ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CR12-70000550-00

DATE: 20130426

BETWEEN:

HER MAJESTY THE QUEEN

– and –

MARK JOHNSTON

Defendant

Derek Ishak, for the Crown

Mary Cremer, for the Defendant

HEARD: April 8, 9, 10, 11, and 26, 2013

J. Wilson J.

REASONS FOR JUDGMENT

[1] Mark Johnston is charged with fraud over $5000 and with knowingly using a forged document during the period from February 11, 2011 to March 15, 2011.

[2] Mr. Johnston retained Mr. Lawrence Ben-Eliezer, a lawyer, to represent him in a complex criminal matter. Mr. Johnston agreed to pay the retainer to Mr. Ben-Eliezer for the ten day preliminary hearing before the commencement of the preliminary hearing. The agreed upon fee was $34,000. The Crown alleges that Mr. Johnston defrauded Mr. Ben-Eliezer by knowingly depositing a series of fraudulent cheques, or cheques not supported by funds, to fraudulently dupe Mr. Ben-Eliezer into preparing for and attending the preliminary hearing, without any intention of paying for the services rendered.

[3] In this trial, Mr. Ben-Eliezer testified, as did an investigator from the Royal Bank of Canada. The rest of the evidence was received by affidavit or by an Agreed Statement of Facts. Mr. Johnston did not testify.

[4] On February 11, 2011, Mr. Johnston deposited a cheque in the amount of $17,000 payable by Cantaberry Holding Corp. in the trust account of Mr. Ben-Eliezer. This payment was partial payment of the retainer to pay for services to be rendered for a preliminary hearing.

[5] On February 17, 2011, an item was returned to Mr. Ben-Eliezer’s trust account with a notation “item returned unpaid SO2176”. The Crown alleges that this cheque was returned by the issuing bank, Caisse Centrale Dejardins, as it was fraudulent. The evidence from Desjardins was not disputed that the transit number on the cheque did not exist, the address was incorrect and incomplete, the institution number did not exist and the bank account number was not valid. The defence acknowledges that this cheque is fraudulent. The Crown relies upon this transaction in support of the charge of knowingly using a forged document in count 2 of the indictment.

[6] There then follows a series of four deposits between February 25, 2011 and March 10, 2011 to Mr. Ben-Eliezer’s trust account that the Crown alleges were from Mr. Johnston. The total of the deposits made, including the initial deposit, was $85,003.03. All of the transactions were subsequently reversed in Mr. Ben-Eliezer’s trust account. In the end, Mr. Ben-Eliezer received nothing by way of retainer. The Crown relies on this series of transactions beginning with the first cheque dated February 11, 2011 to March 10, 2011, in support of the finding that Mr. Johnston is guilty of fraud over $5000 as charged in count 1 in the indictment.

Issues Raised by the Defence

[7] The following arguments were vigorously and capably advanced by defence counsel:

▪ With respect to the forged cheque dated February 11, 2011 underpinning count 2, the defence alleges that there are gaps in the evidentiary record raising a reasonable doubt that Mr. Johnston is connected to this cheque.

▪ One of the cheques in the amount of $17,001.01 has not been produced. For the other cheques that have been produced, there is nothing on the cheques linking Mr. Johnston to these cheques, and there is no evidence produced by the bank confirming who deposited these cheques. The only evidence linking Mr. Johnston to these cheques and the series of deposits made is the evidence of Mr. Ben-Eliezer, which the defence submits is not credible or reliable.

▪ Mr. Johnston advised Mr. Ben-Eliezer that he was seeking assistance from a third party for the transfer of offshore funds. The defence asserts that the problems with the transactions involving International Transfer Agents cheques may have been the responsibility of third parties, not Mr. Johnston

▪ The defence argues that this fraud case is really a civil collection case in the guise of a fraud claim, with the primary objective of Mr. Ben-Eliezer being collecting his outstanding accounts.

