ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 09-30489
DATE: 20120816

BETWEEN:

HER MAJESTY THE QUEEN
Respondent

– and –

STEPHEN ANTHONY WRIGHT
Applicant

Riad Tallin, for the Crown

Paolo Giancaterino, for the Applicant

HEARD: April 2, 3, 4, 5, 10, 11, and 12, 2012

ORAL REASONS FOR JUDGMENT

Madam Justice Blishen J.A.

Introduction

[ 1 ] Stephen Wright is charged with defrauding individuals and/or businesses and/or the Canadian Taxpayers Federation of over $5,000.00 by misrepresenting himself and/or the Canadian Taxpayers Federation while canvassing between June 20 and October 17, 2008, contrary to s. 380(1) of the Criminal Code of Canada , R.S.C. 1985, c. C-46 (“ Criminal Code ”) .

[ 2 ] While canvassing for the Canadian Taxpayers Federation (“CTF”) as a contracted field agent, Mr. Wright also collected money for two of his own organizations: the Ontario Taxpayers Association (“OTA”) and the Ontario Taxpayers (“OT”). He continued collecting funds for his own organizations after his contract with CTF was terminated on August 11, 2008.

[ 3 ] The Crown alleges that Mr. Wright misrepresented himself while canvassing and caused the donors to provide funds to his organization thinking they were providing donations to CTF, thereby intentionally depriving CTF of funds that exceeded $5,000.00.

[ 4 ] Mr. Wright acknowledges that he established two registered businesses, OTA and OT, while still a contracted field agent with CTF. However, he argues that he never misrepresented himself in seeking donations for his organizations and had no intention of defrauding CTF or his donors of any funds. The donors willingly gave money to him for the lobbying efforts planned by OTA and OT focussing on property taxes. Therefore, CTF was not deprived of funds. In fact, a number of donors provided cheques to both Mr. Wright’s organizations and to CTF and continued their CTF donations after it was alleged that Mr. Wright had committed fraud.

[ 5 ] The Crown called: the investigating officer to provide an overview of the investigation, 17 small business persons who provided funds to Mr. Wright’s organizations, the CTF National Sales Manager, Rodney Cunningham, and CTF’s CEO, Kenneth Azzopardi. Stephen Wright testified on his own behalf.

Background and Evidence

[ 6 ] The CTF is a federally incorporated, not-for-profit citizens’ group founded in Saskatchewan in 1990 dedicated to lower taxes and accountable government. CTF has a federal office in Ottawa and regional offices in British Columbia, Alberta, the Prairie Provinces, Ontario and the Atlantic Provinces.

[ 7 ] CTF representatives conduct media interviews, hold press conferences, issue regular news releases, commentaries and postings, as well as publications to advocate on behalf of taxpayers. Financial supporters receive updates and CTF’s publication, The Taxpayer Magazine , published four times a year.

[ 8 ] In August of 2004, Stephen Wright contacted Rodney Cunningham, the national Sales Manager for CTF, to express an interest in working for the organization. Mr. Wright had previously worked as an agent for the Canadian Federation of Independent Businesses (“CFIB”) in Winnipeg. According to Mr. Cunningham, CFIB is a group that also lobbys government on behalf of small businesses. Mr. Cunningham agreed to retain Mr. Wright as a field agent for CTF in Eastern Ontario.

[ 9 ] On August 4, 2004, Mr. Wright signed a contract with CTF (see Exhibit 25). Mr. Wright was retained as an independent contractor, not an employee, responsible for his own income tax. His compensation was commissions on donations that he solicited. The contract noted that a field agent may engage in other business activities or employment. There was however a specific non-competition clause which indicated that “the contractor shall not, during the term of his contract, engage in any activities which conflict with the contractor’s fulfilment of this contract or which are in direct competition with the activities of the Federation.” The commission structure was outlined as an appendix to the contract.

[ 10 ] Mr. Wright began work as a field agent in the Eastern Ontario area where CTF had almost no contributors. He did extremely well according to the evidence of both Mr. Cunningham and Mr. Azzopardi. In essence, Mr. Wright created a list of donors for that area where previously there had been none. Mr. Wright was one of the best field agents in the country. As a result, he received bonuses and was brought to the main office in Regina, Saskatchewan on a number of occasions for planning meetings.

[ 11 ] In March 2007, Mr. Wright signed his second contract with CTF which included the same terms, including the non-competition clause. At that time, Mr. Wright was designated as a Manager and became responsible for training new people, explaining the operations manual and presentation kit, and taking new field agents out to introduce them to the region. Mr. Wright’s friend, Blair Pitters, became a field agent for Mr. Wright along with two or three others.

[ 12 ] In 2007, Mr. Wright earned a gross annual income on commission of $78,670.00 (see Exhibit 28). Nevertheless according to both Mr. Cunningham and Mr. Azzopardi, Mr. Wright wished to re-negotiate his contract and obtain a higher commission. Mr. Cunningham testified that Stephen Wright considered himself the person who had opened up the territory for CTF and, beginning in 2006, argued for a higher level of compensation which was refused. Mr. Wright also consulted with Mr. Azzopardi about applying for the position of Ontario Communications Director in 2006. Mr. Azzopardi discouraged this and told Mr. Wright he would earn more income as a field agent. According to the evidence of Mr. Cunningham, through 2006 and 2007, Mr. Wright continued to push very hard for a special compensation package over and above what other field agents and territorial managers were receiving.

