Her Majesty the Queen v. Stephen R. Clelland and Colleen Rose Marie Clelland, 2012 ONSC 3080

COURT FILE NO.: CR 2011-23

DATE: 20120524

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

Stephen R. Clelland and Colleen Rose Marie Clelland

Defendants

Moray Welch and Vern Brewer, for the Public Prosecution Service of Canada

Larry Douglas, for the Accused

HEARD: March 26-30, 2012 and April 26, 2012

j.s. o’neill

REASONS FOR JUDGMENT

[1] PART A: Introduction

[2] On October 24, 2011 an Indictment was filed in the Superior Court of Justice at Parry Sound charging Stephen R. Clelland and Colleen Rose Marie Clelland as follows:

That they, the said Stephen R. CLELLAND and Colleen Rose Marie CLELLAND between the 1^st day of January, 2000 and the 1^st day of August 2005 at the Town of Parry Sound in the North region, did by deceit, falsehood or other fraudulent means defraud Human Resources Development Canada of money, the sum of $70,187.34 by collecting Canada Pension Plan benefits contrary to Section 380(1) (a) of the Criminal Code of Canada.

[3] The trial of this matter proceeded before me at Parry Sound between March 26 and 30th, 2012. Counsel made sentencing submissions to the court on April 26, 2012. Following submissions I adjourned the matter to May 24, 2012 for the purpose of rendering a decision.

[4] Part B: The Evidence Called at Trial

[5] a) Crown Evidence

[6] i. Initial Exhibits Filed and Admissions made to the Court

[7] Exhibit 1 contains five documents –

1. Application for Disability Benefits, Canada Pension Plan dated September 30, 1998

2. A questionnaire for benefits dated September 30, 1998

3. A medical report dated October 3, 1998

4. A disability summary sheet dated November 23, 1998, and

5. A Human Resources Notice of Entitlement (standard form letter).

[8] Exhibit 2 consists of the Application made for benefits on behalf of the children. Exhibit 3 consists of 38 original cheque payments made to Mr. Clelland between 2002 and 2005. Exhibit 4 is the banking records from T.D. Canada Trust for the period 2000 to 2005. The account is joint as between the two accused.

[9] The following admissions were made at the opening of trial: Mr. Clelland’s social insurance number, address and the joint account for the T.D. Canada Trust Bank.

[10] In his opening statement, Crown counsel submitted that both accused committed fraud between the period 2000 to 2005 with reference to payments made to Mr. Clelland and to his children in relation to his 1998 catastrophic injury. Counsel submitted that it was a fraud of omission, a failure to advise of Mr. Clelland’s return to work in 2000 when he restarted his own business. In addition, Crown counsel submitted the fraud of omission continued when Mr. Clelland returned to work as an employee in 2003, 2004 and 2005.

[11] Counsel submitted that Mrs. Clelland prepared the forms and that she was a primary actor or principal with a duty to inform CPP when Mr. Clelland restarted his business and when he subsequently returned to work as an employee. Counsel pointed to the tax returns filed for the years 2001 through to 2003 as well as the T4 returns filed for the years 2003 to 2005.

[12] Crown counsel submitted that contacts were made by CPP representatives, in 1999 and 2002. Mr. Clelland it was submitted, did not indicate that he had returned to work in any capacity.

[13] In his opening submissions, Defence counsel indicated that he would call evidence outlining what Mrs. Clelland was thinking as she prepared the questionnaire. Defence counsel submitted that Mr. Clelland’s return to self employment would demonstrate a non-viable business with losses incurred.

[14] Counsel submitted that Mr. and Mrs. Clelland were not clearly aware of a duty to report changes.

[15] ii. Anne Lee

[16] Anne Lee is a medical adjudicator working out of the Timmins office. She determines whether a person meets the criteria for CPP Disability Benefits and upon re-assessment, whether a client should continue to receive such benefits.

[17] She testified that the CPP Disability program’s purpose was to provide a monetary amount to clients who have suffered a disability severe enough to stop them from doing any work, not just their usual job.

[18] Psychiatric cases account for 50% of the work load. Ms. Lee testified that a large part of her work was dealing with recipients who must report if they are going back or returning to work. The threshold earnings amount was changed in May 2001. Recipients are now required to call the Department if they have earned $5000.00. Ms. Lee described this as a work trial period. $5000.00 is the threshold whether for employed workers or self-employed workers (gross income).

[19] Ms. Lee testified that the CPP Disability program has changed over the years. More persons are returning to work now as a result of better rehabilitation and medical services. Ms. Lee’s department does not have the resources to follow each individual. She testified that self reporting was very high and that there was an onus on recipients to do so. Ms. Lee was asked about various mail-outs that had been sent during the subject period. She referenced the following:

1. Entitlement letter

2. March 2000 General Mailing

3. November 2001 Onus Change

4. February 2003 Newsletter

5. February 2004 Newsletter

6. February 2005 Newsletter

[20] Ms. Lee reviewed the Exhibit 1 documents filed at trial. She pointed out that the disability summary sheet evidenced that Mr. Clelland was to be reassessed in November 2000.

[21] She reviewed Exhibit 5(a) (2) the April 21, 2009 CRA printout. She testified that the pattern of self employment and employment income outlined therein suggested that Mr. Clelland had regained a capacity for work. She reviewed Exhibit 5(a) (1) and confirmed that she recommended a cease payment date of January 2000, effective February 2000. She testified that between 2005 and 2010 repeated efforts were made to write and request information from Mr. Clelland with respect to his employment and self employment records. She testified that when Mrs. O’Sullivan wrote the June 6, 2005 letter, the Plan representatives were only aware of Mr. Clelland’s T4 employed earnings, not his self employed earnings. Mr. Clelland responded with return to work forms dated August 10, 2005, reflecting periods of work between 2003 and 2005.

