitions”. “National Capital Residence” means a residence established by a Senator within 100 km of Parliament Hill and is not his provincial residence. “Provincial residence means a Senator’s residence in the province or territory for which the Senator is appointed” (page 1-10). Senator Duffy’s residence at 10 Friendly Lane is thus validly his “provincial residence” in the province (P.E.I.) for which he was appointed, and is in fact his primary and only residence in the province of his appointment. These are the sole SARs definitions relating to residences, the governing code.

[187] Chapter 4:03: Travel Entitlements and Expenses of the SARs (2009 – Exhibit 20 Tab 1A) provides no definition or criteria for “primary residence.” It states only (page 4-15) that: “A Senator whose provincial residence in the province or territory the Senator represents is more than 100 kilometers from Parliament Hill and who is within 100 kilometers of Parliament Hill for the purpose of carrying out the Senator’s parliamentary functions is on travel status in the National Capital Region.” Senator Duffy’s “provincial residence in the province” he represents is more than 100 kilometers from Parliament Hill, and upon appointment he attended the Senate at Ottawa (within 100 kilometers of Parliament Hill) for the purpose of carrying out his Parliamentary functions as a P.E.I. Senator. Mr. Bayne submits that upon his appointment as Senator from P.E.I., and with a provincial residence in P.E.I., Senator Duffy was on travel status when in Ottawa to do Senate business (just as Senator Tkachuk had authoritatively advised him). Certainly, the contrary has not been proved beyond reasonable doubt.

The Declaration/designation form(s) (Exhibit 1, Tabs 1-6)

[188] Each and every “primary residence declaration” signed by Senator Duffy during the time period set out in the information (Tabs 1-5) is expressly made “for the purpose(s) of the Twenty-Second Report of the Standing Committee on Internal Economy, Budgets and Administration, adopted in the Senate June 18, 1998” and asserts that “the address of my primary residence in the province or territory that I represent is the following: 10 Friendly Lane, Cavendish, P.E.I.” Each and every declaration form signed by Senator Duffy is true and in compliance with the existing SARs and the forms created by the Standing Committee. There is no misrepresentation. The form provides that each Senator appointed from a distant Province (i.e. more than 100 kilometer from Parliament Hill) may designate/declare a “primary residence” (which has no required or defined criteria other than that it be in the Province of appointment and more than 100 kilometers from Parliament Hill). There is no prohibited act here, no violation of Senate rules and/or forms. The SARs and declaration forms created a designation system without limiting criteria – except that the primary residence so declared be “in the province or territory that I represent” and 100 kilometers from Parliament Hill. Senator Duffy’s open declarations do not violate these limited criteria. There is no inculpatory evidence offered by the Crown of the normative standards of other Senators dealing with these rules and forms (missing “comparator” evidence that Justice Belanger found in Radwanski, [2009] O.J. No. 617, made it “impossible” to find a marked and substantial departure for breach of trust). Indeed, Mr. Bayne says that the only evidence before the Court relating to normative standards of other Senators dealing with these rules and forms is exculpatory.

The Twenty-Second Report of the Standing Committee on Internal Economy, June 18, 1998: (Exhibit A Tab 9 and Exhibit 20 Tab 3)

[189] The 22^nd Report states the following: “The Constitution Act 1867, subsection 23(5) states that a Senator ‘shall be resident in the Province for which he is appointed.’ This means that Senators whose primary residence is more than 100 kilometers from Parliament Hill incur additional living expenses for which they should be reimbursed when they are in the National Capital Region.” The Standing Committee, the important arbiter of the Senate rules and administration, has, 10 years before Senator Duffy’s appointment, explicitly linked the concept of “primary residence” with the Constitutional requirement of provincial residence. There is no other definition of or criteria for primary residence. If that constitutionally required provincial residence is more than 100 kilometers from Parliament Hill (and because the Attendance Policy requires Senators to be in Ottawa for Senate Chamber work) then the Senator “should be reimbursed when they are in the National Capital Region.” Thus, the forms which Senator Duffy completed (and every other Senator making such primary residence declarations, a majority of Senators) explicitly link the required declaration to this 22^nd Report. These forms expressly require the designation of “the address of my primary residence in the province or territory that I represent.” Senator Duffy never violated this criterion. Mr. Bayne submits that Senator Duffy committed no prohibited act, and demonstrated no marked and substantial departure from other Senators’ primary residence declarations.

Evidence of Mark Audcent

[190] The Senate Law Clerk, Mark Audcent, was called as a Crown witness. He testified that in his “five minute” chat with Senator Duffy on December 23, 2008, he focused on required attendance in the Senate Chamber (page 41 Evidence of Mark Audcent, April 8, 2015) and the Constitutional importance of residence in the Province of appointment (page 42). He stated in his evidence that Constitutional residence has never been defined (page 43). He further gave evidence that the concepts of “primary” and “secondary” residence are not defined in the SARs nor are criteria created to limit or qualify these concepts (page 44). His evidence was that there is no required criterion of a minimum number of days that a senator must reside in their province (just “some time in the province” page 46) and that the particular provisions of each different statute set out the requirements for “residence” or “primary residence” for that statute, (page 46), depending on the particular statute’s purpose and context.

[191] Mr. Audcent agreed that a person’s appointment as a Senator changes his/her status from private citizen to Parliamentarian (page 48), and that the provincial residence upon appointment becomes the most constitutionally important (page 50-51), whereas the NCR residence is of no importance constitutionally (page 49 and 51). In respect of the 22^nd Report of the Standing Committee, June 18, 1998, Mr. Audcent’s evidence was that the Standing Committee, in its report, clearly linked/equated provincial residence with primary residence: “It’s – it’s clear to me that although they’ve used the word ‘primary here’, it’s the same meaning as the word ‘provincial’ elsewhere, yes” (page 58). Mr. Audcent further agreed that the 22^nd Report “clearly has linked Provincial Residence with being the primary residence” (page 59). The 22^nd report was, Mr. Audcent testified, “the origin and foundational document” for this whole concept of “primary residence” (page 60).