[ 13 ] In April and May of 2008, Mr. Cunningham and Mr. Azzopardi began to notice that Mr. Wright’s production numbers were dropping. His net sales were approximately one-half of those in previous months. In the summer of 2008, Mr. Azzopardi noted Mr. Wright’s production became scattered and CTF’s income was dropping, as was his. Mr. Azzopardi was aware that Mr. Wright had not been particularly happy and he suspected Mr. Wright was looking or working elsewhere, based on experience with previous field agents. As noted, there was nothing preventing Mr. Wright from obtaining other employment as long as it was not in conflict with the work done by CTF.

[ 14 ] Mr. Wright testified that he was ambitious and wished to build up his profile which was why he requested the Ontario Communications Director position in 2006. In addition, he testified that in 2007, he was approached by the Provincial Conservative Party to run as a candidate in Ottawa. Again, Mr. Azzopardi dissuaded him from pursuing that path and indicated that he would continue to make a good income as a field agent.

[ 15 ] Mr. Wright continued as a field agent for CTF but when the Liberals won the provincial election in 2007 with a majority, he felt the doors were closing to CTF provincially, given that CTF had publically endorsed John Tory and the Conservative Party. Mr. Wright testified he had a number of Liberal donors who decided they did not wish to provide any further funds to CTF. In addition, property tax reform was a major issue for Mr. Wright and he felt that issue had been overshadowed. It was his plan to create an organization to lobby the Ontario government specifically regarding property taxes.

[ 16 ] In June 2008, Mr. Wright went to a Ministry office in Peterborough and inquired about registering a lobbying organization. On June 12, 2008, he conducted a search for the business name ‘Ontario Taxpayers Association’ and no match was found (see Exhibit 37). He paid for the name search and applied for and obtained a master business licence from the Government of Ontario for the sole proprietorship, “Ontario Taxpayers Association”. Mr. Wright then went to the Scotiabank in Lindsay, met with the small business account manager, and opened a business account for the “Ontario Taxpayers Association” as of June 20, 2008. In addition to opening the business account, Mr. Wright hired Cindy Felharber to do some administrative work once a week, sort mail and bills, keep track of receipts and expenses, and do some bookkeeping. Debbie King was hired to do computer work including obtaining the addresses for MPPs and all Ontario University Political Science department heads. Mr. Wright wished to send them a letter of introduction regarding the organization and what he hoped to accomplish. Mr. Wright also hired Blair Pitters to continue as a field agent for the Ontario Taxpayers Association.

[ 17 ] In the meantime, on June 13, 2008, one day after registration, a notice was sent to Mr. Wright that his business name registration would be cancelled as it contained the word ‘association’ which was unacceptable for a non-profit organization. Mr. Wright testified he was out soliciting for the Ontario Taxpayers Association when his assistant, Ms. Felharber, received the letter. He called the Ministry of Government Services and enquired as to whether he could simply drop the word ‘association’ from the name. He understood that would be acceptable and he would not have to repay the fee he had paid to register the Ontario Taxpayers Association. Therefore, on July 9, 2008, Mr. Wright registered the “Ontario Taxpayers” as a sole proprietorship with the Ministry of Government and Consumer Services under the Business Names Act (see Exhibit 38). Mr. Wright continued to use the same business account, kept his employees and continued to solicit funds for his organization. In addition, he obtained the services of some university students to do research. Mr. Wright did not inform CTF of his organizations nor that he was soliciting funds from previous CTF donors.

[ 18 ] In August 2008, it came the attention of CTF that Mr. Wright was soliciting funds from CTF donors for his organization, Ontario Taxpayers Association. Mr. Azzopardi instructed Rodney Cunningham and other staff members to randomly call supporters who had not renewed or who had cancelled their CTF involvement within the previous few months to see if they too had provided funds to the Ontario Taxpayers Association. As this appeared to be the case, Mr. Azzopardi requested a meeting with Mr. Wright on August 11, 2008. Mr. Wright readily admitted that he had registered a new organization, the Ontario Taxpayers Association. He showed Mr. Azzopardi the cheques and receipts that he was using which had a similar logo to that of the CTF. Mr. Wright testified that Mr. Azzopardi was upset, angry and accused him of starting an illegitimate business. Mr. Wright responded that the Ontario Taxpayers Association was a registered business. He showed Mr. Azzopardi the petition that he was circulating on behalf of the Ontario Taxpayers Association which he hoped to provide to the Ontario and municipal governments. Mr. Azzopardi considered this to be a breach of the non-competition clause (clause number 4) of Mr. Wright’s contract with CTF and he immediately terminated Mr. Wright’s involvement with CTF. Mr. Wright returned all CTF materials and documentation to Mr. Azzopardi, who told Mr. Wright there would be further investigation and consideration of a referral to the police.

[ 19 ] On August 18, 2008, on the instructions of Mr. Azzopardi, Mr. Cunningham and Trevor Roadhouse, provincial field managers, sent a letter to previous CTF donors in Mr. Wright’s territory advising that Mr. Wright was no longer associated with the CTF nor with the Ontario Taxpayers Association. This was misleading as Mr. Wright did continue to operate the Ontario Taxpayers Association and later Ontario Taxpayers. Mr. Azzopardi also requested that Mr. Cunningham and Mr. Roadhouse travel to Ontario and speak directly to the previous CTF donors regarding the situation. A number of those donors testified as to the visits by Messrs. Cunningham and Roadhouse and their indication that Mr. Wright was involved in some kind of possible fraud.

[ 20 ] Throughout this time, Mr. Wright continued to visit and solicit donations for his organizations.

