Court File and Parties

Date: 2016-10-13

Court File No.: Brampton 14-14293

Ontario Court of Justice

Between:

Her Majesty the Queen

- and –

Paul Agostini

Before: Justice P.A. Schreck

Heard on: September 6, 2016

Reasons for Judgment

Counsel:

• J. Kingdon, for the Crown
• E. Willschick, for the accused

SCHRECK J.:

[1] For over 20 years, Paul Agostini operated a cabinetmaking and carpentry business. The business began to experience significant financial difficulties and by the end of 2012, Mr. Agostini was finding it difficult to pay his debts. During that period, between November 2012 and April 2013, he entered into a number of contracts to build cabinets. In each case, he was provided with a deposit representing 50% of the estimated total cost of the work, including materials and labour. In each case, he used the deposit to pay his debts, leaving him with insufficient funds to purchase the materials necessary to complete the work. None of the projects were ultimately completed and Mr. Agostini's customers lost their deposits. The Crown alleges that by entering into these agreements, Mr. Agostini committed fraud. The defence position is that Mr. Agostini was simply trying to maintain his business and that he honestly believed that the work would be completed.

[2] Mr. Agostini is charged with three counts of fraud over $5000, each relating to a different customer with whom he contracted. The Crown concedes that Count 1 has not been proven and nothing more needs to be said about the evidence relating to that count. Count 2 relates to three contracts between Mr. Agostini and Ranahashim Sandani. Count 3 relates to a contract with David Shram.

I. Evidence

A. The Case For the Crown

(i) Count 2

(a) The November 2012 Contracts

[3] Ranahashim Sandani operated a building company called Capella Links and hired Mr. Agostini to perform carpentry work on two houses his company was building. On November 16, 2012, they entered into an agreement with respect to a property on Mississauga Road. Mr. Agostini was to build kitchen cabinets at an estimated cost of $26,000 in addition to the harmonized sales tax ("HST"), including materials and labour. The work was to be completed in 12 to 14 weeks with the start time being "to be advised". A formal contract was signed on November 21, 2012. Mr. Sandani gave Mr. Agostini $14,690.00, representing a deposit of 50% of the estimated total cost, including HST.

[4] On November 18, 2012, Mr. Sandani and Mr. Agostini entered into an agreement with respect to a property on Trelawn Avenue in Oakville. Mr. Agostini was to build kitchen cabinets at a total cost of $21,500.00 plus HST. That work was also to be completed within 12 to 14 weeks with a start time "to be advised". A formal contract was signed on November 21, 2012, the same day as the Mississauga Road contract, and Mr. Agostini was provided a deposit of $12,147.50.

(b) The January 2013 Contract

[5] On January 13, 2013, Mr. Sandani and Mr. Agostini entered into another agreement with respect to the same property on Trelawn Avenue. This agreement related to the construction of a wall unit at a cost of $28,500.00 plus HST. The work was to be completed within eight weeks with a start time "to be advised". A contract was signed on January 28, 2013 and Mr. Agostini was provided with a deposit of $16,102.50.

[6] Mr. Sandani testified that when he made the January agreement, Mr. Agostini told him that the work on the Mississauga Road property was "in progress". Mr. Agostini had shown him some cabinetry which he said he had built in furtherance of his contract. In fact, the cabinetry he was shown had not been built for Mr. Sandani's properties.

(c) Communications Following the Contracts

[7] When the work was not performed, Mr. Sandani made repeated efforts to contact Mr. Agostini. Eventually, Mr. Agostini stopped accepting Mr. Sandani's telephone calls. On June 24, 2013, Mr. Sandani learned that Mr. Agostini would be working at a certain location so he went there to wait for him. Eventually, Mr. Agostini arrived and they went to a coffee shop to talk. Mr. Agostini admitted to Mr. Sandani that he had not done any of the work and had lied to him. He proposed to Mr. Sandani that if he supplied the necessary material, Mr. Agostini would be able to complete the work. Mr. Sandani declined to do this. Mr. Agostini then told Mr. Sandani that he would try to give him his deposit back. He explained that he had sold some property in Europe and expected to receive some money from the sale. No money was ever provided.

[8] Sometime after the June meeting, Mr. Agostini proposed to send an individual named Pablo Smith to do some trim work for Mr. Sandani. This work was not part of the original contract between Mr. Sandani and Mr. Agostini. According to Mr. Sandani, he ended up having to pay this person as it was his understanding that Mr. Agostini had not paid him.

(ii) Count 3

[9] David Shram testified that in April 2013, he hired Mr. Agostini to do some work on a house he had recently purchased. A contract was signed on April 4, 2013 and Mr. Shram gave Mr. Agostini a deposit of $8475.00 representing 50% of the estimated total cost of the work.

