SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CRIM(J) 310/10
DATE: 20120312

RE: HER MAJESTY THE QUEEN - and - NAJAM MAHMOOD

BEFORE: F. Dawson J.

COUNSEL: Concetta (Connie) Zary and S. Dollar, for the Respondent

Stacey A. Taraniuk, for the Applicant

HEARD: March 6, 2012

E N D O R S E M E N T

Application for Stay of Proceedings

[ 1 ] Najam Mahmood was scheduled to commence his trial on November 9, 2011 on an indictment charging eight counts of tax evasion; four counts related to Goods and Service Tax pursuant to s. 327(1) (c) of the Excise Tax Act , R.S.C. 1985, Chapter E-15, and four counts related to Income Tax pursuant to s. 239(1) (d) of the Income Tax Act , R.S.C. 1985, c.1 (5 th supp.). On November 2, 2011 Mr. Mahmood’s counsel was served with several volumes of material which the Crown proposed to file as exhibits before the jury to assist in proof of the revenue allegedly earned by Mr. Mahmood’s business. On November 7, 2011 the defence was served with eight volumes of material the Crown proposed to file as exhibits before the jury to assist in proof of the deductible expenses that would be utilized to calculate income from revenue.

[ 2 ] On November 9, 2011 as the trial was to commence, Mr. Mahmood objected to what he characterized as late disclosure and filed an application to stay the proceedings pursuant to s. 24(1) of the Charter of Rights on the basis of alleged violations of s. 7 and s. 11(d) of the Charter in the nature of abuse of process. The bringing of the application necessitated adjournment of the trial so that each side could file proper material on the stay application.

[ 3 ] The first point that must be dealt with is the Crown’s contention that it was under no obligation to provide the defence with advance disclosure of the material contained in the volumes that were provided to the defence on November 2 and November 7, 2011. It is the Crown’s position that because the volumes contain various banking records and documents previously disclosed with only the addition of some spreadsheets based on such previously disclosed documents, the Crown was merely providing copies of the volumes as a courtesy to the defence and was under no obligation to do so.

[ 4 ] I am unable to accept this Crown submission. In my view the nature and intended use of the material is such that it falls within the boundaries of what is properly considered disclosable material under R. v. Stinchcombe , [1991] S.C.R. 326. As such the Crown was under an obligation to disclose it in a timely fashion. I reach this conclusion for the following reasons.

[ 5 ] While the underlying documents and therefore the information had been previously disclosed, the format of the trial volumes was completely different than the corresponding volumes used at the preliminary hearing. In addition, as explained in the affidavit evidence of the lead investigator Stefano Castrucci, subsequent to the preliminary inquiry he had re-evaluated a number of the banking and other records with a view to “streamlining” the presentation of the Crown’s case at trial. This re-evaluation and streamlining resulted in the Canada Revenue Agency and the Crown deciding that they would treat a significant number of items as business expenses when such items had not previously been treated that way at the preliminary inquiry. While this reduced the taxes allegedly owing it nonetheless represented a change in position that had to be evaluated by the defence. I also stress that it was the Crown’s intention to tender the newly served volumes as exhibits to go before the jury. Consequently, the volumes go beyond providing previously disclosed information. They constituted the actual evidence to be tendered by the Crown at trial and for that reason the Crown was required to disclose this material pursuant to Stinchcombe .

[ 6 ] Despite my rejection of the Crown’s submission on this point, I observe that the Crown did disclose the material, although only shortly before the trial was about to begin. The Crown submits that it is clear from the affidavit of Mr. Castrucci that the only substantive changes were a tinkering with the revenue, and the allowance of additional expenses which ultimately benefitted the accused. Crown counsel also submits that although the information was presented in a new format, someone with knowledge of the case should have been readily able to identify the changes which the Crown submits were apparent from a spreadsheet contained in one of the volumes. Although not clearly articulated as such, I take this to be a submission that this material was disclosed sufficiently before the trial to permit the defence to digest it.

[ 7 ] I am also unable to accept this submission. Mr. Castrucci’s two affidavits, which carefully explain the changes in the material from the time of the preliminary inquiry and the rationale therefore, were not served together with the volumes of material. No directions or explanations were sent with the material. Defence counsel was in the final stages of preparing for what both sides agree will be a complicated and document intensive case. The accused and his counsel were entitled, and defence counsel was required by his professional obligations to his client, to examine and thoroughly understand the material that the Crown was proposing to place before the jury. In addition, while the changes with respect to expenses did not change the Crown’s theory of liability, it did impact on defence counsel’s prepared cross-examination of Mr. Castrucci. It is apparent to me from the evidence on the application that by deciding to allow what were previously not allowed as expenses, the so called “streamlining” of the case could take the wind out of the sails of an already prepared cross-examination. While there is no prohibition on the Crown continuously refining its theory, when doing so results in the disclosure of new or additional items of evidence the defence must have adequate time to evaluate the changes and prepare to meet them. In all of the circumstances of this case, I conclude the disclosure did not take place sufficiently in advance of trial to allow the defence to evaluate and respond to the additional disclosure.

[ 8 ] As a result of commencing this application the defence effectively obtained an adjournment of the trial. Based on the evidence led and submissions made it is apparent that the accused and his counsel have now digested and do understand the volumes that were disclosed.

[ 9 ] The question that must next be answered is whether the adjournment has provided an adequate remedy for what occurred. Mr. Mahmood takes the position that a stay of proceedings, and only a stay of proceedings, is an adequate remedy. In response to my question Mr. Mahmood’s counsel advised he seeks no alternative remedy short of a stay.