[ 21 ] On August 20, 2008, a letter was sent to Mr. Wright from the Ministry of Government and Consumer Services indicating that the Ontario Taxpayers Association was cancelled, as the business name did not comply with the prescribed requirements. On the same date, at Mr. Azzopardi’s request, a letter was sent to Mr. Wright by the lawyers for the CTF directing him to “cease and desist immediately and for all time from any attempt, directly or otherwise, to claim any association with the Canadian Taxpayers Federation or the Ontario Taxpayers Association, or to seek to represent the CTF in any capacity whatsoever.” The letter continued that any attempts to continue “will be considered fraudulent, an infringement on my client’s intellectual property, and will be met with immediate legal action.” Mr. Wright did continue operating the Ontario Taxpayers and soliciting funds for that organization.

[ 22 ] On August 26, 2008, Mr. Azzopardi sent an Alert to Ontario supporters of the Canadian Taxpayers Federation indicating:

It has come to our attention that he [Stephen Wright] may be in your area this week collecting support for the Ontario Taxpayers or the Ontario Taxpayers Association. These organizations are not registered with the corporations branch. A contribution to these organizations is not a contribution to the Canadian Taxpayers Federation.

Legal counsel for the Canadian Taxpayers Federation has sent Stephen Wright a cease and desist order. If you are visited by him we suggest, as part of your due diligence, that you question the authenticity of Ontario Taxpayers and how any funds collected by him would be used or processed.

If you still have concerns regarding Mr. Wright’s representations, then I suggest you contact local police or feel free to call us...

(see Exhibit 6D)

[ 23 ] At the time that letter was sent, Exhibit 38 indicates that Ontario Taxpayers did have a master business licence and a business identification number.

[ 24 ] On September 8, 2008, the Ministry of Government and Consumer Services sent a notice to Mr. Wright indicating that the business name did not comply with the prescribed requirements and therefore would be cancelled. Mr. Wright testified that he did not receive this notice until September 16, 2008 and thereafter spoke to Ministry officials who suggested that he contact the Office of the Public Guardian. He did so and also contacted a lawyer who provided a checklist of requirements to properly register the name. Given the nature of the business, Mr. Wright testified that, based on advice received, he believed “Advocates for Ontario Taxpayers” would be an appropriate name. After conducting a name search, the business was registered as “Advocates for Ontario Taxpayers” on October 7, 2008 and Letters Patent were issued (see Exhibit 40).

[ 25 ] In the meantime, as noted, Mr. Wright continued to solicit donations for Ontario Taxpayers and to do research for an information piece regarding property tax reform. On August 28, 2008, Mr. Wright took out an ad in The Lindsay Post which made it clear that Ontario Taxpayers was not affiliated in any way with CTF (see Exhibit 39). Also, on September 5, 2008, Mr. Wright sent a letter to individuals and businesses who had donated to the Ontario Taxpayers, thanking them for their contributions. This letter included a paragraph which stated, “The Ontario Taxpayers is a political lobby firm registered with the Ministry of Government and Consumer Services. Ontario Taxpayers has been registered since July, 2008 and our registration number is 180732307. Our goal is to bring the issues of Ontario taxpayers to the forefront and petition our government to commit to policies that are fair and equitable for all Ontarians.” Mr. Wright included a number of petitions with his letter specifically directed to the issues of property tax reform. Based on advice from counsel, on September 15, 2008, Mr. Wright began the process to become a registered lobbyist and received a lobbyist ID number (see Exhibit 24).

[ 26 ] After registering Advocates for Ontario Taxpayers, Mr. Wright sent a lengthy information piece regarding property tax reform to a number of donors (see Exhibit 41). Work on this piece had commenced in the summer of 2008, prior to the registration of AOT. Mr. Wright testified that he contacted a number of community clubs regarding speaking to them, prepared more materials, and continued soliciting funds.

[ 27 ] In October 2008, the Kawartha Lakes OPP commenced an investigation into Mr. Wright’s activities and interviewed a number of witnesses. A spreadsheet (see Exhibit 1) compiled by Mr. Azzopardi of CTF was provided to the OPP listing a number of CTF donors who had donated to the OTA or the OT between June 20 th and October 17 th of 2008. Total donations to those organizations was estimated to be $14,395.00. For the majority of donors, no source documentation was provided.

[ 28 ] In January 2009, Detective Tim Wright of the OPP Anti-Rackets Branch was assigned the investigation and interviewed 13 individuals from Ottawa to the west of Peterborough who, together with the four witnesses previously interviewed, had collectively donated to OTA/OT $5,117.00 over the four-month period.

[ 29 ] The cheques provided by the donors were deposited into the Scotiabank business account opened by Mr. Wright. Bank records obtained by the police (see Exhibit 23) confirm that all but one cheque were deposited into that account. In addition, Mr. Wright issued cheques to himself from the OTA business account and transferred other funds into his own personal savings account. He also made Interac purchases for what appeared to personal items and services using the business account.

[ 30 ] Mr. Wright explained some of these as business expenses but acknowledged that a number were for personal items. He testified he was not the best bookkeeper and left it to Cindy Felharber to sort out the accounts, acknowledging there was a blending and mixing of business and personal expenses.

[ 31 ] Mr. Wright testified that once the police investigation began, he ceased running the Advocates for Ontario Taxpayers, although it is still a legitimately registered corporation in Ontario. He further testified, confirmed by the CTF executives, that no cheques made out to the CTF when he was soliciting for CTF, OTA or OT, were ever deposited into his business account. All went to CTF. Despite the concerns expressed by the CTF executives and in particular Kenneth Azzopardi, no civil claim was ever made against Mr. Wright nor was any legal action ever taken.

