Court Information

Information No.: 2111-998-17-NR0087-00

Ontario Court of Justice

Between:

Her Majesty the Queen

-and-

Kurt Schwinges

Before: Justice L.P. Thibideau

Heard: April 5 and July 19 & 20, 2017

Reasons for Judgment Released: August 31, 2017

Counsel:

• D. Anger, Counsel for the Federal Crown
• V. Singh, Counsel for Kurt Schwinges

Judgment

THIBIDEAU, J. (Orally):

Charges and Plea

[1] Mr. Kurt Schwinges is charged that on the 31st day of August 2016 he possessed cocaine for the purposes of trafficking, contrary to s. 5(3) of the Controlled Drugs and Substances Act, and that he possessed proceeds of crime, money, under $5,000 contrary to s. 355(b) of the Criminal Code, a charge during the course of the trial that was changed to over $5,000 pursuant to s. 355(a) of the Code.

[2] He has pled not guilty to the two charges, but guilty to a lesser charge of simple possession of cocaine contrary to s. 4(1) of the Controlled Drugs and Substances Act, which plea has been refused by the Crown.

Crown's Theory

[3] There is an agreed statement of facts filed as Exhibit 6. The Crown argues those facts, as interpreted by a qualified expert make out the essential elements of the two offences.

[4] Certificates of analysis for four separate items seized, filed as Exhibit 4, demonstrate the substances seized are cocaine.

[5] The Crown theory is that the amount of substances seized, along with paraphernalia and money found in several locations in the house of Mr. Schwinges, along with other indicia of selling drugs, make out the possession of cocaine for purposes of trafficking and possession of money received from the sale of cocaine.

Defence Theory

[6] The defence argues there is a suitable and credible explanation on the facts to show the drugs found were for the personal use of Mr. Schwinges, and the money found was not his, at least the substantial part of it, there being innocent explanations for the money as found in the house.

Agreed Facts

Residence and Occupants

[7] The summarized agreed facts are these. The residence was occupied at the time of police entry by the defendant, his wife, and two young children. Any drugs found belong to the defendant alone. Items found are as follows: In the master bedroom in an upper drawer of a nightstand table $700 Canadian and $60 American. Also in the room, in the pocket of a pair of men's pants on the floor was $185 Canadian.

Money Found in Daughter's Bedroom

[8] In the daughter's bedroom, in a closet there was $3,325 U.S. in four envelopes wrapped in one foil package.

Cocaine and Paraphernalia in Furnace-Laundry Room

[9] In the furnace-laundry room, there were the following: A large number of men's jackets. The defendant gave evidence these were 15 to 20 suits belonging to him. In one suit jacket there was 20 grams of cocaine with multiple tiny "Apple" logo baggies plus a digital scale and spoon. In another jacket there were three separate baggies each containing 28 grams of cocaine, and $1270 Canadian. The total cocaine located was 104 grams.

Currency Reconciliation

[10] The Exhibit 3 currency seizure reconciliation sheet states total currency found was $3,235 Canadian and $3,733 American. The agreed statement of facts refers to a total of $3,385 American and a total of $2,155 Canadian. The agreed facts do not fully take into account Canadian money found in the foil wrap in the daughter's bedroom.

Telephone Conversation

[11] Finally on August 27th, 2016 four days before warrant execution, there was a telephone call between the defendant and a friend, Dominick Barranca, the content of which the Crown relies on to demonstrate the defendant was trafficking cocaine. Specifically Mr. Barranca asked, "you don't have any uhh, tickets with ya, do ya?" The defendant's reply was No, and then, "I had one with me, but buddy I'm fuckin' around the corner from my house, I'm not driving anywhere". Mr. Barranca states, "'cause this guy was asking that's all". The defendant's response is, "well you can drive to see me but I am not going anywhere, and I don't want any strangers at my house".

[12] After a short exchange about the merits of drinking and driving regarding Mr. Barranca, the defendant stated, "I'm not a lowlife uhh, dealer man, so I don't drive people things. I said I'm not a lowlife dealer man, so I don't drive to peoples..."