[22] Ms. Lee testified that when the department learned of self employed earnings in the fall of 2005, letters were written to Mr. Clelland but he did not respond. She referenced the Exhibit 5(d) file. She testified that she became involved in 2006 and that she required guidance on the file. A decision had been taken in 2002 to continue benefits but she testified that the evidence suggested a back to work return in the year 2000.

[23] She pointed out that Mr. Clelland’s benefits were suspended in August 2005 and that no payments had been made since that date. A self employment questionnaire was forwarded to Mr. Clelland on October 31, 2005. A reminder letter was forwarded on January 1, 2006.

[24] Ms. Lee testified that Mr. Clelland spoke to her on January 11, 2006 and told her that he had sent back return to work forms (T4s) and that he had taken part in a 2002 reassessment. He was asked about self employment earnings and he told Ms. Lee that “I started in the winter of 2000 I was not aware of the allowable earnings policy ($3400.00) Ms. Lee advised that a nurse told him of this during the reassessment of June 2002. The summary of the phone call is set out at item 26 of the Case Summary Report found in Exhibit 5(d). During the phone call with Ms. Lee, Mr. Clelland indicated that he did not know that he had to report allowable earnings and that he was informed in 2002 that files are usually reviewed in 2 year intervals. He told Ms. Lee that he was agreeable to sending a self employment questionnaire along with a letter explaining the nature or extent of his work from 1998 onward.

[25] It was noted in Exhibit 5(d) with respect to the telephone call made by A. Bouillon on June 21, 2002 that Mr. Clelland indicated that he was continuing his treatment, his condition was improving but “he is not able to RTW at this time”. Ms. Bouillon indicated that the file would be reviewed in June 2004. Details with respect to the telephone call are set out at item 2 on the Reassessment Case Summary Report found in Exhibit 5(d). The phone call detailed discussions with respect to critical issues and there is an indication that Mr. Clelland was able to drive and would be looking into an assessment for driving a school bus.

[26] Under cross examination Ms. Lee confirmed that the volume in her department had increased from 1999 to the present and that the force driving change to the volume was case load. She also pointed to changes to treatment and medical improvements which were increasing prospects for return to work.

[27] She agreed that there were likely no representatives at the Lyndhurst Hospital when the application was completed on September 28, 1998. She pointed to the requirement to report changes found on page 4 of the application, the last page of the questionnaire, and as well, on page 2 of the notice of entitlement letter. Ms. Lee confirmed that the date for re-evaluation changed from November 2000 to May 2002. She stated that post grant letters were sent in March 2000 to clients reminding them to contact the Plan if they returned to work. A newsletter was sent in November 2001 explaining the new earnings policy effective May 2001.

[28] Ms. Lee was questioned about Exhibit 5(e), which contains copies of four mailed newsletters. She confirmed that Ms. Bouillon’s words CTB/BF meant continued to be disabled/bring forward. Ms. Lee responded by indicating that Ms. Bouillon was not told by Mr. Clelland that he was working.

[29] She confirmed that the February 2003 newsletter dealing with earnings did not differentiate between gross earnings and net earnings. She confirmed this as well with respect to the February 2004 and February 2005 newsletters.

[30] Ms. Lee was questioned about her telephone call of January 11, 2006. Her notes indicated that Mr. Clelland was agreeable to sending the self employment questionnaire along with a letter explaining the extent and nature of his work from 1999 onward.

[31] Ms. Lee confirmed that Human Resources Development Canada did not have a record of Exhibit 6. The self employment document is dated March 12, 2006.

[32] In re-examination Ms. Lee confirmed that reminder letters would not have been sent out if Human Resources had received the self employment questionnaire. Rather, she testified that staff would have contacted employers and had a medical adjudicator review the file.

[33] iii. Steven Kelly

[34] Mr. Kelly is employed by Service Canada in Ottawa. He is the payment manager for System Support. He confirmed that the Exhibit 5(d) documents were printouts from the RBRS Systems. Under cross examination he confirmed that the system does not say what information is received, in answer to a question with respect to the March 15, 2006 letter.

[35] iv. Susanne Bonsall

[36] Susanne Bonsall (formally Susan Melancon), is employed as a vocational and rehab nurse at the Porcupine Health Unit. She testified that Mr. Clelland telephoned in August of 1999 with respect to his business plan for self employment. She stated that she didn’t know if there was an obligation to report or not back in 1999. She testified that she did not take from her conversations that Mr. Clelland had returned to work. She could not recall if she told him to self-report his earnings.

[37] v. Lianne Muirhed

[38] Mrs. Muirhed confirmed that Mr. Clelland began working with LTJ Construction on October 30, 2003. He worked at various times throughout 2003, 2004, 2005, and 2006 until 2007. She stated that she had no record of sick days being claimed or special arrangements made with respect to Mr. Clelland. He worked as a combo-plough driver.

[39] Under cross examination she said that the local foreman would likely have known more about Mr. Clelland’s medical conditions than would office staff.

[40] vi. Clyde MacDuff

[41] Mr. MacDuff is President of Parry Sound Ready Mix. He confirmed through Exhibit 8 that an application was made by Mr. Clelland for work dated May 25, 2004. No special requests were made with respect to limitations or disabilities.