[ 32 ] As previously noted, 17 small business owners testified on behalf of the Crown. All had been solicited by Stephen Wright between June and October, 2008 and had provided funds payable to OTA or OT and one to AOT. Some had also provided funds to CTF. All had been contacted by CTF, after Mr. Wright had been terminated as a field agent regarding concerns about Mr. Wright’s activities and the possible conflict with the work of CTF. Some had also been informed that Mr. Wright may have been involved in fraudulent activities. All communications from CTF were received by the donors prior to their interviews by the police.

[ 33 ] Lorraine Russell, who with her husband, Ken Russell, owned Mechanical Repair Service and Gas Station in Cobokonk, Ontario, testified that Mr. Wright came to their business on June 20, 2008. At that time, he requested a donation for another organization, the OTA, also involved in lobbying for lower taxes. She provided Mr. Wright with a cheque to OTA for $200.00 and received a receipt. She also provided Mr. Wright with a cheque for $105.00 for CTF and was provided with a receipt. She assumed that OTA and CTF were linked.

[ 34 ] Ray Sexsmith, who owned and operated Sexsmith Trucking in Madoc, provided Mr. Wright with a cheque on June 24, 2008 for $300.00 payable to the Taxpayers Association. He was aware that this was a different organization but indicated to police that he believed the organizations did the same thing.

[ 35 ] Grace Tough owned Tough’s Appliance Repair in Madoc. She testified she was not particularly interested in politics but more interested in religion and family issues. On June 24, 2008 when Mr. Wright dropped in, she simply asked him how to make out the cheque, was told to Ontario Taxpayers Association and provided a cheque in the amount of $205.00.

[ 36 ] Marnie Horton, who together with her husband owned Craig’s Car Clinic in Madoc, was also visited by Mr. Wright on June 24, 2008. She testified there was some discussion of how her business was doing and her concern was regarding local property taxes. After beginning to make out a cheque for CTF, Mr. Wright explained to Ms. Horton there were now two organizations and that the organization, Ontario Taxpayers Association, would concentrate on Ontario issues. Ms. Horton then went back to the computer and made out another cheque. She assumed that the Ontario Taxpayers Association was a spin-off and part of the parent organization, CTF. Ms. Horton also provided a cheque in the amount of $105.00 to CTF and was provided with a separate receipt.

[ 37 ] John Liptak, the Owner of Oakwood Construction in Ottawa testified that he belonged to a number of organizations which lobby on behalf of taxpayers regarding government spending. On July 2, 2008, his wife signed a cheque for $350.00 to the Ontario Taxpayers Association. Mr. Liptak did not recall Mr. Wright mentioning OTA or telling him anything about it but there was discussion about lobbying efforts being made. Mr. Liptak was extremely positive about Mr. Wright indicating that as a businessman over the past 38 years, he would seriously consider hiring Mr. Wright if he applied today. Mr. Liptak’s daughter, Patricia, also testified.

[ 38 ] Carolee Wuis was involved with Wuis Brothers Construction Limited in Pontypool, Ontario. The business began donating to CTF in approximately 2004 and she understood the funds were used for research and to represent of small businesses with government. Water issues and fuel costs were of interest to her. On July 3, 2008, Mr. Wright came to the business and spoke with her for about ten to 15 minutes regarding issues of interest - property taxes and water in particular. Prior to providing her donation, Mr. Wright asked her to donate to Ontario Taxpayers Association. He indicated that OTA was doing more work at the provincial level and greater funds would go to provincial issues. Ms. Wuis trusted Mr. Wright and agreed to make the cheque out to OTA. She testified that she assumed OTA was connected to CTF in some way.

[ 39 ] MaryAnn Clancy, the owner of Oaken Door Inc., a furniture retail store in Cameron, Ontario, testified she was the office manager and her husband Terry was the owner of the business. On June 20, 2008, Mr. Wright came to the business and talked with her husband for approximately one half hour to forty five minutes. Ms. Clancy was there too. Near the end of the conversation, when it came time to make a donation, Mr. Wright talked about the Ontario Taxpayers Association and asked for two cheques. Two cheques were written, one for $200.00 to the OTA and another for $55.00 to the CTF. Ms. Clancy believed there were two separate organizations under one umbrella and Mr. Wright represented then both. She believed that OTA was offshoot of CTF and was more focused on provincial issues.

[ 40 ] Petra Graber owned the Good Food Company Café in Carlton Place. She enjoyed debating politics and did so with Mr. Wright the first time he came in 2005. She had been reluctant to donate to CTF but he was persuasive and she continued to donate every year. On July 22, 2008, Mr. Wright came to the café. It was very busy. Ms. Graber was cooking and interacting with customers. In between customers, she had brief discussions with Mr. Wright but they were unable to have their usual political conversation. She asked him to come back later but he asked for a donation, showed her the receipt book for the Ontario Taxpayers, she made out a cheque for $250.00 and received a receipt. Ms. Graber testified she didn’t notice that the organization was different than CTF.

[ 41 ] Malek Zekry, who together with his wife, owns the Meena Hotel in Carlton Place, also donated to CTF from 2005 onwards. He usually enjoyed a twenty minute to half hour conversation with Mr. Wright. On July 22, 2008, Mr. Wright came in. The hotel was very busy that day and Mr. Zekry was at the back while his wife talked to Mr. Wright and wrote a cheque for $256.00 to the Ontario Taxpayers Association. Mr. Zekry did not hear any discussions regarding the Ontario Taxpayers Association.