Crown's Expert Evidence

Detective Margetson's Opinion

[13] The Crown relies on the search results, the telephone conversation, and the expert opinion of Detective John Margetson, interpreting and explaining the significance of this evidence to prove its case. The expertise of Detective Margetson, and admissibility of the opinion evidence, is not at issue. What is at issue is the factual foundation underlying the opinion based upon the specific facts of this case.

[14] In summary, his opinion is as follows. The facts demonstrate a possession for trafficking situation. The amount of cocaine in the house is inconsistent with personal use and consistent with street to mid-level trafficking. The upper end of personal use amount is 28.3 grams, the usual is far less, 3.5 grams. The larger amount would be for a social circle sharing. The packaging of the cocaine in three 28 gram packages and one 20 gram package speaks of mid-level trafficking. The found paraphernalia, like a scale, empty baggies and a spoon reinforce the trafficking inference. A scale can be found in the possession of a simple user but this is not usual.

[15] The total sum of $3,235 Canadian and $3,733 American was seized. Drug trafficking is a cash business and this amount of money is an indicator of trafficking.

[16] The seizure of two phones with lack of evidence as to the owner and use of phones does not assist the drug trafficking inference. There is no direct evidence of personal drug use. In any event, drug sellers commonly are also users.

[17] The content of the telephone conversation between the defendant and Mr. Barranca supports the trafficking inference.

Analysis of "Ticket" Terminology

[18] The defendant referred to himself as a dealer. The other person referred to wanting a "ticket", "which appears to be coded language for an illegal item, possibly drugs". But, "ticket" is not slang for cocaine. It is for drugs or LSD. However on the facts given in this investigation "ticket" does not appear to fit these two definitions.

[19] The final expert opinion is that on the facts of this case, there is a strong inference that the powdered cocaine seized was possessed for the purpose of trafficking.

Trial Evidence: Money in Daughter's Bedroom

[20] However, the facts as found in this case are substantially different from the fact scenario given to the expert and upon which his opinion is based.

[21] It became clear during the course of the trial that the foil wrapped money found in the daughter's bedroom was under the care and control of the other adult occupant of the home, Sandra Rapac.

[22] The defendant said he had no knowledge at all of this money. Sandra Rapac said the money had accumulated over years, being added to and taken away from, for the benefit of the two children. In her evidence she accounted for the money in detail; how it was accumulated over time, how some of it was spent on the children, how it came to be foil-wrapped as found. Her version regarding the sum of money in one place, foil-wrapped, was corroborated by her mother Redojka Rapac.

[23] The parents and children had a vacation in Bobcaygeon, Ontario starting August 11th, some three weeks before the police entry, and arrest. The sizable amount of the money would have been left in the house unsecured and unattended during this time. Sandra Rapac gave it all to her mother for safekeeping. Ms. Rapac Sr., in keeping with Serbian custom, wrapped the money in foil to protect it from damage and loss should a house fire occur. She understood the money to be for the kids, accumulated over time. She herself contributed to the money, $1100 as a gift for surgery bills for which she used her line of credit, thus the envelope found marked "Mama". Sandra Rapac confirmed that the defendant was never aware this money existed.

Crown's Challenge to Money Evidence

[24] The Crown sought to discredit the evidence of Sandra Rapac, essentially arguing she was covering up for the defendant. How could she account for this amount of money and why were the amounts noted on the envelopes not consistent with the contents, the Crown questioned.

[25] The accepted evidence is that the money accumulated over years. Grandmother gave 1100, the children's uncle gave 1,000 early on in 2009 as a birth nephew gift. Money came and went from the envelopes. One envelope was marked "Mama" for the grandmother's contribution.

[26] In addition, the $700 Canadian and $40 or $60 U.S. in the bedroom nightstand, were the accumulated tips from restaurant employment of the defendant's partner.

Court's Finding on Money

[27] On the whole of the evidence the bedroom drawer money, and foil-packaged money, did not belong to the defendant and were not proceeds of drug sales related to drug buying or selling. The result is that the $185 Canadian, found in a pair of pants in the bedroom, and the $1270 Canadian found with three 28 gram baggies of cocaine in a jacket belonging to the defendant, make up the total money available to support the expert's trafficking inference based upon money. He was never asked if the substantial reduction in the money to support the trafficking inference altered his opinion.

