COURT FILE NO.: CR-10-0082-00
DATE: 20130131
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN
Mr. Schaffer, for the Crown
- and -
MAXIE MORRIS
Mr. Gravesande, for the Defence
HEARD: January 16, 17, 21, 22, and 24, 2013
REASONS FOR JUDGMENT
Andre J.
[1] A member of the Peel Regional Police Force charged Ms. Morris with one count of fraud following an allegation that Ms. Eileen Laing gave her $23,643 in December 2004 for investment purposes. Ms. Laing took $10,000 from an RBC line of credit and $13,643 from a T.D. Bank GIC to give to Ms. Morris based on the latter’s representation that she had the expertise to ensure that Ms. Laing gain a good return on her investment beyond what she would earn at the financial institutions she had accounts with. Ms. Laing testified that she decided to entrust Ms. Morris with the funds because Ms. Morris falsely convinced her that her company, King Judah Financial, was affiliated with an established financial company called Advantage Group of Finance. Secondly, that Ms. Morris guaranteed that her initial deposit or investment would not be at any risk of being lost. Despite repeated requests, Ms. Morris never returned the money entrusted to her care by Ms. Laing.
[2] The Crown’s case is based on the testimony of Mr. Dziadecki, the owner of Advantage Group of Finance, Ms. Laing, Ms. Abha Wason, a bank manager at the Bank of Montreal and Mr. Avi Koren, an official receiver in the Office of the Superintendent of Bankruptcy, Government of Canada. The defence called no witnesses. The Crown’s evidence was heard on January 16, 17, 21 and 22, 2013. Submissions were heard on January 24, 2013.
[3] The Crown submits that the totality of the evidence overwhelmingly supports a conclusion that Ms. Morris defrauded Ms. Laing as charged. The defence maintains that Ms. Laing was a savvy investor who with full knowledge of the risk involved, chose to give her money to Ms. Morris for investment purposes. I will now summarize the evidence before analyzing whether or not it rises to the requisite standard of proof beyond a reasonable doubt.
THE EVIDENCE
[4] 1. Evidence of Leszak Dziadecki Para. 5
Evidence of Aileen Laing Para. 35
Evidence of Abha Wason Para. 87
Evidence Avi Koren Para. 100
Evidence on Consent Para. 105
The Law Para. 106
Analysis Para. 109
Conclusion Para. 157
A. THE EVIDENCE OF LESZEK DZIADECKI
[5] The Certified Financial Planner owns Advantage Group of Finance (hereinafter called Advantage) which processes insurance applications for insurance companies. He has a number of insurance brokers who work with his company as independent contractors. These brokers solicit applications for insurance from members of the public. He reviews these applications and then forwards them to the respective insurance company.
[6] The broker and his company earn a commission on each application for insurance, on condition that the applicant maintains the policy for at least two years. If the policy is withdrawn within this period, the broker and Advantage must return the earned commission to the insurance company. If the policy lapses after one year the broker is obliged to return half of the earned commission. The broker is also entitled to a commission every time a policy holder renews his or her insurance policy.
[7] Mr. Dziadecki first met Ms. Morris in 1996. She was a licenced broker seeking a contract with the National Life Insurance Company of Canada (hereinafter called National). He succeeded in obtaining a contract for her with National. Ms. Morris was licenced to sell insurance policies rather than investment products such as mutual funds.
[8] In 1997, Ms. Morris left his employ. She returned in 2002 accompanied by her sister. She wished to have her old job back. Mr. Dziadecki agreed to have her work with him as an insurance broker.
[9] Ms. Morris worked with Advantage until 2004. Everything appeared fine until the spring of that year. Ms. Morris was selling many insurance products.
[10] In the spring of 2004, she asked Mr. Dziadecki to attend a client appreciation event at Radisson Hotel, Mississauga. She appeared grateful to him for giving her a second chance.
[11] He attended the lavish event. There were 60-100 guests in attendance. The room was decorated as if the event was a wedding. The food was excellent.
[12] Ms. Morris spoke at the event. Her speech was designed to thank her guests for their business. Ms. Morris’ sister and her pastor gave speeches. Mr. Dziadecki did so as well. He stated that he was happy for Ms. Morris. Either Ms. Morris or her sister asked him to speak.