[ 42 ] Greg McIntosh, who owned and operated McIntosh Automotive Centre with his wife in Carlton Place, started up his business in 2006/2007. He met with Mr. Wright for the first time in 2007. On July 22, 2008, Mr. Wright attended at the business. Mr. McIntosh testified it was very busy with lots of people coming in and out. He could not recall much of the conversation with Mr. Wright but did make out a cheque for $100.00 to the Ontario Taxpayers Association. He could not really explain why it was to that organization but assumed Mr. Wright asked him to make the cheque out that way.

[ 43 ] John Poole was the owner of Valley Small Engine and Marine Ltd. in Carlton Place. On July 22, 2008, Mr. Wright came to the office and explained he was representing CTF but also a new organization, Ontario Taxpayers, and that both wanted a donation. Mr. Poole decided to donate to the Ontario Taxpayers Association and gave Mr. Wright a cheque in the amount of $250.00 made out to Ontario Taxpayers.

[ 44 ] Garry Gemmill, the owner and operator of Tirecraft in Perth, began to donate to CTF in 2006. On July 28, 2008, Mr. Wright came in the early morning just before 7 a.m. having driven from Peterborough. Mr. Gemmill referred Mr. Wright to his daughter, Jennifer Fitzgerald, who was the bookkeeper for the business. Mr. Gemmill indicated he was busy at the front desk meeting people and his daughter dealt with Mr. Wright and made out a cheque for $300.00 to the Ontario Taxpayers Association. Mr. Gemmill does not recall any conversation with Mr. Wright about Ontario Taxpayers Association and believed he was donating again to the CTF. Ms. Fitzgerald was unable to testify given health concerns.

[ 45 ] Dorene Crain owned A Touch of DLC Bridal Shop in Perth. She had donated approximately $200.00 a year to CTF since 2005 when Mr. Wright first came into the business. On July 28, 2008, Mr. Wright came in and they had their usual chat. The focus of the conversation was more on personal matters including her daughter’s upcoming wedding. Ms. Crain testified that when she started to make the cheque out to CTF, Mr. Wright explained this year there was a different organization, Ontario Taxpayers, which was going to focus on municipal taxes. Ms. Crain wrote a cheque for $206.00 payable to Ontario Taxpayers. She assumed it was a different division of CTF, although that was never stated.

[ 46 ] Jim Thompson, a farmer in Sterling, Ontario, donated to CTF since 2004. On August 7, 2008, Mr. Wright came to the farm and talked about the importance of property tax reform. He discussed that issue and showed Mr. Thompson an Ontario Taxpayers petition that he hoped he would sign and circulate. Mr. Thompson’s wife made a cheque out to the Ontario Taxpayers for $400.00 after asking Mr. Wright how to make out the cheque.

[ 47 ] Jack Devos is the owner of Vosbrae Farm Equipment Ltd. He believed CTF was to represent small businesses at all levels of government. He enjoyed his discussions regarding politics with Mr. Wright. On September 15, 2008 when Mr. Wright came in, Mr. Devos recalls Mr. Wright stating that the Ontario Taxpayers would be focusing on the provincial level. Mr. Devos thought Ontario Taxpayers was “more or less” an offshoot of CTF. He believed it was another agency operating on the taxpayers’ behalf. He had previously provided a cheque to CTF on April 7, 2008 for $405.00. On this occasion, he provided Mr. Wright with a cheque to Ontario Taxpayers for $400.00. He believed Ontario Taxpayers would work on the taxpayers’ behalf and deserved his support. Upon being interviewed by the police in November, 2008, he told them Mr. Wright had stated he did not work with CTF anymore but was collecting for Ontario Taxpayers.

[ 48 ] On October 9, 2008, Fred Wissink, owner of Bytowne Auto Propane Inc., provided a cheque in the amount of $250.00 to Advocates for Ontario Taxpayers. It appears this donation was solicited by Brad Pitters as Mr. Wright was in Fredericton on October 9, 2008.

Credibility

[ 49 ] This is a case where Mr. Wright’s credibility is in issue. Therefore, I must consider the formula set out the by the Supreme Court of Canada in R. v. W.(D.) (1991), 63 C.C.C. (3d) 397. That case dealt with an alleged sexual assault by the accused on his niece. The accused denied the charge. Mr. Justice Cory, in speaking for the majority, stated at p. 409:

In a case where credibility is important, the trial judge must instruct the jury that the rule of reasonable doubt applies to that issue...The trial judge might well instruct a jury on a question of credibility along these lines: If you believe the evidence of the accused, obviously you must acquit. Secondly, if you do not believe the testimony of the accused but you are left in reasonable doubt by it, you must acquit. Thirdly, even if you are not left in doubt by the evidence of the accused, you must ask yourself, whether, on the basis of the evidence which you do accept, you are convinced beyond a reasonable doubt by that evidence of the guilt of the accused.

[ 50 ] The formula set out by Mr. Justice Cory must be applied to each element of the offence.

[ 51 ] In determining whether to believe a witness, it is important for the Court to consider the following:

1. Inconsistencies in the testimony or between the testimony in a previous statement;

2. Interest, bias or prejudice;

3. Capacity to observe, remember and recount;

4. Independent credible evidence in support of, or in contradiction to the testimony; and

5. Appearance and manner of testifying.

[ 52 ] All 17 small business owners liked and trusted Mr. Wright. They considered him a friendly, knowledgeable individual who, in previous years, had represented the CTF. All witnesses made cheques out to either Ontario Taxpayers Association or Ontario Taxpayers. Although most testified that Mr. Wright mentioned another organization and did not indicate that the organization, either OTA or OT, was associated with CTF, they assumed that the organizations were in some way connected. Some donors believed that CTF was the umbrella organization, others assumed that they were linked, but all donors believed they were connected in some way. Most of these small business owners received a letter from Mr. Wright dated September 5, 2008 thanking them for their donation to Ontario Taxpayers Association or Ontario Taxpayers, outlining the lobby efforts to be undertaken by the organization and enclosing petitions for circulation.