Trial Evidence: Defendant's Income and Money

[28] The defendant gave evidence that the money in his pants in the bedroom and the larger amount in his jacket with the cocaine, were tip money from his employment as a manager and member of VIP Services for his employer, Fallsview Group, an owner operator of multiple restaurants and hotels in the Niagara Falls tourist district. His employment resulted in regular "tip-outs" or manager's share of tips received by the staff at places he managed, specifically two tip-outs per week from two restaurants.

[29] He kept money secretly from his wife and used it to fund his drug habit. Thus, the large amount found with cocaine in his jacket pocket.

Trial Evidence: Telephone Conversation Analysis

Defendant's Explanation of "Tickets"

[30] There is the telephone call recording. The defendant stated he has known Dominick Barranca as a friend since meeting him in the hospitality industry in 1996.

[31] The defendant's managerial position in the tourist industry has perks. One of them is tip-outs. Another is access to free tickets to events including sporting events like Blue Jays games and Buffalo Bills, and music concerts. He has discretion to make tickets available to customers. He can also use them himself or give them away. Exhibit 10 is a photo of himself and Mr. Barranca at a Tragically Hip concert. Exhibit 11 is a snapshot of himself and three others, including Mr. Barranca, at a Buffalo Bills game.

[32] The defendant gave evidence that the conversation regarding ticket and/or tickets was a conversation about nothing more than a ticket for a Blue Jays game. He said he originally had two, gave one to a bartender and had one left to give away. This is what the ticket conversation was about, according to the defendant.

Crown's Reliance on Drug Jargon

[33] The Crown relies heavily on the drug trade jargon to argue ticket can refer to a packet of cocaine, possibly not.

[34] However the expert did not in his report, connect ticket with cocaine. He stated "the word ticket is not known to the author as a slang for cocaine. Ticket is a common term for the price of drugs, or LSD". However, in the context of this investigation, "ticket" does not appear to fit these two definitions. The written expert opinion evidence report was augmented at trial by oral evidence of Detective Margetson on this issue. Ticket can also be a slang term in the drug culture. Ticket can simply be a term for money. Clearly not our situation. The telephone call is not about asking for money.

[35] Ticket can refer to LSD, such as blotter or paper acid LSD, which looks like a ticket. Clearly not our situation.

[36] Ticket can refer to heroin. Once again because the bundling of heroin for sale can look like a tiny ticket. Finally, heroin can be folded up in lottery tickets for sale. Cocaine can sometimes be bundled in a lottery ticket for sale of one-quarter gram or one-half gram, but this is not common packaging for cocaine. This is the evidence, orally, of the expert, and in fact this is not the packaging that was found on site.

[37] On our facts, the expert's opinion with respect to ticket jargon to support the cocaine trafficking inference is weak at best. It is the wrong drug, with no evidence of any packaging found in the search resembling a ticket-like format. Everything indicates baggies, inconsistent with the "ticket" scenario.

[38] Finally, the telephone request was for tickets not ticket, which increases the probability that the reference was not to drugs but to physical tickets.

Defendant's "Dealer" Comment

[39] There is the dealer remark by the defendant. The defendant explained the use of these words as slang, not in reference to actual drug sales. In the context of the conversation, with male bravado apparent throughout, between friends, the words could be interpreted at face value as the Crown argues, or, as a non-drug related sarcasm or slang as the defence argues.

Trial Evidence: Defendant's Drug Use and Finances

Personal Drug Use Explanation

[40] The defendant gave evidence he had, since he was 19 years of age, used drugs, moving from marijuana through to cocaine. At time of arrest he averaged two grams per day. He explained his heavy habit was costly, buying in small amounts costing $200-$300 daily. He changed his buying habits to more quantity less frequently to reduce cost and risk of detection. The 104 grams seized would have cost him about $3,000 for cut street level cocaine. It is implied in his evidence, that the bulk purchase would be for far less, but no specific figure was given. He also said the drugs seized were not chunky, therefore not bought more pure for resale. The inference asked to be drawn is that his cocaine was ready for use, an indicator of possession for own use, and not for resale.