[192] Mr. Audcent further agreed that the governing SARs provisions, having no definition and no criteria for the concept of “primary residence,” required no minimum number of days per year of occupancy, no percentage of the year, no all-seasonal occupancy, no particular type of physical structure (page 95-96), no particular provincial health card or driver’s license or location of payment of income tax filing as a pre-condition to a valid designation of primary residence (page 99). Mr. Audcent’s evidence was that the 1998 22^nd Report of the Standing Committee became the effective “policy of 1998” (page 86) and that that policy was reflected in the wording of the declaration/designation forms. Senator Duffy’s designation of 10 Friendly Lane, his provincial residence in P.E.I. and his primary residence in P.E.I., as “my primary residence in the province or territory that I represent” is not prohibited by the provisions of the SARs, by the forms or by the “policy” of the 1998 Report. In fact, the designation is perfectly valid under and consistent with the SARs provisions, forms and 1998 policy.

Evidence of other Senate Guideline Documents

[193] The Senator’s Living Expenses in the National Capital Region (NCR) Guidelines (Exhibit A Tab 4), given to Senator Duffy on December 23, 2008 by Ms. Proulx (Exhibit A Tab 15c) inform the Senator that in order validly to claim NCR living expenses the Senator “must file” a “declaration designating a primary residence in the province or territory represented by the Senator.” A designation system is created, the designation of a “primary residence” which has no required definition or criteria other than that the designation residence be in the province of appointment. “Eligibility” is contingent on the “registered residence” (i.e. the one designated on the form and in the province of appointment) being more than 100 kilometers from Parliament Hill. The “secondary residence in the NCR” has as its sole criterion (where the claim is for private vs rented accommodation) “a proof of ownership.” There is no criterion for the designation of a “secondary residence in the NCR” that it must not have been owned prior to appointment, nor any such requirement in the SARs, forms or 1998 “policy.” Therefore, designating 47 Morenz Terrace as the secondary, NCR residence violated no policy, guidelines or form.

[194] The Senators’ Living Expenses in the National Capital Region (NCR) Procedures (Exhibit A Tab 5) given by Ms. Proulx to Senator Duffy on December 23, 2008 (Exhibit A Tab 15C), like the Guidelines, advise the Senator that to make a valid living expense claim “Senators must file a Declaration of Primary and Secondary Residences form designating a primary residence in the province or territory they represent.” There are no definitions or criterion limits qualifying the declaration or the concept of primary residence apart from it being in the province of appointment and more than 100 kilometers from Parliament Hill. For the “secondary residence in the NCR” the only required criterion is proof of ownership that must be filed yearly. Senator Duffy’s designation of 10 Friendly Lane as his primary residence in the province of his appointment, being more than 100 kilometers from Parliament Hill and his claim for NCR secondary residence living expenses neither violated nor was prohibited by any provision of the SARs, the forms, the 1998 22^nd Report policy, the instructive Guidelines or the Procedures.

[195] The Senators’ Resource Guide (Exhibit A Tabs 7A-7F; Exhibit 16 Tab 4) provides, like the Guidelines and Procedures (see Exhibit A Tab 7A page IV-9) that, “To claim living expenses in the NCR, Senators must file and keep up to date, a Declaration of Primary and Secondary Residences form, which designates a primary residence in the province or territory represented by the Senator.” Senators who are more than 100 kilometers from their designated primary residence when in Ottawa and who attend the Chamber in Ottawa for the purpose of carrying out their Parliamentary functions are eligible. Mr. Bayne states that Senator Duffy, upon appointment as Senator from P.E.I., clearly represented P.E.I., the province of his appointment, in Ottawa and attended the Senate in Ottawa to do just that. His prime Parliamentary and Constitutional function upon appointment was to represent P.E.I. His primary residence in the province of his appointment was validly designated as was the NCR secondary residence of which he proved the required ownership.

Evidence of Nicole Proulx

[196] Ms. Proulx was called by the Crown. She was the Director of Senate Finance. Although Ms. Proulx disagreed (Evidence of Nicole Proulx, April 27, 2015, page 13) with the findings of KPMG, the independent external auditor of the Senate Financial statements who reported on September 17, 2013 (Exhibit 68) to a finding of “significant deficiency” on the Senate’s internal controls : “Senate expense claim policies related to housing allowances and travel expenses were not sufficiently detailed with respect to eligibility and documentation requirements…” she, nevertheless, agreed with the findings of the Deloitte Report (into Senate living expense claims policies and the living expense claims of Senator Duffy): “I agree that there were no definitions, or criterions to establish the primary residence at that time” (page 12). She confirmed this evidence again on April 28, 2005 (page 18-19): there are no SARs definitions of or criteria for primary or secondary residence. In her re-examination evidence to the Crown given November 20, 2015 (page 65), Ms. Proulx stated that “There were no indicators required” of a living expense claim based on a primary residence designation: “…at the time there were no indicators required for policy.”

[197] Mr. Bayne contends that a policy having no indicators, relevant definitions or criteria other than that the designated primary residence must be in the province of appointment and more than 100 kilometers from Parliament Hill and that a designated secondary residence must be within 100 kilometers and, owned by the Senator (private accommodation) can hardly be violated by designations meeting those limited criteria. He concludes that there is no prohibited act, no violation of policy, no dishonest misrepresentation, no marked and substantial departure from the conduct set out as appropriate in the policy documents and evidence.

Evidence of Paul Belisle

[198] Mr. Belisle was the Senate Clerk at the time of Senator Duffy’s appointment (responsible as “the head of the Senate administration” for the “good administration of the Senate”: Exhibit A Tab 2 pages 2-9 and 2-10) and was present at the December 23, 2008, welcome session. He had only a “vague” recall of that session (Evidence of Mr. Belisle, June 5, 2015, pages 4, 8 & 9). He could not recall if the SARs had any definition or criteria for primary residence (page 12). He could not recall the wording of the declaration form (page 12) and did not know if he ever even saw the declaration form (pages 13-14).

Evidence of Speaker George Furey

[199] Senator Furey is the newly appointed Senate Speaker and a former Chair (2004-10) and Vice-Chair (2010-15) of the Internal Economy Committee.

[200] Mr. Bayne did not take kindly to Speaker Furey’s evidence and respectfully submitted that Senator Furey gave unreasonable, simplistic evidence inconsistent with the clear provisions of the SARs; evidence that was internally inconsistent; evidence that revealed a lack of real knowledge both of policy and actual practice (especially given his formal title); evidence that waffled and obfuscated rather than giving a direct answer; evidence that contained gratuitous personal opinion and evidence that unreasonably rejected the findings of independent, professional, external auditors.