[42] Mr. MacDuff testified that he was aware of Mr. Clelland’s physical impairments. He reviewed the type of work Mr. Clelland carried out with the Ready Mix Company.

[43] vii. Gail Laskoski

[44] Mrs. Laskoski has been with Service Canada since November 1981. She is a pension investigator with CPP and Old Age Security. She has been with the Integrity Department since February 2008. She reviewed Mr. Clelland’s file.

[45] viii. Cindy O’Sullivan

[46] Mrs. O’Sullivan is a Service Canada Benefits Officer working out of the Timmins office. She reviewed the Exhibit 1 files and indicated that the onus was on the client to report changes.

[47] Children’s payments cease if a parent is no longer disabled. Child benefits can continue to beyond age 18 as long as the child is in full time attendance at school.

[48] Mrs. O’Sullivan confirmed that no allowable earnings were permitted between 1999 until the policy change in May 2001. Mrs. O’Sullivan became involved in 2005 when she was working in reassessment. She scanned Mr. Clelland’s T4 earnings and sent out a record of earnings kit for him to clarify his earnings. She wrote to him on June 6, 2005. She reviewed Mr. Clelland’s self employed earnings in October 2005. She testified that had she seen these earnings in June she would have suspended benefits. She testified that her staff look at gross earnings and not net earnings.

[49] She confirmed that return to work consents were received in October 2005. She testified that she never received the Exhibit 6 self employed questionnaire.

[50] She confirmed in cross examination that notice of entitlement forms are sent out before the first cheque is mailed. She confirmed that there was a time lag with respect to self employment earnings between the period 2000 and 2005. She stated that self employed earnings were gross earnings but she confirmed that she was aware of no definition for the word earnings.

[51] ix. Lisa Larose

[52] Lisa Larose is a Tax Auditor with the Canada Revenue Agency Office out of Barrie. She reviewed Exhibit 9, CRA documents for Mr. Clelland and for Mrs. Clelland. She stated the taxable income is outlined on line 150.

[53] b) Defence Witnesses

[54] i. Stephen Clelland

[55] Mr. Clelland is 52 years of age. He has been married to Colleen Clelland for 31 years and he has two children, Emily age 29 and Cody age 26. He has no criminal record.

[56] He worked in the masonry business and he logged firewood until his accident in 1998. He worked long days with a skidder and in cutting and splitting firewood. He often worked 7 days a week. He prided himself on his work ethic. He worked on various boards. In the period prior to his accident he was a volunteer with the Air Cadets.

[57] His accident occurred on September 5, 1998. While cutting down a neighbour’s tree and cutting it into blocks, the tree exploded and the remaining length of the tree hit him in the middle of his forehead. He sustained a fractured neck.

[58] He underwent surgery in Sudbury and remained in hospital in Sudbury until September 28, 1998. He was transferred to Lyndhurst Hospital for rehabilitation. He walked out of this medical facility by himself on February 28, 1999. He described the effects of his injuries in February 1999 as:

• Weakness or limited use of all four limbs (including to the present)
• Limited use of right arm
• Limited strength in right hand
• Problem sensing pain and sensations to heat and cold
• Balance problems
• Unable to walk quickly

[59] He testified that many of the above symptoms continue to affect him to this day.

[60] Mr. Clelland testified that when he returned home he began to receive CPP disability cheques but that he did not know the process by which this occurred. He testified that he never saw the Exhibit 1 Notice of Entitlement document. He testified that he was not made aware of any conditions relating to the CPP application or questionnaire. He could not recall speaking to Colleen about the Application. He testified that his rural route mail box has been struck two or three times by a snow plow and that sometimes he did not receive his mail.

[61] He confirmed that in August 1999 he spoke with a representative from CPP and that he spoke about putting a business plan together. He did not recall any discussions about having to report if he started his business. He confirmed that only in late 2005/2006 was he told about the need to report. He looked into obtaining a hydraulic band saw mill so that he could keep his firewood business going. The mill would replace his physical labour. He purchased one for $265,000.00 by borrowing from his parents, securing a forgivable loan from Human Resources Jobs Ontario, and by borrowing from T.D. Canada Trust and the Commercial Business Development Bank. The loan application documents were filed as Exhibit 10.

[62] He testified that his business did not go well. He started it up in early January or early February 2000. There were problems with scaling logs and late delivery of a new dump truck. He testified that his business came to an end after a steady decline. After difficulty securing cutting areas he began to sell off equipment and his employees left one by one. He sold a Crown allocation of wood in July 2002 and a skidder in December 2002. In April 2003 he sold his band saw mill. He testified that during this entire period he spoke with CPP only in 2002. He recalled speaking about his medical condition and that by this time his business had pretty much failed. He recalled indicating that he was attempting to secure his school bus licence.

[63] Mr. Clelland testified that he didn’t recall receiving any of the newsletters. He turned over his CPP documentation to his accountant in order to have his tax returns prepared. He underwent a tax audit in May 2002 for four days. He was advised that everything was in order for the years audited 1999, 2000 and 2001.