[13] There was business paraphernalia at the event. There was a large banner in the room with the name King Judah Financial on it. Mr. Dziadecki had never heard the name before.
[14] The name meant nothing to him. Ms. Morris had not discussed the company with him.
[15] Mr. Dziadecki had no recollection of the speeches about King Judah at the function. He had no discussion with Ms. Morris about her company being affiliated with Advantage. Such an affiliation would have required King Judah to (a) obtain a licence from Ontario; (b) obtain professional liability; and (c) execute a contract with Advantage.
[16] Mr. Dziadecki never promoted King Judah or advised anyone that King Judah was affiliated with his company. Neither did he authorize Ms. Morris to say that it was.
[17] He was shown a book mark that had been disseminated at the Radisson event. It had the name of King Judah and the name of Advantage and its logo. Mr. Dziadecki had no knowledge of the bookmark.
[18] He was shown a business card with Ms. Morris’ picture on it along with his company name and its logo. He denied ever seeing the card or giving Ms. Morris permission to print the card with her picture on it.
[19] He identified a document, marked as Exhibit 4, which indicated a transfer of funds between Ms. Laing’s company, Investors Group, to National. He identified the document as being a legitimate transaction because it involved a transfer of funds from one company to another. Brokers never received any of the funds involved in such a transaction except where a small amount of funds, a couple of hundred dollars, was involved.
[20] When shown a similar document, Exhibit 5, which listed King Judah as the recipient of the transferred funds of $10,000 from Ms. Laing, Mr. Dziadecki denied ever seeing the document before. Advantage had no involvement in that transaction. Ms. Morris would not have been permitted to list her company’s name as the Receiving Institution, Mr. Dziadecki testified.
[21] Mr. Dziadecki reviewed two progress reports, marked as Exhibit 6, which were later identified by Ms. Laing as having been sent to her by Ms. Morris. He denied any knowledge of them. He stated that Advantage did not provide updated information to clients about their investments. Neither were his brokers authorized to guarantee the initial deposit made by a client other than that provided by an insurance company, as the document stated.
[22] Mr. Dziadecki identified a letter, marked as Exhibit 7, dated August 11, 2005, sent to him by Ms. Laing. He stated that shortly after the Radisson Hotel event, the insurance policies submitted by Ms. Morris started to lapse. He tried to get an explanation from her. She gave him an excuse that her Jamaican clients were ending the policies because of pressing financial pressures.
[23] A client started attending his office with complaints about Ms. Morris. He sent letters, e-mails and messages to Ms. Morris. He received no response.
[24] Mr. Dziadecki was required to repay National $190,000 in unearned commissions. Approximately 80-90% of all Ms. Morris’ insurance policies had lapsed within a few months of the Radisson Hotel event.
[25] Mr. Dziadecki tried to speak to Ms. Morris about the lapsed policies without success.
[26] He contacted National, the Financial Services Commission of Ontario, Green Gross Financial and other companies to revoke Ms. Morris’ licence. He called Pastor Pat Francis and warned her about Ms. Morris.
[27] He met Ms. Laing in 2005. She wanted her money back. He told her his company was not responsible for her investments with King Judah. He returned the money she had invested with National.
[28] When he tried to recover his losses from Ms. Morris, he received legal advice that his attempts were futile since she had declared bankruptcy.
[29] Under cross-examination, Mr. Dziadecki denied being the guarantor in the contract between Ms. Morris and Advantage. He stated that Ms. Morris’ business card with her picture on it was never printed by his company. He conceded that his wife also approved the printing of cards and that he did not review all the cards she authorized. He denied that the company could have printed the business card since all cards were printed from templates that did not have the photographs of the brokers who worked with Advantage.
[30] He had no recollection of receiving written invitation from Ms. Morris to attend the Radisson Hotel function. He first saw the name King Judah at the function. Ms. Morris advised him before the event that it was a client appreciation dinner. He spent two hours at the event. He had no recollection of anyone highlighting or promoting King Judah in any speech during the evening.
[31] Mr. Dziadecki conceded that the banner was well posted on the wall. However, he had no recollection if business brochures were distributed that night. Neither did he recall what Ms. Morris spoke about. He denied meeting with Pastor Francis to arrange financing for her church. He testified that he had contacted her because he knew that Ms. Morris was actively prospecting members of her congregation. He received two threatening messages from Ms. Morris, after he contacted Pastor Francis.