[201] Mr. Bayne stressed that in respect of Counts 1 and 2, rather than accepting the findings of the Deloitte report and the KPMG report, both of which were consistent in their findings with, and corroborated by the 11^th Report of the Standing Committee of which Senator Furey was part, Senator Furey stated that there was no need to define or establish criteria for the term “primary residence” as it appears in the declaration form because “I’ve always felt” that “it was self-explanatory” (Evidence of George Furey, December 7, 2005, page 37). Senator Furey’s personal “feeling” is inconsistent with reason, with the independent, external audits of two separate professional audit firms and with the 22^nd Report (1998) and the 11^th Report (2010) of the Internal Economy Committee, his own Committee reports. Moreover, it pointedly ignores the express wording of the declaration form (Exhibit 1, Tabs 1-6) that requires that it be the “primary residence in the province or territory that I represent” and “more than 100 kilometers from Parliament Hill.” Mr. Bayne asserts that the only thing “self-explanatory” about that is that the required criteria for “primary residence” are, one, that it be located in the province of appointment and, two, more than 100 kilometers from Parliament Hill. Beyond that, no definition or criteria are set out or are “self-explanatory.”

[202] As set out in the next section, ‘primary residence’, ‘principal residence’ and ‘residence’ are terms that take the meanings assigned them by their respecting enabling statutes or regulations, and their meaning, definitions and required criteria differ widely from statute to statute. In the 11^th Report (Exhibit A Tab 20), the Standing Committee of which Senator Furey was a part, finds and reports publicly that “some administrative policies were outdated, inadequate or non-existent” as well as “poorly communicated and/or not well understood by users” (page 3). The Deloitte and KPMG Reports, independent of each other and of the 11^th Report, identify the living expense provisions as a policy that is, in the words of the 11^th Report, “inadequate” or “non-existent.” Deloitte reported (see pages 31-32 of Senator Furey’s Evidence) that owing to a lack of clear definition and “criteria for determining primary residence” in the Senate policy documents, Deloitte could not find that Senator Duffy’s primary residence declarations and NCR expense claims were (even administratively, much less criminally) inappropriate, the very purpose of the Deloitte mandate (Exhibit 67: “assess the appropriateness of related claims”). The Deloitte report was commissioned by Senator Furey’s Standing Committee (see Exhibit 45B Tab 11) because it was in the “overarching public interest” to have “an independent external review and opinion” that would avoid Senators passing judgement on themselves and their own policies (exactly what Senator Furey purports to do) and that promotes “the public’s trust and confidence in Parliament.” Deloitte found the primary residence provisions to be inadequate and/or non-existent in terms of definition and meaningful criteria. Yet, Senator Furey rejects the independent, professional audit findings in favour of his personal, unreasonable “feeling.” Similarly, he rejects the conclusion of KPMG, the professional auditor who reported to the Senate September 17^th, 2013, that “a significant deficiency” existed in Senate controls, namely “Senate expense claim policies related to housing allowances and travel expenses were not sufficiently detailed with respect to eligibility and documentation requirements.” Like the Deloitte finding, this is an independent, professional finding of inadequate policy.

[203] Mr. Bayne states that in rejecting both Deloitte and KPMG, Senator Furey also ignores the finding of his own Committee relating to “outdated, inadequate or non-existent” Senate administrative policies and opts instead, unreasonably, for a personal “feeling.” Senator Furey’s “feeling” is also inconsistent with his own Committee’s report in 1998 that explicitly linked primary residence with the provincial residence, a linkage that Mr. Audcent described as having “equated” the two: “the word ‘primary’ here, it’s the same meaning as the word ‘provincial’ elsewhere.” Mr. Bayne points out that, of course, Senator Furey’s position that the term needs no definition or criteria as it is “self-explanatory” serves conveniently to absolve him of any responsibility for failing to ensure, as Chair of Internal Economy, “appropriate policies,” his SARs duty (Exhibit A Tab 2 pages 2-3). In sum, the Defence submits that the evidence of Senator Furey does not assist the Crown in proving the actus reus of fraud or breach of trust but rather it embarrasses such a case.

[204] I am of the view that when Speaker Furey gave his evidence regarding the meaning of primary residence he was expressing his personal views. I do not view Speaker Furey’s evidence as an attempt to absolve himself for any failure of his duty under SARs and to suggest otherwise is unfair.

Evidence of Other Statutory Provisions (Exhibit 9) Relating to Definitions of Residence

[205] The concepts of “residence”, “primary residence” and “principal residence” are defined differently among different statutes in terms of their required criteria (or lack of criteria), depending upon the differing purposes and contexts of the statutes. Exhibit 9 demonstrates this and the evidence of Mr. Audcent is consistent with this proposition. For example:

• “permanent residency” under IRPA (Immigration and Refugee Protection Act) SC 2001, c 27, s 28 has a 730 day (within 5 years) physical presence requirement (Exhibit 9 Tab 1);
• “resident” for the P.E.I. Adoption Act, RSPEI 1988, c A-4, s 1 means “ordinarily resident in the Province” (Exhibit 9 Tab 2);
• “resident” for the P.E.I. Highway Traffic Act, RSPEI 1988, c H-5, s 14 means lives in PEI more than 120 days per year (unless attending school or working in the province) (Exhibit 9 Tab 3);
• For the P.E.I. Lands Protection Act, RSPEI 1988, c L-5, s 1 a “resident” is one who resides in PEI for 183 days or more per year (Exhibit 9 Tab 4) (see also Exhibit 9 Tab 8);
• “principal residence” for the P.E.I. Real Property Act, RSPEI 1988, c R-5, s 14 means real property occupied for more than 6 months (Exhibit 9 Tab 5);
• “residence” for the PEI Securities Act, RSPEI 1988, c L-5, s 1 includes permanent or temporary residence in a building (Exhibit 9 Tab 6);
• a “mobile home” is prescribed as a class of residential property under the Nova Scotia Assessment Act, Residential and Resource Property Tax Assessment Regulations, NS Reg 219/2004, c 23, s 8 (Exhibit 9 Tab 9).