[64] He confirmed obtaining work from the companies in the Parry Sound area. Mr. Clelland testified that he is still disabled to a certain extent. He confirmed receiving documentation around June 2005 and he prepared return to work sheets. He mailed them back in October 2005 with a consent form. He confirmed that after he mailed in his documentation he received a reply in the fall of 2005 from CPP requesting his self employment questionnaire. He recalled a telephone conversation with a representative from CPP in January 2006 and recalled that the issue of business income was mentioned. He testified that he copied the questionnaire and then typed it on the computer. He made a better copy, purchased four envelopes and photocopied his income tax returns. He testified that he signed the documentation in March 2006 and mailed it from the Parry Sound Post Office.

[65] He confirmed receiving follow-up phone calls from CPP but he decided not to return the calls as he was now working full time and his benefits were already suspended. He was unable to recall receiving any other letter after November 2007.

[66] Mr. Clelland was cross examined at length by Crown counsel. He confirmed that he began his business in 1984 and that he employed people in the business from time to time. He was responsible to WSIB, CPP and income tax payments or deductions. He received instructions from the Government about various kinds of deductions or payments.

[67] He confirmed that he kept records and time sheets with respect to his business and that he kept track of vehicle maintenance and other business activities. He denied that he was aware of a new publication revised in November 1999, dealing with people with disability. He testified that he could understand things while at Lyndhurst Hospital but he could not remember speaking with Mrs. Clelland about the questionnaire. When he left Lyndhurst in February 1999 he could walk without a cane. He was asked why he did not tell CPP about his improvements and he answered that he did not know of this requirement. He testified that he had other pressing priorities when he returned home.

[68] He stated that he continued to suffer from a disability after his return home. He confirmed that his condition slowly improved and that he restarted his business in early 2000. He confirmed that work takes on many forms in answer to a series of questions. He testified that disabled people can change their type of work but keep working. He indicated that he was running the business with help from Mrs. Clelland. He testified that he did not know the definition of disability or that he had to report ongoing changes. He stated that he believed that he was entitled to continued disability as the cheques arrived at his place of residence. He confirmed that he was losing money from his business and that the CPP income was helpful. At the end of 24 months his private insurance came to an end.

[69] He testified that he was not in fear of being cut off from benefits. He was asked why he did not indicate in the June 2002 telephone call that his business was ongoing. He answered that his business was declining and that he had sold a lot of his equipment. He denied that he did not speak forthrightly to the CPP representative in 2002. He testified that the June 2005 letter was the first indication that he knew of an obligation to report. He was asked why he did not call in November 2007 to indicate that he had mailed back forms in March of 2006. He replied that this was two years later and that he was earning income and no longer receiving CPP payments. He confirmed that he was capable of working when he worked seasonally and part-time in 2003 and 2004. He confirmed that he still had a disability and that he felt that he was not required to call CPP. He testified that he assumed that they were receiving appropriate medical reports.

[70] In re-examination Mr. Clelland testified that he found the March 2006 copy of documentation in his filing cabinet earlier during the first week of trial.

[71] ii. Colleen Clelland

[72] Mrs. Clelland is 51 years of age and she has resided in or about the Dunchurch area for most of her married life. She has worked in Mr. Clelland’s business from the beginning. Mr. Clelland did the paperwork and she helped to pile wood and blocks, sharpen blades and answer phones. She received wages and CPP was deducted.

[73] She testified that her husband’s 1998 injury was devastating and beyond stressful. Her children were 13 and 16 at the time. She was worried and scared throughout the September 1998 period. She was not getting very much sleep. She testified that she was almost completely overwhelmed. She returned from time to time to visit the children in Dunchurch.

[74] She testified that she had not seen the Exhibit 1 application form before and confirmed that her signature appeared on the document. She testified that she did not recognize the questionnaire but confirmed that her signature appeared on the document. She testified that she has memory problems and that she often forgets how she has arrived at different places. She did not recall the community benefit for her injured husband.

[75] She testified that she didn’t recall at all any discussions about the CPP Disability Plan. She remembered hospital walls, colours of the walls and certain things with respect to Mr. Clelland’s treatment and hospitalization. Prior to her husband’s accident she was being treated for anxiety and depression. She is taking the drug Paxil.

[76] She is taking a number of other medications including Lorazapam, an anti-anxiety drug. She was not on medication at Lyndhurst but she had been seeing a therapist.

[77] She testified that she did not discuss the CPP issue with her husband once the cheques arrived. She didn’t open any mail addressed to her husband. She testified that Mr. Clelland has present medical issues arising from recent work injuries as well as reoccurrence of chest pains.

[78] She testified about the weakness or bulge in Mr. Clelland’s spinal cord. She worries about the consequences of Mr. Clelland sustaining a fall. She testified that Mr. Clelland has physically changed but his mind-set has not. She testified that it is important for her husband to work and to help people and that he does not wish to burden anyone.

[79] She testified that she knew very little about the CPP Disability Plan and that she never saw or read any newsletters or pamphlets.

[80] Under cross examination she testified that she did not recall reading the questionnaire or application forms to Mr. Clelland. She testified that she had been instructed not to stress or bother Mr. Clelland. She would always say to him that everything was fine while he was in the hospital. She confirmed that she agreed with the part 3 wording on the form with respect to notification requirements. She testified that her husband’s injury was permanent and that she still considered him to have a spinal cord injury.

[81] She was asked to compare Mr. Clelland’s condition in Lyndhurst, as compared to how Mr. Clelland was when he was discharged home in February 1999. She testified that Mr. Clelland’s business was up and running in 2000 and he was involved but very little. He gave direction as to what was to happen. She confirmed that he carried out paperwork for his business. She confirmed that Mr. Clelland was working but not as a 40 hour per week manager. She confirmed that she would see him doing paperwork, talking to employees and going outside from time to time.