[ 53 ] Mr. Wright testified he had a script which he used with all donors, after starting Ontario Taxpayers Association and Ontario Taxpayers. The scripted message indicated:

1. He was leaving CTF;

2. He was starting a new organization; and

3. The organization was to focus on property tax reform in the province.

[ 54 ] Mr. Wright testified that he usually asked the client to donate the same amount as to CTF and he never stated that the new organization was related to CTF, although he acknowledged never specifically stating that the new organization was not related to CTF.

[ 55 ] All 17 business owners were candid, open and honest with the Court. They were good reasonable people who trusted Mr. Wright. Nevertheless, there are some weaknesses in their evidence as follows:

1. In most cases, much time had elapsed between Mr. Wright’s visit to their business and the provision of a police statement; and again, between the provision of the police statement and the trial. There is no question that the memory of some of the witnesses was impaired by the passage of time;

2. Prior to providing any statements to police, all business owners had received communications from CTF as to the difficulties with Mr. Wright. CTF sent out a letter to the donors on August 18, 2008 indicating that Mr. Wright was no longer working with CTF. An alert was sent out on August 26, 2008 and a final letter from CTF on October 3, 2008. In addition, Mr. Cunningham and Mr. Roadhouse spoke directly to a number of donors prior to police intervention. The August 18, 2008 letter from CTF misinformed the donors by indicating that Mr. Wright was no longer associated with the Ontario Taxpayers Association. This was incorrect. The August 26, 2008 letter from CTF indicated that the registration of OTA had been cancelled which was correct but misinformed donors regarding the cancellation of the OT registration. That organization was still “alive” at the time. It addition, that letter referred to a cease and desist order. There was no such order. There was a letter sent by CTF’s lawyers to Mr. Wright asking him to cease his activities. Therefore, prior to any police intervention, there had been some misinformation provided to donors by CTF;

3. A number of the witnesses were very busy at the time Mr. Wright attended and were unable to recall much of the conversation. They were busy and not paying particular attention;

4. In addition, some witnesses were unable to observe in any detail what transpired, for example, Mr. Liptak, Mr. Zekry and Mr. Gemmill. At times, the evidence was inconsistent, for example, the evidence of Mr. Liptak and his daughter, Patricia;

5. Ms. Russell, Ms. Horton, Ms. Wuis, Ms. Clancy, Mr. Poole, Mr. Devos and Ms. Fitzgerald all corroborated the fact that Mr. Wright mentioned the new organization.

[ 56 ] Mr. Wright testified in a straightforward fashion and was unshaken under vigorous cross-examination. His evidence regarding the registration of his businesses was corroborated by a number of Exhibits, as was his evidence regarding his follow-up with donors and the intention to pursue property tax issues on their behalf. Letters and petitions to donors were filed as Exhibits. In addition, there was corroborative evidence provided regarding his organization of the business, the business cards ordered, letterhead, etc, and confirmation that Mr. Wright registered as a lobbyist in Ontario (see Exhibit 24). Mr. Wright did not waiver under cross-examination maintaining that he used a script with donors that included a statement that he was leaving CTF and starting a new organization with the focus on property tax issues. Mr. Wright’s intention to maintain and grow the organization is to some extent corroborated by the fact that he registered the name, registered the business, re-registered the business and then re-re-registered it. He was undeterred by the approach being taken by CTF and did not cease his efforts until the police investigation commenced. He opened a business account which although sloppy regarding deposits and expenses, was clearly set up as a business account for OTA. He continued to maintain his own personal account. No CTF cheques were deposited to his account and all funds made out to CTF went to them.

[ 57 ] Although Mr. Wright was under a contract with CTF until August 11, 2008, which included a non-competition clause, no legal action was ever taken in this regard. Mr. Wright’s interpretation of the limitations upon him was different than the interpretation by Mr. Cunningham and Mr. Azzopardi. Mr. Wright believed he was not violating the terms of his contract. In any event, the potential violation of his contract with CTF is not directly related to the essential elements of the offence in this case. If there was a breach of contract, this would be a matter for a claim for damages by CTF.

Law and Analysis

[ 58 ] The Criminal Code defines ‘fraud’ under s. 380(1) as follows:

380. (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service...

[ 59 ] In this case, the Crown must prove the following essential elements beyond a reasonable doubt:

(1) Mr. Wright deprived individuals and/or businesses and/or the CTF of money;

(2) Mr. Wright used deceit, falsehood or other fraudulent means in misrepresenting himself and/or CTF while canvassing which caused the deprivation;

(3) Mr. Wright intended to defraud individuals and/or businesses and/or the CTF; and

(4) the value of the money exceeded $5,000.

As previously noted, the W.(D.) analysis applies to each of the essential elements of the offence.

Actus reus

[ 60 ] The Supreme Court of Canada in R. v. Théroux , [1993] 2 S.C.R. 42 , and R. v. Zlatic , 1993 135 (SCC) , [1993] 2 S.C.R. 29, set out the requirements to establish the actus reus of fraud as follows:

(i) the offence has two elements: dishonest act and deprivation;

(ii) the dishonest act is established by proof of deceit, falsehood or "other fraudulent means";

(iii) the element of deprivation is established by proof of detriment, prejudice, or risk of prejudice to the economic interests of the victim, caused by the dishonest act.

(see Théroux , para. 16).