[ 10 ] In my view a stay of proceedings is not warranted in the circumstances of this case. In reaching my decision I have applied the law of “abuse of process” as comprehensively summarized by Charron J. on behalf of the Supreme Court of Canada in R. v. Nixon , 2011 SCC 34 , [2011] 2 S.C.R. 566, at paras. 33-42 . As is made clear in that summary, before an applicant can succeed in obtaining a s. 24(1) Charter remedy on the basis of abuse of process a degree of harm to either the accused’s fair trial interests or to the integrity of the justice system must be shown, which is commensurate in degree to that required to obtain a stay of proceedings at common law (para. 38). Under the first consideration it must be shown that compelling an accused to stand trial would violate the fundamental principles that underlie the community’s sense of fair play and decency or that the proceedings are oppressive and vexatious (para. 40). Under the second consideration, referred to as the “residual category”, conduct or circumstances must be demonstrated which would tend to undermine society’s expectation of fairness in the administration of justice (para. 41).

[ 11 ] Under either category a stay of proceedings will only be appropriate where: (1) the prejudice caused by the abuse in question will be manifested, perpetuated or aggravated through the trial or its outcome; and (2) no other remedy is reasonably capable of removing the prejudice (para. 42).

[ 12 ] Under the first category, Mr. Mahmood submits that he has suffered severe prejudice because he has been on restrictive bail conditions for a number of years. The conditions prevent him from travelling and there is some evidence, though not compelling, that this interferes with his business. He submits that he will be subject to continuing difficulties in this regard if the case is allowed to proceed.

[ 13 ] In response, Crown counsel points out that although Mr. Mahmood has sought some variation of his bail conditions on consent, which the Crown has not agreed to, he has not pursued any attempts to have his conditions varied by the court. I agree with the Crown’s submission that this tends to reduce the weight of the claim for prejudice advanced on this basis.

[ 14 ] Mr. Mahmood also submits that he will suffer a financial burden as a result of the need to do further trial preparation based on the change in the Crown’s position. I find there is little legitimate force in this submission. While the Crown has changed its position in a manner that may require some reconsideration of the presentation of the defence there has been no change in the Crown’s theory of Mr. Mahmood’s liability. The Crown’s position is straight forward: Mr. Mahmood earned revenues from a business, did not keep proper books and records as required by the Income Tax Act , and wilfully evaded the payment of taxes on his income. It is also alleged that he collected GST and failed to remit it. As this has always been the basis upon which criminal liability has been alleged the changes in the Crown’s position are not fundamental. The variation in allowable expenses works to Mr. Mahmood’s advantage, in the sense that his income is reduced and he owes less tax.

[ 15 ] There is no evidence or suggestion that, for example, the defence has been forced to change its entire approach. While some of the already completed preparation for the cross-examination may have been rendered of little value, the case to be defended against is still substantially the same. In any case, the Crown is permitted to improve or change its approach. While that led to a disclosure problem in this case which required that an impending trial date be vacated, the evidence shows that the junior lawyer hired to evaluate the changes was able to achieve a substantial understanding of them by expending 18 hours of docketed time. While this does not reflect the totality of the additional work that is required it shows that it is not overwhelming. This is to be a six to eight week trial and I am unable to find that what is required to be done as a result of the additional disclosure takes this case outside the bounds of the litigation contingencies that arise in many such cases.

[ 16 ] Finally, there is nothing on a “go forward basis” to indicate that the accused’s fair trial interests have been impaired by what has occurred.

[ 17 ] Turning to the residual category, counsel for Mr. Mahmood submits that the fact that the Crown continues to maintain that it has no obligation to disclose such material demonstrates an affront to the administration of justice. He submits that if this does not demonstrate bad faith it at least shows a lack of good faith.

[ 18 ] I have already found that Crown counsel was in error on this point. However, I see no indication of an oblique motive or bad faith. I recognize that such is not required to establish an abuse of process, but the absence of Crown misconduct is a relevant factor: R. v. Keyowski , 1988 74 (SCC) , [1988] 1 S.C.R. 657.

[ 19 ] Mr. Mahmood’s counsel also submits that there was a similar problem at the preliminary inquiry when a number of volumes of material were disclosed shortly before the preliminary inquiry was to commence. Mr. Mahmood’s application to adjourn the preliminary inquiry was rejected by the presiding provincial judge on the basis that all of the material had been disclosed in a different form. He did give counsel part of a day to prepare.

[ 20 ] This is a factor I have taken into account together with all of the other circumstances. I find that collectively the circumstances the accused relies on fall far short of establishing an abuse of process in the residual category.

[ 21 ] I would also add that I am also far from satisfied that this is one of the clearest of cases that requires a stay. I am of the view that the adjournment coupled with the explanatory affidavits from Mr. Castrucci have put Mr. Mahmood in a position where neither he nor the administration of justice are prejudiced by the trial proceeding. A stay is not required in order to prevent the manifestation, perpetuation or aggravation of any prejudice either to Mr. Mahmood or to the repute of the administration of justice. An adjournment is an adequate remedy in the circumstances.

[ 22 ] The application is dismissed.

F. Dawson J.

DATE: March 12, 2012

COURT FILE NO.: CRIM(J) 310/10

DATE: 20120312

SUPERIOR COURT OF JUSTICE - ONTARIO RE: HER MAJESTY THE QUEEN - and - NAJAM MAHMOOD BEFORE: F. Dawson J. COUNSEL: Concetta (Connie) Zary and S. Dollar, for the Respondent Stacey A. Taraniuk, for the Applicant ENDORSEMENT Dawson J.

DATE: March 12, 2012