[82] She confirmed that the Government ought to have known about Mr. Clelland’s return to work but she was not aware of any reporting requirement at this time. She stated that she still viewed her husband as disabled. She testified that in the year 2000 he could not complete a job without someone helping him. She confirmed that income tax returns were completed and that the Government would be aware of Mr. Clelland’s financial circumstances. She testified that an auditor came to her house for approximately four days. She testified that she was she was under considerable stress and that she thought that she was doing the right thing at all times.

[83] Part C: The Theory of the Defence

[84] On the evidence before the court, Defence counsel submitted that the court consider the wording of s. 42(2) of the Canada Pension Plan and come to the conclusion that based on contract interpretation principles, the meaning of the term “any substantial gainful occupation” is sufficiently ambiguous, in relation to net versus gross earnings, so as to entitle both accused to an acquittal. Counsel pointed to the CRA audit in 2002, and the application for benefits (Exhibit 1) which does not bear a witness signature, a power of attorney signature, or any indication of independent legal advice.

[85] Counsel pointed to the Black’s Law Dictionary definition of gainful and argued that this definition could not be synonymous with the losses incurred by Mr. Clelland in his business as evidenced in his income tax returns.

[86] Counsel submitted that there was no evidence to suggest that Mr. and Mrs. Clelland intentionally tried to deceive the government. Mrs. Clelland was under deep stress when she filled out the form. She could not remember attending at a community benefit for Mr. Clelland.

[87] Counsel submitted that Mr. Clelland was a hard worker who contacted the Ministry with respect to securing loans and grants for his business, and who was not attempting to hide anything during a call with department staff on August 5, 1999. Counsel pointed to the summary of the June 21, 2002 telephone call and suggested that most of the summary dealt with Mr. Clelland’s medical condition and about the possibility of him becoming a school bus driver.

[88] Counsel pointed to Mr. Clelland’s response to the June 2005 request for further information, and Mr. Clelland’s filing of return to work reports as well as a signed consent. Counsel submitted that Mr. Clelland indicated during the January 11, 2006 telephone call that he was not aware that he had to report his earnings and that he nevertheless followed up and forwarded self employment information in March 2006.

[89] Counsel asked the Court to look at Mr. Clelland’s background, his lack of criminal record, his hard work ethic, and his rehabilitation efforts as all indicative of a person not attempting to defraud the Canada Pension Plan.

[90] Part D: The Theory of the Crown

[91] Crown counsel filed written closing submissions with the Court in which he captured and outlined the following points:

• Overview – The Crown submits that both accused deliberately failed to disclose that Mr. Clelland had returned to work, knowing that they were obliged to do so. If the Court does not accept that both accused acted deliberately, the Crown further submits that both accused were reckless with respect to the potential economic loss that would be incurred by HRDC if they failed to notify HRDC of Mr. Clelland’s return to work, or were wilfully blind to their obligation to so notify HRDC and the consequences of not doing so.

• There was a legal obligation to inform HRDC of the return to work and the deprivation/risk of deprivation incurred by HRDC – Both accused agreed in cross examination that it is reasonable that persons receiving social assistance tell the government administrators about a change in circumstances related to the basis upon which they are receiving the assistance, and that it is for the recipients to inform the government administrators of such a change in circumstances. Fraudulent conduct includes omissions – the hiding through silence of a fundamental and essential fact.

• Mr. Clelland was no longer eligible for CPP disability benefits commencing at the beginning of 2000.

• The Supreme Court of Canada jurisprudence with respect to fraud has clarified a number of matters regarding the actus reus of fraud. For the Crown to prove fraud, it must establish dishonest deprivation. The detriment that results to victims is secondary to that purpose and incidental. It is “intended” only in the sense that it is the contemplated outcome of the fraud that is perpetrated.

[92] In written submissions, the Crown set out a summary from the decision R. v. Theroux, 1993 CanLII 134 (SCC). A person is not saved from conviction because he or she believes there is nothing wrong with what he or she is doing. The question is whether the accused subjectively appreciated that certain consequences would follow from his or her acts, not whether the accused believed that the acts or the consequences were moral. The mens rea consists in the subjective awareness that one is undertaking a prohibited act (the deceit, falsehood or other dishonest act) which could cause deprivation in the sense of depriving another of property or putting that property at risk. The test is not whether a reasonable person would have foreseen the consequences of the prohibited act but whether the accused subjectively appreciated those consequences at least as a possibility.

[93] Counsel pointed to evidence that Mr. Clelland deliberately did not inform HRDC of his return to work and evidence that Mrs. Clelland knew that she was required to inform HRDC of Mr. Clelland’s return to work and deliberately chose not to do so. Accordingly, counsel argued that liability with respect to the fraud charges could also be founded on recklessness or wilful blindness.

[94] In oral submissions, Crown counsel submitted that s. 42(2) ought not to be interpreted in the context of contract law as the Government is able to change the program at any time. Counsel invited the court to look at the statute and the words of the statute and consider the purpose and intent of the legislation. The point of s. 42(2) is not gaining or earning any substantially gainful occupation but rather regularly pursuing any substantially gainful occupation. According, it is the ability to work or pursue work, not the outcome.

[95] Counsel submitted that Mr. Clelland’s gross income was similar both before and after his accident and that he could not rely on this argument in support of his inability to pursue any substantially gainful occupation. Counsel submitted that during the phone call of June 2002 with Ms. Bouillon her notes reading “not able to RTW” implied that Mr. Clelland had not returned to work or was not able to return to work.