[10] Mr. Shram initially testified that Mr. Agostini attended the house on one occasion, but in cross-examination acknowledged that it could possibly have been two. According to Mr. Shram, Mr. Agostini did about five percent of the work that was supposed to be done. He never returned to the house. Mr. Shram repeatedly tried to reach him but was unsuccessful. The work was never completed and the deposit was never returned.

B. Defence Evidence

(i) Background

[11] Mr. Agostini testified. He was 65 years old at the time of trial and had been working as a cabinet maker for over 20 years. He owned his own business, Edison Fine Carpentry. By the end of 2012, he had six employees. At around that time, he began to run into financial difficulties. A number of jobs he expected would be given to him by builders he had worked with in the past did not materialize and he was not paid for some work he had done for others. As a result of his difficulties, Mr. Agostini lost his employees.

(ii) The Contracts With Mr. Sandani

[12] Mr. Agostini testified that when he first entered into an agreement with Mr. Sandani in November 2012, he was in financial difficulty and in debt. However, he still believed that more contracts would be forthcoming in the future. He planned to use the deposit provided by Mr. Sandani to pay debts that he owed, anticipating that the money from future contracts could be used to purchase the materials required for Mr. Sandani's projects. He maintained that it was his intention to complete the work for Mr. Sandani and he honestly believed that he would be able to do so.

[13] By the time he entered into the second agreement with Mr. Sandani on January 28, 2013, he had already spent the deposit he had received with respect to the first agreement and had not performed any of the work. Mr. Agostini did not give any evidence as to what he had said to Mr. Sandani about the status of the work on the November contracts at the time he entered into the January contract.

[14] Despite Mr. Agostini's expectations, he was unable to find new work. As a result, he was unable to purchase the material needed to complete Mr. Sandani's projects.

[15] Sometime between January and July 2013, Mr. Agostini suggested to Mr. Sandani that if he purchased the material himself, Mr. Agostini would complete the work. Mr. Agostini had made such an arrangement with another customer in order to mitigate the losses suffered by that customer as a result of Mr. Agostini having spent the deposit. Mr. Sandani was not willing to accept this proposal.

[16] Mr. Agostini acknowledged that he had shown Mr. Sandani cabinets in his workshop and had falsely told him that they had been built for his project. He testified that he did so out of pride and was "trying to give myself time to complete the work". He was unable to recall when this happened, only that it was before the end of March 2013.

(iii) The Contract With Mr. Shram

[17] Mr. Agostini testified that when he entered into the agreement with Mr. Shram, he expected to be able to complete the work. He disagreed with Mr. Shram's testimony about how much of the work was completed. He estimated that about $4,000.00 worth of work was completed. He was ultimately unable to complete the rest of the work because he was unable to purchase the necessary materials.

[18] Eventually, Mr. Agostini's landlord locked him out of his workshop because he had not paid the rent. He lost his business and his marriage broke up as a result. By the time of trial, Mr. Agostini was living on welfare and residing in a homeless shelter in Toronto.

II. Analysis

A. The Application to Have the Evidence Applied Across Counts

[19] Ordinarily, the evidence with respect to each count on an indictment or information needs to be considered separately. In this case, the Crown has applied to have the evidence considered across counts. Like any other similar fact evidence, evidence across counts is presumptively inadmissible unless the Crown can establish that its probative value outweighs its prejudicial effect: R. v. Handy, 2002 SCC 56, [2002] 2 S.C.R. 908 at para. 55; R. v. Arp, [1998] 3 S.C.R. 339 at paras. 42, 51; R. v. McCormack, 2010 SKCA 2, 251 C.C.C. (3d) 516 (Ont. C.A.) at para. 48.

[20] In this case, it is the Crown's theory that when Mr. Agostini contracted with the complainants and accepted their deposits, he did so knowing that he would be unable to fulfil the terms of the contracts. When Mr. Agostini entered into a contract with Mr. Shram in April 2013, he was aware that he had been unable to fulfil the two contracts he had entered into earlier with Mr. Sandani. This fact makes it more likely that Mr. Agostini would have been aware that he would be unable to fulfil the contract with Mr. Shram. At this stage, I am not making any findings of fact but simply determining whether the evidence has any probative value. I find that it does.