Income Tax Act and Folio (Exhibit 111)

[206] The Income Tax Act graphically demonstrates the propositions set out above. The Act creates, like the SARs, a designation system (page 6/43). The Income Tax Act provides criteria for the designation of a “principal residence” (which affords a taxpayer a capital gains tax-free gain on sale). The criteria are ownership (page 2/43) and “ordinary inhabitation” (page 5/43) which means “even if a person inhabits a housing unit for only a short period of time in the year, this is sufficient for the housing unit to be considered “ordinarily inhabited.” The “principal residence,” to qualify, may be a house, apartment, cottage, mobile home, trailer or houseboat (page 5/43). “Principal residence,” its definition and criteria, under the Income Tax Act differs markedly from the “principal residence” definition and criteria as set out above in the P.E.I. Real Property Act and is a function of the purpose and context of the Act.

Significance of Definitions or Lack of Same

[207] According to Mr. Bayne, the point is that there is no standard or “self-explanatory” universal meaning, definition, content or criteria for terms and concepts such as residence, primary residence, principal residence, and secondary residence. Meanings, definitions, content and criteria vary widely from statute to statute. Mr. Bayne concludes that primary residence is not, in law, a matter of “common sense” as the Crown asserted in its opening, nor could it be, since what appears subjectively to one person’s common sense may appear to another to be nonsensical. It is up to the governing legislation or administrative rules to define and establish the required criteria for given concepts such as “primary” and/or “secondary” residence. The SARs and related guideline documents created only as the criteria for “primary residence,” that that residence be in the province of appointment and more than 100 kilometers from Parliament Hill; for “secondary residence” they created only that it not be the provincial residence, that it be within 100 kilometers of Parliament Hill (in the NCR) and that it be owned (if private accommodation). Senator Duffy’s designations and living expense claims violate none of these administrative provisions.

Subsequent change in policy and form(s)

[208] Commencing in April, 2013 and applicable in the 2013-14 fiscal year (see Exhibit 1 Tab 6), a period after the impugned residency declarations and expense claims, the policy of the 22^nd Report was amended by that of the “Nineteenth Report of the Standing Committee” dated February 28, 2013. The declaration form pursuant to this Nineteenth Report now requires additional criteria to establish primary residence, namely the production of a driver’s license, health card and proof of location of filing one’s income tax return (Exhibit 1 Tab 6), none of which had previously been required criteria. Mr. Bayne submits that the ex post facto addition/imposition of these 3 specific criteria or indicators of primary residence is cogent, explicit evidence that they were not previously required. That Senator Duffy (and other Senators) in previous years may not have had all these documents from the province of designated primary residence is irrelevant to the criteria that were then specifically required.

The ‘new’ Travel Policy (Exhibit A Tab 6)

[209] The Standing Committee on Internal Economy created the Senators’ Travel Policy June 5, 2012. For the first time since the 22^nd Report in 1998, some (albeit limited) content or definition was provided for the concept of primary residence: “Primary residence means the residence identified by the Senator as his/her main residence and is situated in the province or territory represented by the Senator” (page 5). Apart from the fact that this new policy post-dated the fiscal years under consideration (the 2012-13 fiscal year designation covered the period commencing April 1, 2012) and leaving aside for the moment the very serious issue of lack of proof of effective communication of this new policy and its provisions to Senators, Mr. Bayne submits that Senator Duffy’s designations of primary residence all meet even the new definition. There is no doubt that upon appointment as a Senator from P.E.I. in 2009, the P.E.I. residence (10 Friendly Lane) was/is the residence of prime constitutional importance. Mr. Audcent’s evidence confirms this. “Main” is not otherwise defined and means simply, therefore, most important. Senator Duffy’s most important residence as a P.E.I. Senator was 10 Friendly Lane. It was his constitutional anchor as a Senator. Mr. Audcent stated that the NCR residence was of no importance constitutionally to a Senator. The travel policy also requires (as did the 1998 22^nd Report and the Guidelines and Resource Guide) that the primary residence be “in the province or territory represented by the Senator.” In the Defence submissions, 10 Friendly Lane fits both criteria. The Kanata bungalow fits neither.

Evidence of no marked and substantial departure from the standards of conduct of other Senators dealing with Senate rules and policies concerning primary residence declarations and NCR living expense claims

[210] Mr. Bayne says that the Crown has failed to adduce any cogent evidence that the vast majority of other Senators (most of whom did make such declarations and NCR living expense claims) consistently read, understood and applied the SARs and other guidelines documents differently from Senator Duffy to make their respective declarations and NCR expense claims or that they uniformly spent a certain amount of time in their provincial/permanent versus the NCR residence. Justice Belanger in Radwanski, supra, aptly noted that such an omission in the “comparator” evidence made it impossible to find a breach beyond reasonable doubt of the marked and substantial departure standard required for proof of the actus reus of breach of trust. The Defence submits that there is, however, evidence in the record of the trial that suggests just the opposite. Senator Duffy’s understanding of the SARs and his primary residence designation and NCR living expense claims were not a marked departure from other Senators at all:

1. The amount or nature of his claims were not unusual among Senators: Exhibit 30 demonstrates that Senator Duffy’s claims were entirely within the normal range among all Senators – 20% of Senators claim in greater amounts; in addition Ms. Proulx’s evidence (April 28, 2015, pages 24-26) demonstrates that Senator Duffy’s living expense claim amounts (and amounts for travel and office expenses) are not “inappropriate or out of line” with other Senators;

2. Exhibit 45A (the Chronological Emails) at page 3, in emails #6 and #7 demonstrate that the Chief of Staff to the Prime Minister, confronted with newspaper insinuations about Senator Duffy’s living expense claims, looked into the matter and stated: “I am told that you have complied with all the applicable rules and that there would be several Senators with similar arrangements.” The Chief of Staff gave evidence that he did his own analysis of the SARs concerning designation of primary residence and NCR living expense claims and concluded that Senator Duffy’s designations and NCR expense claims, far from being a marked and substantial departure from appropriate conduct under the rules, were in fact most probably all within the existing rules: “he certainly had a case on the, on those rules about his principal residence being the one in Cavendish” (August 13, 2015 page 29);