[96] Counsel submitted that in this case there was no medical report showing or indicating any medical inability of Mr. Clelland to understand or remember the various CPP disability forms or to understand the necessity of contacting the plan to report changes. Counsel submitted that in accordance with the decision R. v. D’Amour, 2002 CanLII 45015 (Ont. C.A.) it is incumbent upon plan recipients to self-report material changes and circumstances and that the Court must support this message by handing down a conviction in this case.

[97] Part E: The W.(D.) Framework

[98] I bear in mind the following principles in my assessment of the evidence in this case and in my Reasons. Firstly, W.(D.) relates the Crown’s burden of proof to the issue of credibility. Secondly, W.(D.) does not apply to individual facts or items of evidence but to the elements of the offences charged, which must be proved by the Crown beyond a reasonable doubt, and to the elements of defences raised by the evidence, which must be negatived by the Crown beyond a reasonable doubt. Thirdly, W.D. is not limited to a case where the accused testifies and denies the charge. Stated differently, conflicting evidence and resulting issues of credibility are not limited to cases where the accused has testified.

[99] Bearing in mind the W.(D.) framework, I approach the three step W.(D.) formula as follows:

a. Steps 1 and 2 must be addressed in the context of all of the evidence. Accordingly, I have undertaken steps 1 and 2 in the context of considering all of the conflicting evidence led at trial. With respect to the second step, I bear in mind that even if I do not believe or accept the testimony presented by the accuseds, I must acquit if, in the context of considering all of the conflicting evidence, I am unable to resolve the evidence and thus am left in a state of reasonable doubt. Finally, with respect to step 3, even if I am not left in doubt by the evidence of the accuseds I must ask whether, on the basis of the evidence which I do accept, I am convinced beyond a reasonable doubt by that evidence of the guilt of the accuseds.

[100] Part F: Analysis and Conclusion

[101] i. The Charge Against Colleen Clelland

[102] In my view, it would be dangerous to convict Mrs. Clelland on the facts and circumstances of this case. I accept her evidence that when she was at the Lyndhurst Hospital in Toronto, she was under deep stress and anxiety. I find that she did sign the forms bearing her signature but given her very real levels of stress, I am not able to conclude that the words “I agree to notify the Canada Pension Plan of any changes that may affect my eligibility for benefits. This includes: an improvement in my medical condition; a return to work (full, part-time, volunteer, or trial period); attendance at school or university; trade or technical training; or any rehabilitation.” would have resonated with her. These words appeared in the application for disability benefits.

[103] I make the same finding with respect to the declaration and signature page found in the questionnaire: I am not able to conclude that when Colleen Clelland signed the questionnaire on September 30, 1998 at the Lyndhurst Hospital, that the words, similar to those in the application, would have resonated with her.

[104] There is a possibility on the evidence that when Mr. and Mrs. Clelland returned home The Notice of Entitlement letter, the first cheque or both had already been mailed to her residence. I am not convinced on the evidence that the paragraph on page 2 of the Notice of Entitlement under the heading Disability Pension would have resonated with Mrs. Clelland or would have caused her to consider contacting the Canada Pension Plan when Mr. Clelland began to again operate his self employment business, or indeed when Mr. Clelland began to earn some part-time employment earnings after his self employment business came to an end.

[105] It is true that Mrs. Clelland prepared or would have read the application and the questionnaire but beyond that in the face of a criminal proceeding, I am simply not able to conclude that the Crown has proved beyond a reasonable doubt the actus reus and the mens rea of the offence for which a conviction is sought.

[106] I am fortified in this view by having heard Mrs. Clelland give her evidence from the witness stand. Even today, she carries the anxiety and stress from her husband’s 1998 accident with her. She still suffers from anxiety and she requires prescription medication to deal with several of her symptoms.

[107] Mrs. Clelland was candid to admit, under a series of cross examination questions, that with the benefit of hindsight, she would agree with a requirement to contact the Canada Pension Plan. But at the date and time captured by the Indictment, I cannot find that she committed the offence as charged, as that defence is described in the Criminal Code and by the series of cases referenced by Crown counsel in his submissions. For all of these reasons, Mrs. Clelland is to be acquitted of the charge before the court.

[108] ii. The Charge Against Stephen Clelland

[109] There is no firm evidence to suggest that Mr. Clelland was fully aware of the requisite language found at page 4 of the Application for Disability Benefits and found under the heading Declaration and Signature on the last page of the questionnaire. He had suffered a catastrophic injury in 1998. While he was an inpatient in the Lyndhurst Hospital in Toronto, the application for CPP disability benefits was made on his behalf. The application itself was signed by Colleen Clelland, and the questionnaire was also signed by her.

[110] As I outlined under my analysis dealing with Mrs. Clelland, it is quite possible that upon his return home, Mr. Clelland’s first CPP disability cheque had already arrived in the mail.

[111] On the whole of the evidence, I conclude that the Notice of Entitlement would have also been mailed to the Clelland residence. It is true that the plan officials did not keep an exact copy of the mailed letter but the evidence from the various witnesses establishes that a firm system was in place to ensure that such a letter be mailed in advance of a recipient receiving the first payment. Indeed the opening line in the Notice of Entitlement reads:

“Your application for benefit(s) under the Canada Pension Plan has been approved.”