Findings of Credibility

Mr. Ben-Eliezer

[8] Mr. Ben-Eliezer testified. He did not have a written retainer agreement, which he acknowledged was sloppy business practice. It is not contested, however, that Mr. Johnston agreed to pay Mr. Ben-Eliezer the sum of $34,000 for preparation for and attendance at the ten day preliminary hearing in Mr. Johnston’s case.

[9] I agree with defence counsel’s submission that Mr. Ben-Eliezer’s memory about dates and times was weak, as he did not keep notes as these events unfolded. I find, however, that the core of Mr. Ben-Eliezer’s evidence made sense, was credible and was supported by the documents.

[10] Mr. Ben-Eliezer was very concerned about any breach of any fiduciary duties to Mr. Johnston if he reported this matter to the police. In his written statement to the police, Mr. Ben-Eliezer did not include all of the details that he included in the evidence given at trial due to his concerns as to his duties to his former client. I accept his evidence that it was only two days before this trial commenced that he clarified with senior counsel that he would not be in breach of solicitor-client privilege by disclosing all of the facts and discussions between him and his client with respect to the retainer.

[11] I accept the evidence of Mr. Ben-Eliezer that as a result of the transactions involving Mr. Johnston, the Royal Bank conducted an investigation of his trust account, which was stressful and frightening, potentially placing in jeopardy his livelihood as a sole practitioner. Mr. Ben-Eliezer told the bank that he believed that he was a victim of a fraud by his client. The reporting of this matter to the police was not a method of achieving payment, but was a serious matter affecting Mr. Ben-Elierzer’s ability to practice.

[12] I found Mr. Ben-Eliezer to be a credible witness on the core issues, which are corroborated by documentation, although admittedly there are some gaps in his memory about dates. I accept his evidence as to the contents of conversations with Mr. Johnston as these events unfolded, culminating in him reporting this matter to the police. I agree with defence counsel that his record-keeping did leave something to be desired, but this weakness does not undermine my findings of credibility and reliability with respect to his evidence.

Mr. David Skea

[13] Mr. Ben-Eliezer’s trust account was with the Royal Bank. Mr. Skea testified as an investigator from the Royal Bank to explain bank procedure and to assist with interpreting the bank documents from Mr. Ben-Eliezer’s trust account. Neither counsel challenged the evidence of Mr. Skea. It would have been helpful if Mr. Skea had been more familiar with some of the codes noted on Mr. Ben-Eliezer’s bank account when the various cheques were returned.

Outline and findings of the facts

[14] Mr. Ben-Eliezer was initially retained by Mr. Johnston to conduct a bail hearing in April 2010. Mr. Johnston was released and paid his retainer for these services rendered.

[15] In July 2010, Mr. Johnston and Mr. Ben-Eliezer had discussions and confirmed that Mr. Johnston was retaining Mr. Ben-Eliezer to conduct the preliminary hearing. Matters were cordial.

[16] In September 2010, the preliminary hearing date was set for ten days from February 14 to 26, 2011. The parties agreed to a $34,000 retainer inclusive of HST for the preparation for and attendance at the preliminary hearing. Mr. Johnston acknowledged that the fee was fair and reasonable and that “lawyers deserved to be paid”. The parties agreed that the retainer would be paid in full before the preliminary hearing began. The preparation was extensive as there were some 10,000 documents to be reviewed.

[17] Mr. Johnston advised Mr. Ben-Eliezer that there was no problem with the retainer and that he had funds offshore to meet his obligations. Mr. Ben-Eliezer confirmed that so long as the source of funds offshore was legal, a wire transfer of the funds was acceptable. Mr. Ben-Eliezer then provided Mr. Johnston with particulars of the trust account to facilitate a wire transfer of the funds.

[18] At all times in 2010 Mr. Ben-Eliezer had no difficulties getting in touch with Mr. Johnston either by calling his cell phone or by text.

[19] In January 2011, Mr. Ben-Eliezer began getting somewhat concerned, as the retainer funds had not been received. For a sole practitioner this was a large case. Mr. Ben-Eliezer had some difficulties communicating with Mr. Johnston prior to the commencement of the preliminary hearing.