3. Senator Tkachuk was Chair of the Internal Economy when, on December 3^rd, 2012 (Exhibit 45B Tab 1) he is reported to have stated in response to the newspaper story about Senator Duffy’s primary residence designation and related NCR living expense claims that Senate “Duffy’s expenses are entirely within the rules.” Senator Tkachuk, who would know, stated that many Senators who own homes in Ottawa make similar claims for housing expenses – “A lot of Senators stay here all winter long and then they go home for the summer.” These publicly reported statements have never been refuted. There is no evidence adduced by the Crown to the contrary of these statements or demonstrating any marked and substantial departure;

4. It is entirely reasonable to conclude, given Senator Tkachuk’s January 7, 2009 advice to Senator Duffy (that Senator Duffy’s primary residence declarations were valid, that Senator Duffy was on travel status when in Ottawa as the Senator representing P.E.I., and that Senator Duffy’s secondary/NCR living expenses claims were valid and within the rules), that such advice was given also to other Senators by Senator Tkachuk in his capacity as caucus “guru”, dispensing advice. Amount of time spent was not for Senator Tkachuk a criterion for valid primary residence declaration within the SARs: “A lot of Senators stay here all winter long and then they go home for the summer.” “Many senators who own homes in Ottawa make similar claims for housing expenses.”

5. Exhibit 82 is a March 7, 2013 memo from Senator John Wallace to Senator Carolyn Stewart-Olsen, a member of the 3-person executive Steering Committee of the Standing Committee on Internal Economy. The memo contents speak eloquently to the proposition that Senator Duffy’s primary residence declarations and NCR living expense claims were within the existing rules and not at all a marked and substantial departure from what they provide for all Senators. Exhibit 82 is evidence that other Senators, like John Wallace, understood the rules and the conduct pursuant to them, just as did Senator Duffy;

6. Exhibit A, Tab 20 (the 11^th Report of the Standing Committee on Internal Economy) provides evidence that a “recurring issue” in the Senate was that “in certain instances, policies were poorly communicated and/or not well understood by users” (pages 2-3). “Users” included Senators; “living expenses were identified as a subject of the audit report. There is no cogent inculpatory evidence that the vast majority of Senators’ conduct in respect of the SARs provisions and primary residence declarations/NCR expense claims differed markedly and substantially from Senator Duffy’s; there is evidence in Exhibit A Tab 20, however, that a recurring issue that affected the entire Senate (all Senators) was not well understood policy. If policy is not well understood how can the conduct pursuant to it be held to any given standard?

[211] Mr. Bayne submits that the Crown has failed to prove, on all the evidence, either the actus reus or mens rea of fraud or breach of trust, beyond any reasonable doubt, and that Senator Duffy should be found not guilty of these criminal charges.

Conclusion

[212] I do not intend to repeat the very able arguments of counsel as part of my conclusions but rather highlight some of the more salient points.

[213] Senator Duffy has had a lifelong connection with his native Prince Edward Island and had a settled intention to make his residence at 10 Friendly Lane his permanent residence upon his retirement from broadcasting. Upon his appointment to the Senate as a Senator from P.E.I., Senator Duffy’s long- term plan was moved forward and his permanent residence, his primary residence, his residence of primary constitutional importance was 10 Friendly Lane.

[214] However, with his appointment, issues surrounding his residency status and his right to even sit as a Senator from P.E.I. came to the fore. Senator Duffy did not ignore the gathering storm around his appointment. He immediately sought out reassurance about these issues and was assured that he did not have any valid concerns. I find that Senator Duffy honestly and reasonably believed and relied on the advice he received regarding his appointment and his primary residency and he acted upon it.

[215] Mr. Holmes suggested that I be very careful as to Senator Duffy’s portrayal of the advice he received from various individuals. It would seem to me that I only have the straight forward evidence of Senator Duffy about the advice that he had received from various people whom he had identified. Surely, if the Crown had wanted me to carefully examine this evidence, some of these advisors could have been called to lay a foundation for increased scrutiny.

[216] The controversy surrounding the issue of residency resulted in Mr. Mc Creery’s preparing a memo dated January 6^th, 2009. Senator Duffy was one of the recipients of this memo. I find this memo illustrates the confusion over the whole residency issue. Mr. Audcent, describes the document as legally incorrect but he couldn’t say if it was correct from a political point of view.

[217] Although Mr. Holmes considered the completion of the declarations of primary residence by Senator Duffy to be inaccurate but benign, he took a much different view regarding the living expenses being claimed by Senator Duffy based on his inaccurate claim of primary residence.

[218] Mr. Holmes had no difficulty declaring Senator Duffy’s primary residence to be in Kanata, Ontario assisted by Mr. Audcent’s indicators and opinion as to what constitutes a primary residence and bolstered by the decision in Thomson, supra, which dealt with the meaning of ordinarily resident under the Income Tax Act and the definition of primary place of residence as defined under the Health Insurance Act (Ont.).

[219] It is interesting that Mr. Holmes was lured into the definition web regarding various definitions of residency when he was so critical of Mr. Bayne’s dalliance with definitions.

[220] One must always keep in mind that when various statutes define terms that are residency related, such definitions are statute specific.

[221] The search for the meaning of primary residence here is hampered because there was in fact no definition in place at the time in the Senate Administration Rules.

[222] I suppose the closest we get to what a primary residence is in the primary declaration itself and it reads that “the address of my primary residence in the province or territory that I represent is the following: ……:”

[223] As the years have gone by, the number of documents that must accompany the primary declaration document has grown and references regarding secondary residences have been added and fleshed out. However, there does not appear to be any definition of primary residence.

[224] After reviewing the submissions and the facts in this case, I am not satisfied that the Crown has proven the guilt of Senator Duffy in relation to alleged fraudulent residency declarations and/or expense claims in connection thereto beyond a reasonable doubt and accordingly, and accordingly, Counts 1 and 2 are hereby dismissed.

EXPENSES RELATING TO TRAVEL EXPENSE CLAIMS – COUNTS 3 to 20

Crown’s Position on Travel Expense Claims

[225] Mr. Holmes commenced his written submissions on travel expense claims by addressing some general principles and procedures that impact on the counts before the court.