[112] The Notice of Entitlement letter is written in English and French and on page 2 of the letter, under the heading disability pension, it is stated:

Notify Income Security Programs if:

• your medical condition significantly improves,

• you become employed or self employed,

• you enrol in school or university.

[113] There is no indication on page 2 of the nature of any consequences upon failure to notify CPP of changes.

[114] While I can conclude that the Notice of Entitlement letter would have been mailed to the Clelland household, I am not able to accept or make a clear finding that the entitlement letter came to Mr. Clelland’s attention or that he read it.

[115] There is nothing in the evidence in 1999 or 2000 which would suggest that Mr. Clelland was attempting to mislead CPP or other government agencies. He set about to put a business plan together and he shared this information with CPP personnel. There is nothing in the Exhibit 5(d) Human Resources Development Canada Pension Plan Rehabilitation Unit – note of August 5, 1999 which suggests that Mr. Clelland was advised of a need to contact CPP if any changes occurred. In the letter of August 5, 1999, Mrs. Melancon sent a copy of the brochure, Canada Pension Plan Vocational Rehabilitation Program, to Mr. Clelland, and indicated that it was “the goal of this program...to provide reasonable, cost effective vocational rehabilitation services to suitable disabled clients to assist them in regaining the capacity to return to work.”

[116] Mr. Clelland set about securing government assistance, bank loans and other loans to put together his business. It is clear that he could no longer timber and split wood to the physical degree that he had in the past. The evidence establishes that his purchase of a hydraulic band sawmill for $265,000.00 would aid him in replacing his physical labour.

[117] Indeed, the very large accumulation of debt for purchases made itself evidences that Mr. Clelland’s business, driven largely by his physical strength and non hydraulic tools and implements, prior to 1999, was now being recast into a more machine driven wood business reliant upon machinery and employees, and far less reliant on Mr. Clelland directly.

[118] I accept Mr. Clelland’s evidence that this business did not “go well.” I find that the business was started up in early January or early February of 2000. I accept that there were problems with scaling logs and late delivery of a dump truck. I accept that Mr. Clelland had difficulty securing new cutting areas.

[119] As early as July 2002, he had sold a Crown allocation of wood and in December 2002 he sold a skidder. In April 2003 he sold his band sawmill.

[120] The evidence from trial confirms that during the period January 1, 2000 to April 2003, Mr. Clelland would have spoken with a representative of CPP on one occasion, June of 2002. The details of this phone call are outlined by Ms. Bouillon at pages 1 and 2 of the Reassessment Case Summary Report found at Exhibit 5(d).

[121] The larger details with respect to the phone call are set out at paragraph 2 on the Reassessment Case Summary Report. Within a month of this phone call, Mr. Clelland sold a crown allocation of wood. Within six months he sold a skidder.

[122] I accept his evidence that his business was in decline and this would explain why he indicated to Ms. Bouillon that he was reconsidering reassessment for driving a school bus.

[123] During this phone call, Ms. Bouillon discussed, as noted, return to work issues as well as the issue with respect to “allowable earnings.”

[124] For the years 2000 through to 2003, Mr. Clelland’s gross business income was $73,448.00, $72,813.00, $72,772.00, and $63,054.00 respectively. But tax returns for these years also indicated net business income as follows:

2000 – (-$37,270)

2001 – (no indication apart from net CPP income)

2002 – Net business income -$7,149.00

2003 – Net business income -$13,826.00

[125] In his four income tax returns for the years 2000 to 2003 inclusive, total income (line 150) is shown at follows:

Year 2000 - $27,613.00

Year 2001 - $8,423.00 (CPP income)

Year 2002 - $3200.00

Year 2003 - $3999.00

[126] I am not able to conclude that Mr. Clelland minimized or exaggerated his medical condition during the phone call on June 21, 2002. In the context of what he described as a declining business, his mindset may well have been a change in work and a reassessment for the purpose of driving a school bus. During this phone call, there is no indication that the meaning of the phrase “allowable earnings” was described by the plan representative. Clearly, there is a difference for self employed persons as between their gross income and their net income. The documentation filed in this case establishes that for each of the years 2000 through to 2003, Mr. Clelland had nil (and in some cases negative) business income. He was, in effect, running his business at a loss.

[127] There is nothing in the evidence to suggest that the various newsletters referred to in the Crown’s evidence were not mailed or sent to the Clelland household. Mr. Clelland testified that he didn’t recall receiving any of the newsletters. In the newsletters dated November 2001, February 2003, February 2004 and February 2005, there is reference to various amounts of earnings income for each of the various years. The newsletters are informational pieces which, it would not be expected, every recipient would read or read fully.

[128] There is nothing in the evidence to suggest that Mr. Clelland was misleading the court when he was cross examined about the newsletters and when he was asked whether he recalled reading them. Indeed, I accept his evidence when he indicated that he could not recall reading these newsletters as they were mailed, from time to time, to his home. He gave his evidence in a straight forward and deliberate manner. He did not appear evasive or agitated when he answered Crown counsel’s questions.

[129] Mr. Clelland testified that he did not know the definition of disability and that he believed that he was entitled to continue receiving disability cheques as and when they arrived at his place of residence.

[130] As against the backdrop of this criminal proceeding, it is clear that Mr. and Mrs. Clelland filed income tax returns and delivered materials to their accountant every year covered by the period of the Indictment. Mr. Clelland underwent a tax audit in May 2002 and there is nothing in the evidence to suggest that anything was found awry for the period in question (years 1999, 2000 and 2001.)