[21] With respect to the prejudicial effect of the evidence, the following quote from McCormack is, in my view, apposite (at para 69):

In large measure, the practical realities of a trial by judge sitting alone in a case in which the allegedly similar acts do not extend beyond the counts of a multi-count indictment reduce significantly, if not to the vanishing point, the virus of reasoning prejudice. The judge is less likely than a jury to be distracted by a focus on similar acts. No additional time is required to adduce the evidence of similar acts because they are co-extensive with the evidence that is relevant, material and properly admissible on the individual counts. The only additional time required is that needed for the argument on admissibility at the end of the trial. The conduct relied upon as evidence of similar acts was not contested, although the appellant's participation and the legal characterization of the crimes committed were controversial.

[22] In my view, in this case the consideration of the evidence across counts has little, if any, prejudicial effect. Any that exists is outweighed by the probative value of the evidence. I will accordingly consider all of the evidence in relation to each count.

B. Count 2

(i) The Essential Elements of Fraud

[23] The offence of fraud requires proof of (1) "an act of deceit, a falsehood or some other fraudulent means" and (2) "deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim's pecuniary interests at risk": R. v. Riesberry, 2015 SCC 65, [2015] 3 S.C.R. 1167 at para. 20; R. v. Théroux, [1993] 2 S.C.R. 5 at para. 27; R. v. Zlatic, [1993] 2 S.C.R. 29 at para. 26. In this case, there is no issue that both Mr. Sandani and Mr. Shram suffered actual losses. The issue is whether they did so because of dishonest acts by Mr. Agostini.

(ii) The November Contracts

[24] When Mr. Agostini first contracted with Mr. Sandani in November 2012, he knew that his business was in trouble. He used Mr. Sandani's deposits to pay his debts because, according to him, he expected more work from other sources that would result in him having the funds necessary to complete the work for Mr. Sandani. There is no suggestion that the deposits were used for personal rather than business ends: Zlatic at paras. 33-35. If Mr. Agostini honestly believed that he would be able to complete the work, then he would not have the requisite mens rea, even if his belief was not reasonable: Théroux at para. 21.

[25] In considering Mr. Agostini's actions, I am mindful of the Ontario Court of Appeal's caution in R. v. Milec, 110 C.C.C. (3d) 439 (Ont. C.A.) (at para. 16):

The reality of commercial life mandates that the line between acts directed to the preservation of the business, even if desperate, and acts which are fraudulent, be meticulously drawn.

See also R. v. Lazeo, 2000 BCCA 483, 147 C.C.C. (3d) 388 (B.C.C.A.) at paras. 47-49.

[26] Having carefully considered all of the evidence in this case, I am not satisfied beyond a reasonable doubt that when Mr. Agostini contracted with Mr. Sandani in November 2012, he did not honestly believe that he would be able to complete the work. I am aware that Mr. Agostini misled Mr. Sandani by showing him cabinets he was working on and falsely telling him that they were for his project. However, this occurred after November 2012. The deprivation preceded the deceit and did not result from it.

(iii) The January Contract

[27] I reach a different conclusion with respect to Mr. Agostini's January 2013 agreement with Mr. Sandani. At the time that agreement was reached, Mr. Agostini was fully aware that he had not performed any work in accordance with the November contracts. According to Mr. Sandani, Mr. Agostini claimed that the work was underway, which was a "falsehood". Mr. Agostini did not contradict Mr. Sandani's testimony in this regard. In any event, even if Mr. Agostini did not tell him that the work was underway, I find that he must have been aware that Mr. Sandani believed that the work was in progress and that his decision to enter into a new agreement was premised on that belief. Mr. Sandani would not have contracted with Mr. Agostini in January if he had known that Mr. Agostini had not done any of the work on the earlier contracts. Mr. Agostini knew this, but did nothing to correct this misconception. In my view, this constitutes "deceit". The deceit or falsehood caused Mr. Sandani to advance the deposit of $16,102.50, resulting in deprivation in excess of $5000.00. Count 2 has therefore been proven.

C. Count 3

[28] By the time Mr. Agostini entered into the agreement with Mr. Shram, he had entered into three similar agreements with Mr. Sandani but had not performed any of the work. His claim that he still honestly believed that he would be able to complete the work for Mr. Shram is difficult to accept. However, the agreement with Mr. Shram was for a smaller job with an estimated cost of $15,000.00. This was considerably less than the jobs he was to perform for Mr. Sandani, which ranged from $21,500.00 to $28,500.00. As well, unlike the situation with Mr. Sandani, it appears that Mr. Agostini performed at least some of the work, although he and Mr. Shram disagreed as to the extent that was completed. In all the circumstances, I am left with a reasonable doubt as to Mr. Agostini's state of mind at the time he entered into an agreement with Mr. Shram. Count 3 has therefore not been proven.

III. Disposition

[29] For the foregoing reasons, Mr. Agostini is found guilty on Count 2 and not guilty on Counts 1 and 3.

Justice P.A. Schreck

Released: October 13, 2016