Senate Administration Principles

[226] From the testimony at the trial and the review of various Senate policy instruments, Mr. Holmes observed that the following points emerge:

(i) “Parliamentary functions” are very broadly defined;

(ii) Partisan activity is expressly recognized as part of the work;

(iii) Senators enjoy wide latitude to travel and engage in other activities in the fulfillment of their parliamentary functions;

(iv) Senators have unilateral authority in the selection of contractors, assignment of tasks, and designation of projects;

(v) Hiring decisions are entirely within discretion of the Senators; and

(vi) There is a compensatory scheme in place in respect of costs associated with the discharge of “parliamentary functions”.

[227] The Crown noted that the aforementioned principles have limitations and restrictions:

(i) There is an overriding expectation, indeed a “presumption” that Senators would behave honourably in respect of their administrative functions: Division 1:00, Chap. 1:02, s.4 (SARs, 2009, Exhibit 20, Tab 1 – A, p. 1-6);

(ii) No Senate resources can be used in respect of a Senator’s “private business interests” or while “attending to one’s private concerns”;

(iii) While stated less explicitly, Senate resources cannot be used for non-Parliamentary partisan activity;

(iv) All travel costs and entitlements have to be reasonable. This is obvious in the case of Parliamentarians charged with upholding a public trust. It is also set out in Division 4; Chap 4.03, s. 10. [SARs, 2009, Exhibit 20, Tab 1-A, p.4-13] that says:

“No person shall cause the Senate to pay or reimburse a cost under this chapter unless the cost was actually incurred, reasonable and authorized…;”

(v) There is an expectation that Senators will exhibit financial prudence in connection with travel. Once again, this is a self-evident principle given their overarching role to promote the public interest. It is set out in Division 4, Chap 4:03, s.19 [SARS, 2009, Exhibit 20, Tab 1-A, p. 4-16] as follows:

“Subject to the need to fulfil their parliamentary functions and to obtain reasonable comfort and convenience, a person shall exercise due economy in the selection of travel options.”

(vi) The existing policy framework declares it to be perfectly acceptable for a Senator to receive some incidental personal advantage in the course of discharging their parliamentary functions. The incidental personal use doctrine applies to benefits or advantages that are derivative or ancillary to the predominant or main purpose for which the cost is incurred. No other interpretation is possible without rendering the concept of “incidental use” meaningless. The further restriction on the applicability of this principle is that the incidental benefit cannot give rise to any additional costs to the Senate. Division 3:00, Chap 3:01, s.7 [SARs 2009, Exhibit 20, Tab 1-A, p.3-2 ] provides:

“A person may use a Senate resource for personal purposes where such use is minor, customary and reasonable and does not give rise to a direct cost to the Senate or to a Senate expenditure”.

[228] Mr. Holmes stated that while it is true that Senators enjoy a broad discretion; they do not enjoy limitless discretion. There also are limits imposed on the sort of expenses that are properly billed back to the Senate. There is a system of checks and balances imposing responsibilities on all parties, most notably the Senator himself or herself who has the most detailed and intimate knowledge of the underlying purpose of the expenses. Distilled to their essential components the processes are neither arduous nor complicated.

The use of pre-signed forms

[229] The Crown notes that the practice of relying on pre-signed forms reflects on personal integrity and therefore credibility. It is a “poor practice” according to Speaker George Furey. Mr. Holmes contends that each pre-signed claims form is a fraud in its own right. Senate Finance rely on the information contained in those forms. Maggie Bourgeau explained what a Senator’s certification at the bottom of the form meant to her: it meant that the Senator had reviewed the contents of the form and agreed that the basis for the claim was correct and therefore, it was ready to be processed. The staff in Senate Finance rely on the Senator’s certification. Mr. Holmes concludes that in the case of many (quite possibly most) of Senator Duffy’s claims the Senate Finance staff was actively deceived.

[230] Although it is clear that Senator Duffy engaged in this practice with regularity, no one can say with any certainly which of the claims were pre-signed and whether any of the pre-signed forms appear in Exhibit 6A. For this reason, Mr. Holmes contends that Senator Duffy is insulated from liability for the specific line by line entries included in the claims forms.

[231] The Crown takes the position that Senator Duffy’s practice of pre-signing forms is unethical and undermines his oft-repeated assertion that he conducted himself openly, transparently and honestly.

[232] The travel expense claims forms read in part:

“I certify that the foregoing expenditures have been incurred by me on parliamentary functions, as defined in the Senate Administrative Rules”

and

“I hereby certify that these charges are in accordance with the Senate Administrative Rules”

[233] The stated reason for Senator Duffy’s reliance on pre-signed forms was a concern that he would exceed the 60 day deadline in filing his claim. Mr. Holmes questioned whether there is any basis in reality for Senator Duffy’s concern about exceeding the 60 day limit for the filing of claims. There does not appear to be any period of time where Senator Duffy is away from Ottawa for 60 consecutive days. Furthermore, on the only occasion where Senator Duffy did exceed the 60 day time limit (in 2011), the claim was processed in the ordinary course.

[234] Melanie Mercer (Vos), Senator Duffy’s Executive Assistant, said that she learned the practice of pre-certifying travel expense claims forms from Loren Cicchini and Gillian Rokosh. Both women worked for other Senators at the time and had not been asked to engage in any training on behalf of Senate administration. Ms. Cicchini agreed that on limited occasions she relied on pre-signed forms but even then ensured that the Senator verified the accuracy of the claim by double-checking it after the fact. Mr. Holmes concluded that, “One can only imagine that if Ms. Cicchini had provided counsel to Ms. Mercer in respect of the practice, she would also have included the part about the need to verify the accuracy of the claim with the Senator following [before its submission to Senate Finance].”

[235] I am not inclined to speculate on what Ms. Cicchini may have told Melanie Mercer (Vos).

[236] Ms. Rokosh denied using pre-signed claims forms.

[237] Mr. Holmes stated that Diane Scharf, Senator Duffy’s replacement Executive Assistant, fully embraced the deceptive, unethical and illegal practice of relying upon pre-signed forms. Ms. Scharf said the practice was widespread, although did not specify how she knows this, and her work for Senator Duffy represented her first work in the Senate. Whether this is true or not, Mr. Holmes contends that it doesn’t make the practice appropriate. The use of pre-signed forms had the effect of eliminating any independent review by Senator Duffy of his claims, and it undermined efforts by finance officials to make sure the claims were appropriate. Quite naturally, Ms. Bourgeau relied on Senator Duffy’s expense claims as having his attestation of accuracy and propriety when in most cases he hadn’t signed off on the claims at all.