Financial Capacity to Support Drug Habit

[41] Both the defendant and Sandra Rapac provided details of how they make their income and how they keep their financial lives separate. They both have substantial cash income in addition to their salary or hourly rate income. The defendant says his annual income was in the $75,000 range, which included base salary $36,000 per year, $10,000 bonus and tip-offs of about $26,000 a year based on $500 weekly. It would appear that at least $26,000 a year in tip-offs is not reported, or is under-reported, for tax purposes. The money came in as cash, was not banked but held in hand, and used to purchase drugs in cash, according to the defendant. His annual income would therefore have to be grossed-up accordingly in looking at lifestyle and ability to purchase drugs for a significant habit using cash as a result of non-reportable income being used. The defendant paid the house mortgage, Ms. Rapac paid the monthly household expenses from her income.

[42] While there was no documentation and no forensic accounting with respect to ability to pay for drugs without selling some to maintain a personal habit, the defence need not prove the point, only demonstrate the money evidence was reasonable and not merely speculation with respect to personal money from non-drug sale sources, to finance the defendant's cocaine habit. It appears doable on the evidence provided, thus the Crown's argument that the defendant is not wealthy, which begs the logical question, Where does the money come from, is capable of being answered on an it's possible basis.

Lifestyle and Home Routine

[43] The Crown argues the evidence of the defendant is not consistent with the evidence of Ms. Rapac regarding lifestyle and home routine so that the defendant could be out of the home in the evenings and nights to consume cocaine secretly, and to do so at home secretly. On the whole this is not so. Ms. Rapac Sr., mother of Sandra Rapac, told the court it was a common complaint of Sandra Rapac that Kurt stayed out too much and they would fight over this. Sandra Rapac gave evidence of different daily scenarios, even conflicting ones, of their life together. Given the whole of the evidence it is clear that to a large extent each of the two led their own lives. They had different working hours, varying from time to time, based on employment contingencies; they had leisure time together, like a trip to Bobcaygeon; the defendant visiting also at her workplace. But they also had time alone, outside of the home as described by the defendant, corroborated by Sandra Rapac's complaints to her mother.

Storage Method

[44] The Crown argues that the method of storing cocaine, not in a safe, but in a jacket pocket in a non-secure area of the house, made the cocaine more accessible for sale, without the knowledge of his partner. In fact, the method of storage vis-à-vis detection by Ms. Rapac, is the same for storage, for sale or for personal use. The method of storage has no probative value in this case in relation to hiding facts from Mrs. Rapac, or otherwise. The case law filed, chiefly by the defence, is not particularly helpful. In R. v. Bhullar, 2011 BCSC 416, where there was an acquittal, the Crown argues correctly the facts did not include presence of drug paraphernalia and there were not packaging of the drugs in quantities potentially for resale. In that case the quantity was 72 grams not 104 grams.

[45] R. v. Gonzalez ( BC CA), this is an appeal as to sentence for a simple possession, and any comment on the facts, vis-à-vis possession for the purposes, is obiter, with facts very different from our own case in any event.

[46] R. v. Fader (2017 ONCJ), is an unreported decision of Justice O'Donnell in this jurisdiction, on the 6th of March 2017, which involves a guilty plea to a charge of simple possession of cocaine, in which the court was not required to address the issues we have in our case.

Resolution

Crown's Position

[47] The Crown argument distilled to its essence in this. The facts proved at trial, as commented upon and explained by the expert in drug trafficking, whose evidence is entitled to great weight, is sufficient to make out the offences when the R. v. W.D. principles are applied to the assessment of the totality of the evidence. There are difficulties with this. As I have found, much of the facts presumed before trial, and relied upon by the expert, have not been proven in court. There is no issue as to the quantity of drugs seized, 104 grams. There is no issue as to the condition when found, three 28 gram packets and one 20 gram packet. There was a scale. Other paraphernalia included a large spoon and miscellaneous baggies. However, the proceeds of sale arrived at in the amount of $6,958 total in Canadian and American currency, hugely inflates the amount of money available for an inference of trafficking on our facts. The correct amount is $185 and $1,270 total.