[131] Mr. Clelland mailed the Exhibit 5(c) Return to Work Reports along with the signed authorization to disclose information/consent for medical evaluation within several months following his receipt of Mrs. O’Sullivan’s letter of June 6, 2005. He did this when he knew his file was under review and that during such review period his last cheque received would be July 2005. There is nothing in Mr. Clelland’s response or in the series of questions he answered under cross examination which would suggest that he was attempting to mislead the Plan or otherwise acting deceitfully or fraudulently with respect to his income.

[132] Mr. Clelland himself called a Plan representative on January 11, 2006 and he was able to speak with Anne Lee. Ms. Lee made notes of the conversation and these are found at paragraph 26 of the Case Summary Report at Exhibit 5(d). Mr. Clelland was noted as indicating that there was no discussion of his forestry business and that he was not aware that he had to report allowable earnings to a Plan representative.

[133] Mr. Clelland was cross examined at length with respect to his knowledge of the requirements to report allowable earnings and changes in his employment, self employment or medical condition. He testified that in his view, he still suffers from a disability even though he has improved significantly from the condition which existed while he was at Lyndhurst Hospital. In this respect, he reiterated or made reference to his physical limitations and incapacities which I earlier referenced at para. 58 of these reasons.

[134] In my opinion, Mr. Clelland stood up to the lengthy cross examination and questions put to him by Crown counsel. His answers were short, responsive, and in no way did they suggest fabrication or evasiveness. In his mind, and in Mrs. Clelland’s mind, Mr. Clelland indicated that during the time period in the Indictment, he suffered from certain disabilities which entitled him to ongoing receipt of disability cheques. He was aware that his business was losing money even if he was able to pay Mrs. Clelland, other employees and expenses associated with his business.

[135] In his written submissions, Crown counsel concisely put the point that Mr. Clelland’s failure to inform HRDC of his return to work in 2000, when he restarted his business, and then again in 2003, when he began to work for third parties, constituted the underlying mens rea of the offence before the court. Counsel also outlined Mr. Clelland’s late response to the request for self employment documentation, particularly the Exhibit 6 documentation which counsel submitted is evidence itself of fabrication and a fraud upon the court.

[136] Counsel submits that this ought to be weighed in examining and considering Mr. Clelland’s credibility.

[137] Mr. Clelland was cross examined carefully on Exhibit 6 but in my view he withstood the cross examination. He was able to explain the circumstances under which he prepared the questionnaire, obtained the envelopes to mail the questionnaire and attended himself to mail it. He indicated to the court that he searched his filing cabinet earlier during the first week of trial and he was able to locate the March 2006 copy of the subject documentation.

[138] Mr. Clelland did not appear evasive, testy or unresponsive when he was asked a series of questions with respect to the documentation. In short, his evidence generally held up under cross examination.

[139] I remind myself that I am never restricted to simply choosing whether I accept the evidence of the prosecutor or the evidence of the defence. Rejection of one does not equate to acceptance of the other. The stark alternative of believing either Crown evidence or Defence evidence excludes the legitimate possibility of being unable to resolve conflicting evidence, and accordingly, being left in a state of reasonable doubt on whether the Crown has proved its case. This issue is not which of the two versions is true, but, rather, on the totality of the evidence, viewed as a whole, has the Crown proved the guilt of the accused beyond a reasonable doubt.

[140] Mr. Clelland’s contact with Plan representatives was few and far between. And even today, I accept that his physical condition and his medical condition is not that which it was prior to his injury of September 1998. I accept Mr. and Mrs. Clelland’s evidence, to some respect, when they each characterize Mr. Clelland as suffering from an ongoing physical disability, to some degree, up to the present time. Where Mr. Clelland was a strong, manual and tireless labourer before 1999, working in a physically demanding environment, today he works in a much less physically demanding form of work.

[141] If the CPP documentation dealing with allowable earnings, earnings and monetary earnings better distinguished between gross business and net business income then the strength of the Crown’s case would be fortified and the path to a conviction might have been made more easy.

[142] It is true that Mr. Clelland began to earn considerable employment income in the years 2004 and 2005. However, I am not satisfied that Mr. Clelland was aware or possessed such sufficient knowledge that he knew that he was to advise the CPP of changes in his employment, self employment, medical or earnings status. He had filed his income tax returns on a timely basis, he had readily submitted his business to a tax audit, and within a few months of receiving correspondence from Mrs. O’Sullivan in 2005, he responded with his Return to Work Report and the signed consents. He did this at a time when his benefits had been suspended. I am not able to conclude that the Crown has made out the mens rea of the offence i.e., Mr. Clelland’s subjective awareness that undertaking a prohibited act which could cause deprivation in the sense of depriving another of property or putting that property at risk.

[143] Guilt in this case cannot be founded on likelihood or suspicion or probability. The Theroux case, supra, set outs the legal principles with respect to the crime of fraud. I conclude for all of the reasons above that the Crown has not proved the guilt of Mr. Clelland beyond a reasonable doubt, and accordingly an acquittal will be entered in relation to the offence charged.

[144] Accordingly, I have endorsed on the Indictment filed with this court the following:

J.S. O’NEILL

Released: May 24, 2012

ONTARIO

SUPERIOR COURT OF JUSTICE

HER MAJESTY THE QUEEN

– and –

HER MAJESTY THE QUEEN

– and –

Stephen R. Clelland and Colleen Rose Marie Clelland

REASONS FOR JUDGMENT

J.S. O’NEILL

Released: May 24, 2012