[32] Asked about a company called Industrial Alliance (Industrial), Mr. Dziadecki stated that Industrial owned National and that he believed that the two became amalgamated sometime in 2004.
[33] He conceded that in a letter dated September 2005, to Industrial, he claimed that he had not discovered any fraud in Ms. Morris’ dealings. In the letter he stated that he had contacted four to six of Ms. Morris’ clients and that none had given him any reason to believe that anything was wrong. Mr. Dziadecki also denied that Ms. Laing had accused Advantage of improper behaviour. However, he admitted that he harboured a lot of bitterness towards Ms. Morris.
[34] Asked about his company’s policy towards brokers opening their own companies, Mr. Dziadecki stated that he encouraged them to do so. In response to a suggestion that the opening of satellite offices by his brokers would be very lucrative for his company, he replied that the very opposite was true. The more business that was done on his premises the greater his profit.
B. EVIDENCE OF AILEEN LAING
[35] The fifty one year old single mother has been an office worker for 25 years. She was involved in a church where her daughter was a member of a dance troupe which was owned by a member of the Deeper Life Ministries, later known as Kingdom Covenant Ministries, called Ms. Pat Chacha.
[36] Ms. Laing attended the Radisson Hotel function in the spring of 2004. Ms. Morris was a popular member of the church. She understood that Ms. Morris had organized the function to promote her new business.
[37] At the function she saw a huge banner, with the caption: King Judah Financial, Billion Dollar Dinner.
[38] At the top left of the banner was King Judah’s logo while Advantage’s logo was at the top right.
[39] Someone, possibly Ms. Pat Chacha, introduced her to Ms. Morris. The dinner was an elegant affair attended largely by church people. The top clergy of the church was present including Pastor Francis.
[40] There were congratulatory speeches and one from Ms. Morris promoting her business.
[41] Mr. Dziadecki endorsed Ms. Morris’ new business although Ms. Laing could not recall what he said.
[42] There were bookmarks and business cards on tables. There were also bookmarks advertising Ms. Morris’ school in Jamaica.
[43] Ms. Morris told her that King Judah was “an arm” of Advantage. Ms. Morris’ business cards and bookmark also indicated that the two companies were affiliated. Both contained Advantage’s logo.
[44] Ms. Laing heard from Ms. Morris in the summer of 2004. She promised to assist her in her financial portfolio by growing her investment. Ms. Morris subsequently called her on other occasions.
[45] Ms. Laing met Ms. Morris at the former’s house in December 2004. The first time she did not commit to doing business with her. Ms. Morris returned on a second occasion. Ms. Laing showed her financial portfolio. She did so because Ms. Morris had been endorsed by Pastor Francis and Ms. Chacha.
[46] Furthermore, Ms. Morris had presented herself as a very successful financial advisor. She said she could grow Ms. Laing’s money. However, Ms. Morris provided no specifics. She kept saying that she had found massive success in her business. Ms. Morris spoke about her experience and knowledge to make money grow. She repeatedly told Ms. Laing that there would be no risks involved if she invested with her.
[47] Ms. Morris mentioned that the Ontario Securities Commission would provide security for Ms. Laing’s funds. She said so when she was writing up the documents related to the investment.
[48] Ms. Laing decided to invest with Ms. Morris because of the guarantees that there would be no risk involved.
[49] She signed the document marked as Exhibit 5. It signified Ms. Morris’ intention to invest the $10,000 from Ms. Laing’s line of credit.
[50] Ms. Morris told her that the rich became richer by using other people’s money to make money. She encouraged her to use the bank’s money to earn more interest on her investments than the interest the bank would charge her if she used the line of credit.
[51] Ms. Morris also advised Ms. Laing that King Judah was a subsidiary of Advantage.
[52] Ms. Morris told her specifically that the investment was for a six month term and that the money could be returned at any time. Ms. Morris also stated that Ms. Laing’s investment was protected by the Ontario Securities Commission. These guarantees convinced Ms. Laing to invest her money with Ms. Morris. She also agreed to transfer her locked RRSP to Advantage.