[238] I found Ms. Scharf to be a very credible, experienced and straight forward witness and not a witness who engages in deceptive, unethical or illegal practices.

[239] I also find that the use of pre-signed travel claims forms was not an uncommon practice on Parliament Hill.

[240] The argument might be made that the use of a pre-signed form has certain efficiency and convenience components and therefore meets the needs of individuals that travel with some frequency. Once the trip is completed, the receipts are forwarded to the preparer of the travel claims form for entry and then the documentation is submitted for payment. Regardless of how common the practice was, I agree that the use of pre-signed blank travel forms is not a good business practice. It increases the chance of errors being made and not being detected.

[241] I note that Senator Duffy did not restrict himself to just signing travel claims in blank. He also was in the habit of leaving signed, blank personal cheques with his Executive Assistants to facilitate the payment of his personal Senate-related charges that would arise from time to time during his absences from Parliament Hill. Again, this practice can be viewed as risky and ill-advised.

[242] However, I do not find that Senator Duffy possessed any sinister motive or design when he made use of signed blank travel claims. Nor do I consider Senator Duffy’s use of them a negative reflection on his integrity or credibility.

Proof that Senator Duffy was directly responsible for the expense claims in Exhibit 6A

[243] The Crown expressed concern that given Senator Duffy’s reliance on the “corrupt practice” of using pre-signed forms how can we be certain that he had a direct role to play in the claims in Exhibit 6A which are referred to in counts 3 to 20 in the information?

[244] Mr. Holmes created a chart that set out the documents that Senator Duffy had to have supplied to his Executive Assistants to support the claims that were made. In each case these are materials that only he would have received; boarding passes and gas receipts, for example.

[245] Melanie Mercer (Vos) and Diane Scharf both testified about the process by which they processed Senator Duffy’s travel claims. Senator Duffy would leave the original supporting documents with them and they would determine the basis for his travel from information in the Senator’s Lotus organizer to which they also had access. Senator Duffy likewise verified this process in his testimony.

THE CROWN’S OVERVIEW ON THE FIRST EIGHT TRAVEL CLAIMS (COUNTS 3 – 18)

[246] The following chart prepared by Crown Counsel shows the key characteristics of the first eight claims contained in Exhibit 6A. The tabs contained in Exhibit 6A contain claims forms and also the supporting documents that were submitted in connection with Senator Duffy’s claims. As well, there are business records from McCord Travel that disclose when the travel was booked.

Claim # Count #

Date

Justification per claim

What diary says

What the evidence reveals

When the travel booked

T64-06754 [3/4]

19 June 2009

Peterborough “Speaking Engagement – Senate Business” $1234.20

PA “personal appearance?” “public appearance” reference to meeting “Kyung B. Lee” Korean Human Rights advocate who was actually at Devolin’s event (chance encounter)

Party fundraisers, Peterborough later Lindsay

19 May 2009

T64-06755 [5/6]

21-26 June 2009

“series of speaking engagements – Senate business” $15,046.22

“John Duncan” “meet vets reps on pension”

One meeting with veterans’ rights representatives??? during a six day trip where Duffy was engaged in partisan political activity; Party fundraiser in British Columbia

12 May 2009

T64-06774 [7/8]

5-8 Sept 2009

“Senate Business” $7,905.50

Meet Sean at 4 Seasons, attend Miranda’s play at Jerico Playhouse. Only possible “hook” cancelled attendance at “Sananich Fair with Hon. Gary Lunn”. Lunn says Duffy never attended although the event took place. “Gavin drives Heather and Janey to hike Grouse Mountain”

Family trip to B.C.

1 September 2009

T64-06798 [9/10]

2-3 July 2010

“Public business – meet local officials on broadcasting issues” $698.58

PA Cdn Kennell Club show and luncheon [otherwise no reference to support stipulated purpose of the trip]

Following loss of family pet, travel to dog show to look into a replacement?

Car trip, no flights booked, submitted invoice for gas

T64-09996 [11/12]

9-12 Dec 2010

“Senate Business -- Speaking engagement and meetings” $10,652.19

Mostly entries pertaining to birth of baby, visits in hospital: stipulated purpose of trip: fundraiser for Cockrell House. Diary suggests that at best he arrived late. Arrangements for his speaking engagement made 7-10 days prior to event. [DeSouza] The flight was also booked a week in advance around Miranda’s due date: 1 Dec

Family trip to BC – travel coincides with C section, daughter Miranda gives birth [son = Colin?, partner = Sean?]

2 December 2010

T64-18674 [13/14]

30 Dec 2011 to 5 Jan 2012

“Senate Business” $4464.06

Taxis and travel, celebrate New Years, 1 Jan: “hang out at Jane & Gavs”, Jan 2 “haircut and shopping”, Jan 3 lunch at Yacht club, Jan 4 “breakfast with kids” return to Ottawa

single lunch meeting (of dubious significance) in what was otherwise a family visit

8 November 2011

T64-20139 [15/16]

9/10 July 2012

“Medical appointment with specialist in Ottawa” $3025.78

Medical appointment Heather, MD SunTV interview Ezra Levant

Claim denied, then re-submitted as “community event”

5 July 2012

T64-20671 [17/18]

11-13 Sept 2012

“Speaking engagement – Senate business” $3,142.48

Speaking appearance – for which MD paid $10,000 + Heather Duffy medical appointments BOMA

Not senate business. Speaking engagement for which he received compensation through Mike Duffy Media Services Inc.

Contracted for speech in January 2012; travel booked 26 June 2012

Expenses relating to non-Parliamentary partisan activities (Counts 3 - 6)

[247] Mr. Holmes stated that the testimony heard in this trial clearly revealed that Senator Duffy was engaged in non-parliamentary partisan activities in respect of his travels on June 19th and 20th, 2009. The Crown’s summary of the facts surrounding these charges is to be found after the reproduction of counts 3 and 4.

[248] Likewise, Mr. Holmes suggested that Senator Duffy’s west coast travel from June 21st to 30th, 2009 was directed toward non-parliamentary partisan political activities. A Crown’s summary of the facts surrounding these charges is to be found after the reproduction of counts 5 and 6.