[20] The preliminary hearing was scheduled to commence on February 14, 2011. Extensive preparation was required prior to the commencement of the preliminary hearing.

[21] On Friday, February 11, 2011, Mr. Ben-Eliezer received a telephone call from Mr. Johnston late in the afternoon confirming that he had deposited $17,000 into Mr. Ben-Eliezer’s trust account. Mr. Ben-Eliezer was expecting a wire transfer of funds and was concerned that Mr. Johnston had deposited the cheque directly into his trust account. His practice is to personally deposit client retainer cheques into his trust account.

[22] There was only one deposit to Mr. Ben-Eliezer’s trust account on February 11, 2011, and it was in the amount of $17,000.

[23] The $17,000 cheque was payable by Cantaberry Holding Corp. at First Canadian Place to Mr. Ben-Eliezer’s trust account transit #00002 Account #113-837-9 on a cheque noted to be from Caisse Centrale Desjardins in Drummondville. The memo line states “Re: Lawrence Ben-Eliezer Barrister”.

[24] This cheque was subsequently returned to Mr. Ben-Eliezer.

[25] This is the cheque that is acknowledged by the defence to be fraudulent, as it contains an incorrect and incomplete address, an incorrect transit number and branch number, and an invalid bank account number.

[26] The preliminary hearing was scheduled to begin on February 14, 2011, but in fact began on the 15th. Mr. Ben-Eliezer was concerned that he had not received the agreed upon $34,000 retainer.

[27] During the preliminary hearing, Mr. Ben-Eliezer was able to access his online banking and noted that another deposit, this time of $17,001.01, had been made to his bank account on February 25, 2011. He discussed this deposit with Mr. Johnston and asked why the $1.01 had been added to the agreed upon retainer. Mr. Johnston confirmed that the deposit was from him and that the additional $1.01 was added so that he could keep track of his financial matters.

[28] Mr. Ben-Eliezer did not notice in his bank statement, or it was not yet posted, that on February 17, 2011 there was an entry saying “item returned unpaid SO2176” in the amount of $17,000. The first Desjardins cheque that had been deposited by Mr. Johnston on February 11, 2011 had been returned.

[29] The investigator from the Royal Bank confirmed that the reasons for the return of a cheque could be because there were insufficient funds, the funds had not yet cleared, or the cheque was counterfeit.

[30] An affidavit was filed on consent from Annie Tremblay-Gautier from Caisse Centrale Desjardins that confirms that the cheque was a forgery. This evidence is not disputed by the defence.

[31] On February 18, 2011, Mr. Ben-Eliezer transferred the sum of $10,735 from his trust account to his personal business account. He had rendered an invoice to Mr. Johnston in the amount he believed to be $10,000. The balance of the transfer was payment of another client account.

[32] The preliminary hearing did not conclude within the ten day period, as unexpected documents were disclosed. The balance of the preliminary hearing was adjourned to May 2011.

[33] By the end of February, Mr. Ben-Eliezer had a retainer deposit of $17,001.01 which had not yet cleared the bank, and the first cheque deposited in the amount of $17,000.00 had been returned.

[34] On March 7, 2011 Mr. Ben-Eliezer transferred another $7000 from his trust account to his general account after rendering a bill to Mr. Johnston for further work done on the preliminary hearing. The total transfer that day was $7961.01 but only $7000 was with respect to Mr. Johnston.

[35] By March 7, 2011, Mr. Ben-Eliezer had billed out the sum of $17,000 to Mr. Johnston, and paid his general account in this amount.

[36] On March 9, 2011, Mr. Ben-Eliezer noticed a deposit of $34,000 into his trust account, and on March 10, 2011 there was a further deposit of $17,002.02 also paid into the trust account.

[37] Mr. Johnston had now overpaid his retainer agreement, and Mr. Ben-Eliezer became concerned that his trust account may be being used for the purpose of money laundering.

[38] He had a conversation with Mr. Johnston advising that he was pleased that the agreed upon retainer had been paid, but that he needed instructions about what to do with the surplus funds, as it was too soon to require a retainer for the trial.