[ 61 ] Deceit is not a central element of the offence. In Théroux , the Court notes that the general concept of dishonesty which could manifest itself in deceit, falsehood or some other form of dishonesty, is an essential element of the offence. What constitutes a lie, a deceit or some other form of dishonesty are all to be determined objectively. “Other fraudulent means” include means which are not in the nature of deceit or falsehood but encompass other means which a reasonable person would consider to be dishonest. (see Théroux , para. 17).

[ 62 ] In Théroux , McLachlin J. states at para. 18 :

18 ...where it is alleged that the actus reus of a particular fraud is "other fraudulent means", the existence of such means will be determined by what reasonable people consider to be dishonest dealing. In instances of fraud by deceit or falsehood, it will not be necessary to undertake such an inquiry; all that need be determined is whether the accused, as a matter of fact, represented that a situation was of a certain character, when, in reality, it was not.

[ 63 ] In the case at bar, although the Indictment alleges that Mr. Wright committed fraud by deceit, falsehood or other fraudulent means, it goes on to specify that the fraud was committed by Mr. Wright misrepresenting himself and/or CTF while canvassing. Therefore, in this case, the Crown must prove the misrepresentation beyond a reasonable doubt.

[ 64 ] The Crown must further prove beyond a reasonable doubt that by his misrepresentation, Mr. Wright deprived individuals and/or businesses and/or the CTF of money valued at over $5,000.00.

[ 65 ] The Crown argues that Mr. Wright did not fully disclose to prospective donors the material fact that his organizations, the Ontario Taxpayers Association and Ontario Taxpayers, were not associated with or in any way related to CTF. It is argued that this non-disclosure can constitute fraud.

[ 66 ] The Supreme Court of Canada considered this issue in R. v. Cuerrier , 1998 796 (SCC) , [1998] 2 S.C.R. 371. Cory J., writing for the majority, states:

115 ... Traditionally, courts were of the view that fraud does not include non-disclosure (R. v. Brasso Datsun (Calgary) Ltd. (1977), 39 C.R.N.S. 1 (Alta. S.C.T.D.) ). However, Olan, supra, and Théroux, supra, have endorsed a wider interpretation of fraud which can include non-disclosure in circumstances where it would be viewed by the reasonable person as dishonest. This view was upheld in R. v. Zlatic, 1993 135 (SCC) , [1993] 2 S.C.R. 29 . At p. 44 McLachlin J. speaking for the majority, held that if the means to the alleged fraud can be characterized objectively as dishonest they are fraudulent. This, it was observed, can include the non-disclosure of important facts.

116 In summary, it can be seen that the essential elements of fraud are dishonesty, which can include non-disclosure of important facts, and deprivation or risk of deprivation.

[ 67 ] In R. v. Feddema , [2005] A.W.L.D. 2858 (Alta. C.A.) , the Alberta Court of Appeal comments on non-disclosure as follows:

54 A failure to disclose material facts can amount to fraudulent conduct. The Quebec Court of Appeal said in R. v. Émond (1997), 1997 10605 (QC CA) , 117 C.C.C. (3d) 275 (leave to appeal to SCC denied) at 284:

The falsehood can consist of a positive act, but also sometimes a mere omission, that is to say a situation where, through his silence, an individual hides from the other person a fundamental and essential element. This is what Beverley McLachlin J. called, in R. v. Théroux, ... the "non-disclosure of important facts".

55 The accused must be under some duty to disclose the material facts before inaction or non disclosure will constitute fraud. Such a duty to disclose may exist by reason of the accused's relationship with the victim of the alleged fraud (see R. v. Émond, supra). Legislation may create a duty to disclose...

[ 68 ] Although I do not find that Mr. Wright was under a statutory duty to disclose material facts, the fact that the small business owners placed their trust and faith in him as a representative of CTF for a number of years does, by the nature of that relationship, impose a duty to disclose. The question is, did Mr. Wright provide sufficient information to prospective donors while canvassing?

[ 69 ] Based on all the evidence before the Court and having considered the issues of credibility and the W.(D.) formula with respect to the issue of the actus reus of the offence in this case, I make the following findings:

1. In general terms, Mr. Wright had a script that he used or attempted to use when canvassing donors for his new organizations, the OTA and OT. Although the exact words used by Mr. Wright are unclear, his script did involve the fact that he was leaving CTF and starting another organization which would focus on property tax reform;

2. Although Mr. Wright did not state that his new organizations were affiliated with or associated with CTF, nor did he state that they were not;

3. Despite some weaknesses in the testimony of the donors as previously outlined, all were consistent that, although they wrote cheques to another organization, either OTA or OT, they “assumed” or “believed” or “thought” that OTA or OT were related to CTF. Mr. Wright had been the field agent for CTF for a number of years and had met with them in the past regarding similar issues including, from time to time, property tax reform;

4. Although I do not find beyond a reasonable doubt that Mr. Wright lied or actively deceived the small business owners, he had established a relationship of trust with them; they relied upon him and considered him a friendly, knowledgeable and professional representative of CTF. Therefore, I find there was a duty on Mr. Wright to fully, clearly and unequivocally, disclose the material fact that his new organizations were not branches of, or in any way related to CTF. I find beyond a reasonable doubt that he did not provide the required disclosure in this case;

5. Most of the donors who testified at trial indicated they were surprised and shocked to learn their donations had gone to Mr. Wright’s sole proprietorship OTA or OT and not, as in all previous years, to CTF; and

6. The donations made by the small business owners to OTA and OT were similar in amount to those made in the past to CTF. Although some of the donors also contributed to CTF, most did not. Therefore, given Mr. Wright’s misrepresentation by not providing complete and detailed disclosure, CTF was deprived of funds.