[249] The Crown notes that in his testimony Senator Duffy agreed that given the minority government situation following the 2008 general election all candidates were effectively in “election mode”. (See 17 December 2015 at pp. 74-75) Senator Duffy was clear that the principal reason that he was appointed to the Senate was to provide “third party validation” for the Prime Minister in his quest for a majority government. His job was to expand the base of the Conservative Party.

[250] Mr. Holmes concedes that the Senate is a partisan institution and that Senator Duffy is perfectly free to engage in partisan activity. However, he contends that it is inappropriate for a Senator to make a claim for certain expenses associated with that sort of activity. To support this position, Mr. Holmes makes reference to the introductory letter Senator Duffy received from Nicole Proulx wherein she wrote:

“Senate resources may not be used for partisan matters that are non-parliamentary in nature such as nomination campaigns or election campaigns.”

[251] Senator (now Speaker) George Furey was the Chair of the Internal Economy Committee from October 2004 until March 2010. In his testimony he distinguished, simply and effectively, the difference between parliamentary partisan activity (for example caucus activity, wherever undertaken) and non-parliamentary partisan activity (for example “working for the election of a Member of Parliament”.) Senate resources may be used for the former; but not the latter.

[252] Mr. Holmes stressed that it would be inappropriate to dismiss Senator Furey’s comments as a matter of his personal opinion. Crown Counsel pointed out that Senator Furey appeared in court as the embodiment of the Internal Economy Committee. I find that this characterization might be a bit of an overstatement.

[253] The scope of authority of that Committee is prescribed by law. In respect of the powers of the Internal Economy Committee the Parliament of Canada Act provides as follows:

Exclusive authority

19.6 (1) The Committee has the exclusive authority to determine whether any previous, current or proposed use by a senator of any funds, goods, services or premises made available to that senator for the carrying out of parliamentary functions is or was proper, given the discharge of the parliamentary functions of senators, including whether any such use is or was proper having regard to the intent and purposes of the regulations made under subsection 19.5(1).

Senator may apply

(2) Any senator may apply to the Committee for an opinion with respect to any use by that senator of any funds, goods, services or premises referred to in subsection (1).

[254] The Crown takes the view that on the totality of the evidence it is reasonable to infer that Senator Duffy appreciated the difference between parliamentary and non-parliamentary partisan activity.

[255] Mr. Holmes suggests that the MPs and candidates who invited Senator Duffy to attend their events seemed to appreciate the difference. More than one referred to attendance at their event to be ancillary to other business that would have the Senator come to B.C. Mr. Duncan testified that Duffy’s attendance would be contingent upon him “tying it to some other event on Vancouver Island”. In describing how arrangements are made to secure guest speaker for events, Mr. Cannan spoke about the need to maximize a guest speaker’s itinerary and stated that; “they don’t come specifically for the EDA event”. Michael Lauer who testified in respect of Senator Duffy’s attendance at the fundraising event in the Yukon testified that Senator Duffy attended at Senator Lang’s invitation and was “already on the west coast on government business”.

[256] It is proposed that this evidence is in perfect harmony with the testimony of Speaker George Furey who, in response to a question about attending a fund-raising event incidental to “legitimate travel for [a] parliamentary function” said: “If there was no expense incurred and it wasn’t a primary purpose of the travel, it, it would be fine.” (Transcript of Speaker Furey 7 December 2015 at p. 39)

[257] Senator Duffy’s hotel costs were consistently paid by the EDAs for whom he appeared, begging the question: if the events were part of his parliamentary duties, why wouldn’t Senator Duffy bill the accommodation costs back to the Senate as well? This might have been an excellent question to be put to Senator Duffy in cross-examination.

[258] Mr. Holmes pointed out that Senator Duffy said that he questioned Senator Tkachuk about his expenses in connection with his role to do the Prime Minister’s bidding and broaden the base of the Conservative party in anticipation of the next general election. The Crown suggested that in effect, this discussion showed that Senator Duffy had questions about his expenses.

[259] It would seem to me that Senator Duffy sought clarification on this point and received certain advice that he acted upon.

[260] Mr. Holmes reminded the court that although Senator Duffy and other newly appointed Senators had been advised that representatives from Senate finance and HR were available to answer questions regarding expenses and other matters, Senator Duffy elected to approach Senator Tkachuk in an informal way, following a meeting. Senator Duffy’s evidence on this discussion is as follows: (Transcript of Senator Duffy’s Evidence on 9 December 2015)

Well, he knew, as did the rest of the Senate Leadership, that Pam and I, and Patrick, and to a degree, Nancy Greene, had been recruited to try and expand the pool of accessible voters and provide third party validation for the Prime Minister in his quest to get a majority. And so, he said, “I know you’re going to be on the road.”

And I said, “Well, how much of this is the party going to pay for, and how much of it is the Senate going to pay for?” And he said, “When you are on the road, you’re doing public business. You’re meeting with mayors, you’re meeting with councillors, you’re meeting with local officials, it’s all under the rules, it’s all – a Senator is always on. The Senate doesn't disappear during election times. The Senator is always a Senator. And whenever you’re out in the public, you’re on duty, and Senate resources are provided for that, because as it says in the SARs, partisan activity is an inherent and essential part of being a Senator.

Q. So did that include partisan activities as well?

A. Yes. Except, for the only – the exceptions that are in the SARs, which are during a federal election campaign, during a nomination race, on behalf of a particular candidate, and you cannot donate public money to a Political Party.

[261] Mr. Holmes put forward the proposition that from the passage above, even assuming that the brief exchange almost seven years earlier unfolded just as Senator Duffy says it did, it is unclear that Senator Tkachuk knew precisely what question he was being asked to answer. The passage above begins with Senator Duffy’s contention that Senator Tkachuk has some prior understanding of the nature of Senator Duffy’s assignment from the Prime Minister. There’s no reason to necessarily believe that Senator Duffy was in a position different from any other Senator. What is significant is that Senator Duffy knew that there was a problem passing his expenses for partisan “friend-raising” along to the Senate.

[262] Mr. Holmes suggests that on the basis of an informal chat (Senator Tkachuk was the Conservative leader on the Internal Economy Committee, but he was not providing any ruling or opinion in his formal capacity ), in a highly partisan environment, Senator Tkachuk provided information that didn’t differ from the position articulated by Speaker Furey in court. Yet, according to Senator