[39] On March 11, 2011, Mr. Ben-Eliezer transferred a further $17,443.45 from his trust account to his general account. $17,000 was with respect to bills rendered to Mr. Johnston for the agreed upon fee for the preliminary hearing.

[40] By March 11, 2011, Mr. Ben-Eliezer had billed Mr. Johnston and been paid the agreed upon fee of $34,000 for conducting the preliminary hearing.

[41] On March 14 and 22, 2011 the bank reversed all of the previous deposits.

[42] The following occurred on March 14, 2011:

▪ Returned item $17,001.01

▪ Debit adjustment $51,002.02

[43] At this point in time all of the funds paid into trust by Mr. Johnston in the amount of $85,003.03 had been reversed by the Royal Bank.

[44] On March 16, 2011, Mr. Ben-Eliezer spoke to Mr. Johnston. He was upset and believed that he had been defrauded by Mr. Johnston, and told Mr. Johnston if he did not rectify the situation immediately, he would go to the police.

[45] On March 22, 2011, the trust account showed a further reversal entry saying “Item returned unpaid S00431” respecting $17,029.92. This added insult to injury as the bank made an error and reversed the deposit made on February 25, 2011, in the amount of $17,001.01 twice, placing Mr. Ben-Eliezer’s trust account into impermissible overdraft.

[46] The bank did correct their error on March 25, 2011, when Mr. Ben-Eliezer brought the error to the attention of the bank.

[47] The bank advised Mr. Ben-Eliezer that they were going to conduct an internal investigation into his trust account and that they may have to shut the account down. Mr. Ben-Eliezer told them he thought he had been defrauded by a client and begged the bank not to shut down his bank account, as it would undermine his source of livelihood. Without his trust account he could not conduct his practice. Nothing further was heard from the bank about any internal investigation.

[48] Mr. Ben-Eliezer wished to report the situation to the police. He was concerned about what was permissible in the circumstances. He contacted the Law Society to see if in the circumstances it was appropriate to lay criminal charges, and whether there would be any breach of solicitor-client privilege. He also contacted two senior criminal defence counsel to canvass the issue.

[49] After receiving advice from these three sources, he reported the matter to the police on March 28, 2011. He provided a will say statement to the police on May 9, 2011.

[50] I will begin my analysis with count 2, as it is the beginning of the story.

[51] In considering both counts, I apply the presumption of innocence, and the high threshold nearing certainty of the test of what constitutes proof beyond a reasonable doubt. The Crown bears the onus of proof on all elements of all offences. There is no obligation for Mr. Johnston to testify. I have not considered as relevant in any way the fact that Mr. Johnston was charged with a criminal offence giving rise to the retainer with Mr. Ben-Eliezer. That fact is irrelevant.

ANALYSIS AND THE LAW

Count 2: Knowingly Using a Forged Document

[52] In count 2 Mr. Johnston is charged that on or about the 11th day of February, 2011 in Toronto he did knowingly use a forged document being a cheque from Cantaberry Holding Corp. account number 56712164, in the amount of $17,000 as if it were genuine, contrary to s. 368(1)(a) of the Criminal Code.

[53] Section 368(1)(a) provides that everyone commits an offence who, knowing or believing that a document is forged, uses, deals with or acts on it as if it were genuine.

[54] Defence counsel acknowledges that this cheque is a forgery. The defence position is that there is insufficient evidence linking Mr. Johnston to the cheque, and there is insufficient evidence indicating that Mr. Johnston knew that the cheque was a forgery.

(remaining paragraphs reproduced exactly as in the source)

[127] For these reasons, therefore, I find Mr. Johnston guilty of count 1, fraud over $5000, and count 2, knowingly using a forged document.

J. Wilson J.

Released: April 26, 2013

COURT FILE NO.: CR12-70000550-00

DATE: 20130426

ONTARIO

SUPERIOR COURT OF JUSTICE

HER MAJESTY THE QUEEN

– and –

MARK JOHNSTON

Defendant

REASONS FOR JUDGMENT

J. Wilson J.

Released: April 26, 2013