Expert Evidence Limitations

[48] The cell phone evidence is simply a summary of culpable possibilities based on experience as an expert, with various alternative possibilities. In fact, the evidence is that there was one working cell phone attributable to the defendant with no evidence in court of incriminating material on it whatsoever. The expert did not have the advantage of the personal use facts presented at trial. Therefore the comment "no personal use evidence" does not take into account the actual trial evidence. The evidence of the meaning of certain words and phrases in the Schwinges-Barranca recorded telephone call has been assessed and commented upon already. In any event, the expert opinion regarding these words is that the word dealer is used in the apparent straightforward sense, and the word ticket is not known as slang for cocaine. And ticket in the context of this case is not probative.

[49] With respect to expert evidence on our facts the Crown was left with a large quantity of cocaine, in four separate significant amount packages, with $1270 in a jacket belonging to the defendant, with specific drug paraphernalia present, not commonly found in the possession of a simple user, who identifies himself as a dealer in a telephone conversation with another person.

Proper Application of Expert Evidence

[50] Expert evidence is not in itself dispositive evidence. There is a need to nuance the expert evidence in relation to all other evidence as recently stated by our Court of Appeal in R. v. Toole, 2017 ONCA 305, the trial judge must be careful not to abdicate to the expert witness the trier of facts role in determining the guilt of the accused. In that case the appeal court found the trial judge had an unquestioning acceptance of, and reliance upon the expert's bald opinion that the quantity of drugs seized could not be for personal consumption, not even for an addict. In that case the Court of Appeal substituted a possession conviction for the possession for purposes conviction. It must also be remembered that expert opinion often relates to what is usual, what is the norm, given a specific set of facts.

[51] Thus, in our case the following. "The amount of cocaine is not consistent with personal use". "The packaging is consistent with mid-level trafficking". "Empty baggies, a weigh scale, and a spoon were found in a jacket with cocaine". These items would be consistent with cocaine being divided into smaller amounts for street-level trafficking". "Scales are not commonly found with persons who are strictly drug users".

[52] The expert's opinion, based on facts put to him before trial, not entirely proven at trial, is that, "here is a strong inference that the powdered cocaine seized at this search warrant was processed for the purposes of trafficking".

[53] Some of the essential facts that formed a constellation of facts upon which the expert opinion of Detective Margetson was based, were not proven at trial, with the result that the expert opinion has a greatly diminished value.

Defence Evidence Assessment

[54] The defence witnesses provided direct evidence of the events and circumstances related to the charges before the court. The defendant's evidence was internally consistent. Contradiction of his evidence, particularly with respect to the purpose for which a quantity of drugs was in his possession, comes only from the expert's opinion. An explanation has been provided by the defendant that he possessed 104 grams of cocaine in four separate packets and baggies for personal use related to a heavy addiction over years. Miscellaneous baggies found in the home, in more than one location, is explained as baggies from previous use, not discarded, and clean baggies to be used. The presence of the empty used baggies by themselves in the context of the expert opinion, and the defendant's evidence, does not advance the Crown theory. On this point the expert opinion is that empty used baggies in the abstract, "might be for personal use because they are discarded". The expert believed incorrectly that all baggies on site were clear and clean, therefore not indicating personal use.

[55] The presence of the baggies is explained by the defendant as leftovers from his own use by measured daily amounts of cocaine contained in the baggies. As previously canvassed, the money related to the alleged cocaine trafficking is reduced from over 7000 to under $1500. We can surmise that the expert opinion that cocaine sales are a cash business would remain the same, even with the much lower amounts of money involved. However, it is clear that the defendant received weekly substantial cash amounts from his employment, and the $1270 is consistent with more than one week, but less than three weeks, of such cash payments received. It is reasonable to infer that both he and Ms. Rapac kept accumulated cash income at home on a regular basis.

[56] In the context of all the evidence the cash on hand attributed to the defendant himself is as consistent with proceeds of cocaine sales as with cash income received from legitimate employment. The variable favourable to the Crown is the physical proximity of the $1270 to the cocaine seized.

Cellular Phone Evidence

[57] The cellular phone evidence and expert opinion related thereto on our facts has no probative value. The one working phone was seized. Only one phone call transcript was considered incriminating by the Crown and therefore used during the trial. The assessment of the evidentiary value of that phone transcript shows that the Crown theory on the use of ticket or tickets to denote drugs or drug dealing, is not in accord with the expert evidence or the explanation of the defendant.