[ 70 ] I find that the Crown has proven the actus reus of the offence beyond a reasonable doubt.

Mens rea

[ 71 ] The real issue in this case is whether or not the Crown has established beyond a reasonable doubt that Mr. Wright had the requisite mens rea required under s. 380 of the Criminal Code . In Théroux , McLachlin J. for the majority indicates at paras. 27 and 28 that:

27 ...the mens rea of fraud is established by proof of:

1. subjective knowledge of the prohibited act; and

2. subjective knowledge that the prohibited act could have as a consequence the deprivation of another (which deprivation may consist in knowledge that the victim's pecuniary interests are put at risk).

28 Where the conduct and knowledge required by these definitions are established, the accused is guilty whether he actually intended the prohibited consequence or was reckless as to whether it would occur.

[ 72 ] The question arises in this case whether Mr. Wright’s misrepresentation by non-disclosure was merely negligent or was an intentional fraud. In Théroux , McLachlin J. makes the distinction at para. 40 as follows:

40 The requirement of intentional fraudulent action excludes mere negligent misrepresentation. It also excludes improvident business conduct or conduct which is sharp in the sense of taking advantage of a business opportunity to the detriment of someone less astute. The accused must intentionally deceive, lie or commit some other fraudulent act for the offence to be established. Neither a negligent misstatement, nor a sharp business practice, will suffice, because in neither case will the required intent to deprive by fraudulent means be present. A statement made carelessly, even if it is untrue, will not amount to an intentional falsehood, subjectively appreciated. Nor will any seizing of a business opportunity which is not motivated by a person's subjective intent to deprive by cheating or misleading others amount to an instance of fraud...We are left then with deliberately practised fraudulent acts...

[ 73 ] In this case, did Mr. Wright subjectively intend to deprive the individuals and/or small businesses and/or CTF of money by cheating or misleading them, when he did not make full disclosure while canvassing?

[ 74 ] Based on all the evidence heard at trial and having considered credibility and the W.(D.) formula, I make the following findings regarding the requirement of mens rea in this case:

1. As a field agent for CTF, Mr. Wright considered that he had more to offer than simply soliciting donations and informing donors of CTF activities;

2. Mr. Wright was dismayed by the results of the 2007 provincial election and CTF’s endorsement of the Conservative Party. Of particular concern to him was the issue of property tax reform. Mr. Wright wanted to more actively lobby and advocate regarding this issue;

3. Mr. Wright registered OTA, OT and finally AOT to pursue this goal. Upon receiving notices that the names he had chosen were not permissible, he changed them. He registered OTA then re-registered the organization as OT and finally, as AOT;

4. In June, 2008, Mr. Wright opened a Scotiabank business account into which he deposited donations for OTA and OT. Some donors provided donations to both Mr. Wright’s organizations and CTF. All CTF donations were provided to that organization;

5. In addition to opening the business account, Mr. Wright hired two administrative assistants and a field agent, Brad Pitters. He also used some students to do research and began working on a position paper regarding property tax reform in Ontario;

6. On September 5, 2008, he sent letters to the individuals and businesses who had donated funds to his organizations, thanking them, explaining more about Ontario Taxpayers, and the property tax reform campaign. He enclosed a number of petitions regarding property tax reform which he requested his donors to sign and forward;

7. After Ontario Taxpayers was cancelled, Mr. Wright consulted with a lawyer and followed the legal advice to the extent that he applied for a lobbyist ID number on September 15, 2012. He then reregistered his organization as AOT on October 7, 2008 and sent out the position paper;

8. Mr. Wright stopped all the work of AOT when the police investigation commenced in October, 2008; and

9. Mr. Wright acknowledged using his business account for some personal expenses but indicated he relied on his bookkeeper, Ms. Felharber, to sort out his expenses and revenues and put things in order. At the very least, Mr. Wright engaged in unacceptable, sloppy bookkeeping and accounting practices, which raises some suspicions as to his motivation.

[ 75 ] However, on the basis of all of the evidence before the Court, I find that Mr. Wright genuinely intended to start a legitimate lobbying/advocacy organization to deal with property tax reform in Ontario and to solicit funds for those efforts. Although he did not inform CTF and may arguably have been breaching his contract, I find that the Crown has not proven beyond a reasonable doubt that Mr. Wright subjectively intended to deprive the individual donors and/or their businesses and/or CTF of funds by cheating, misleading or more specifically, by misrepresenting himself while canvassing. Therefore, the required mens rea has not been proven beyond a reasonable doubt.

Fraud Over $5,000

[ 76 ] In addition, I am not satisfied beyond a reasonable doubt that the donor funds provided to Mr. Wright by the individuals and small businesses, believing that his organizations were associated in some way with CTF, totalled more than $5,000.00. The individual donors that testified provided $4,917.00 to Mr. Wright’s organizations. In addition, I find that Mr. Wissink was not solicited by Mr. Wright which further reduces the amount donated. Therefore, the Crown has not proved beyond a reasonable doubt that the amounts donated totalled more than $5,000.00.

Conclusion

[ 77 ] In conclusion, I find Mr. Wright not guilty of the offence charged.

Blishen, J.

Released Orally: August 16, 2012

COURT FILE NO.: 09-30489
DATE: 20120816

ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:

HER MAJESTY THE QUEEN
Respondent

– and –

STEPHEN ANTHONY WRIGHT
Applicant

ORAL REASONS FOR JUDGMENT

Blishen, J.

Released Orally: August 16, 2012