[58] The self-description by the defendant as not being a lowlife dealer is consistent with the Crown position, but the explanation offered has some traction. The conversation is between two male friends, with masculine bravado evident, and present in subject matter and terminology. A sarcastic use of the phrases used is not beyond reasonable possibility, even if not reasonably probable.

Reasonable Doubt Analysis

[59] The strongest evidence is the amount of cocaine seized as packaged, with the money in the suit jacket pocket. The explanation of personal use cocaine only and earned income cash is set against the guilty inference to be drawn from the evidence as the Crown suggests. On the facts of this case as found we are at the second of the three R. v. W.D. considerations: If you do not believe the testimony of the accused but you are left in reasonable doubt by it, you must acquit.

[60] Reasonable doubt does not involve a decision as to whether the defence evidence or the Crown's evidence is believed. This is a non-permissible binary choice. The second alternative is the correct one; where the trier of fact does not believe the accused, the trier of fact after considering the accused evidence in the context of all the evidence, may still have reasonable doubt as to guilt. "Reasonable doubt is an honest and fair doubt, based on reason and common sense. It is a real doubt, not an imaginary or frivolous doubt". R. v. W.D..

[61] All of this is in the context of a case that is entirely circumstantial. For the Crown to succeed the facts must be consistent with a culpable inference to the exclusion of one or more exculpatory inferences, based on the totality of the facts before the court, and not merely speculation or fancy.

[62] An assessment of the evidence of the defendant and the defence witnesses in relation to all the evidence before the court is required to determine whether a non-culpable, fact-based inference exists on a reasonably possible basis. To begin with, the degree of certainty required for a reasonably possible determination is above mere suspicion, but it is less than reasonable and probable grounds, and certainly less than balance of probabilities.

Credibility and Consistency

[63] The evidence of the defendant was on the whole internally consistent and externally consistent in relation to the evidence of the other two defence witnesses. He had no knowledge of the large sum of money foil-wrapped in the daughter's bedroom. There is a very plausible explanation for it being there that does not involve the defendant, corroborated by both of the other two defence witnesses.

[64] His explanation that he had sizable cash income from legitimate sources is logical and compatible with common sense. His telephone conversation, argued to be indicative of guilt in two separate ways, related to words used, is explained. Ticket wording is problematic for the Crown's case. A self-description as a dealer is not. However, in the context of the relationship of the two people and the entire conversation, it cannot be said the words dealer, or dealers are tantamount to a confirmation of drug trafficking activity. It is reasonably possible the words were used in the manner suggested by the defendant himself; slang between friends.

Remaining Crown Evidence

[65] The most difficult hurdle for the defence is the presence of the quantity of cocaine as packaged, found in the suit jacket pocket, and another.

[66] On the one hand, one must be careful not to include back into evidence the facts originally presented by the Crown in the statement of agreed facts and relied upon by the expert, now in question for the reasons given, related to a quantity of money, intercepted telephone call, content of the call, and the clean baggies. On the other hand there are facts still remaining that support an inference of guilt. The quantity of cocaine seized, the packaging in four baggies, the $1270 with over three quarters of the cocaine in one pocket in one suit, the obvious meaning of the word dealer in the telephone call, the scales and clear baggies and spoon.

Final Determination

[67] With these considerations in mind I am satisfied that a reasonable doubt has been raised by the defence evidence, even if I don't believe the evidence of the defendant personally, with respect to that. It is unlikely but still reasonably possible that what is left of the Crown facts has been explained by the defendant. It is not contradicted. He has been a drug user for decades, and a cocaine user for years. Financially it is reasonably possible that someone with a very substantial cash income, with a partner with a meaningful cash income, could afford his heavy habit as he described.

[68] Used baggies assist his case. His explanation for how the cocaine was stored and the unusual amount of cocaine; how he seeks to avoid multiple deals and avoid detection, and drug culture risk; how he carries what he needs only to avoid overdose, while not the most probable explanations are at least reasonably possible on the whole of the evidence.

[69] The result is a fact based exculpatory explanation in a circumstantial evidence case sufficient to raise reasonable doubt. There will be not guilty findings with respect to the two offences tried and a guilty finding for possession of 104 grams of cocaine, as pled.

Dated at St. Catharines, Ontario

This 31st day of August 2017

The Honourable Justice L.P. Thibideau