[53] In December 2004 Ms. Morris accompanied Ms. Laing to her bank to withdraw $10,000 from her line of credit. Ms. Laing transferred the money to her savings and then the bank gave her a cheque payable to Judah Financial. This bank draft was marked as Exhibit 11.
[54] Ms. Laing gave Ms. Morris the bank draft. Ms. Morris told her that she had done the right thing and that her decision was going to do well for her.
[55] Ms. Laing also invested $13,643 with a guaranteed note of return at 8% interest. Ms. Morris advised her that this investment was also for six months and could be withdrawn at any time. As on the first occasion, Ms. Morris accompanied her to the bank.
[56] Ms. Morris promised to pay 6% interest on Ms. Laing’s line of credit. She sent Ms. Laing six post-dated cheques of $15 each.
[57] These cheques served as a red flag to Ms. Laing. She believed that Ms. Morris, as an expert investor, should have known that the interest payable on $10,000 would be more than $15 a month. She subsequently told Ms. Morris that the interest was $54. Ms. Morris then sent her six cheques, each in the amount of $54, to cover the interest on her line of credit.
[58] Ms. Laing cashed the first $15 cheque. The second one was returned N.S.F. She did not try to cash the others since she would have had to pay the bank’s service charge if they were also returned N.S.F.
[59] One of the replacement cheques for $54 was also returned N.S.F. Ms. Laing decided not to cash the others.
[60] Ms. Laing received two progress reports from Ms. Morris. The January 2005 reports indicated that her initial deposit was guaranteed. They also showed that she had already earned interest on her investment.
[61] After these investments, Ms. Morris tried to interest Ms. Laing in doing more investments with her. Ms. Laing declined.
[62] In 2005, Ms. Laing called Ms. Morris for a return of her money and the interest she had earned. She repeatedly called her home. Ms. Morris’ sister would say that Ms. Morris was out of town. By May - June 2005, Ms. Laing could not make any contact with Ms. Morris. When she called Advantage to locate Ms. Morris, someone advised her that Ms. Morris had been released by the company.
[63] Ms. Laing finally made contact with Ms. Morris at a Kitchener number. Ms. Morris assured her not to worry; that she should ignore what she may have heard about her. Ms. Morris assured her that she would get back all her money a week later.
[64] Despite these assurances, Ms. Morris never returned Ms. Laing’s investment. Ms. Morris finally told her that she would receive her money back on September 15, 2005. Shortly after, Ms. Laing received documents indicating that Ms. Morris had declared bankruptcy.
[65] Ms. Laing wrote to Mr. Dziadecki seeking to regain her investment money. She also wrote to the Superintendant of Bankruptcy alleging that Ms. Morris had defrauded her. She also sent letters to the Financial Commission and to the Receiver General making similar allegations against Ms. Morris.
[66] Ms. Laing conceded while being cross examined that she never met Ms. Morris at church functions neither did she see her at church services. Asked about the letter she had written to the official receiver she denied that a lawyer affiliated with Pastor Francis’ church had written the letter.
[67] She also restated that Pastor Francis had publicly endorsed Ms. Morris at the Radisson Hotel function and that the church’s senior membership attended the function.
[68] Ms. Laing also stated that she initially spoke to the police in 2005. She denied misrepresenting the circumstances of her meeting with Ms. Morris in her January 2007 police statement to the effect that she met Ms. Morris through the church. She insisted that Ms. Morris’ function was a church affiliated event given that almost every attendee was a member of the church.
[69] Defence counsel put to Ms. Laing that she falsely claimed that she met Ms. Morris at the Deeper Life Ministries. She replied that she knew that Ms. Morris was a prominent church member. She conceded that she testified at the preliminary hearing that she had met Ms. Morris through the Kingdom Covenant Ministries, which she earlier stated she had never attended. She replied that the church had changed its name from Deeper Life Ministries to Kingdom Covenant Ministries and as far as she was concerned, it was still the same church. She was unsure of the date of the name change.
[70] Asked about her attendance at the Radisson Hotel function Ms. Laing conceded that she may have been told about the reason for the function before she attended and may have congratulated Ms. Morris at the function. She agreed that she testified at the preliminary hearing that the purpose of the function was for Ms. Morris to promote her new business.
[71] Asked about the literature she saw at the function, Ms. Laing replied that there were bookmarks, business cards, and items advertising Ms. Morris’ school.
[72] It was put to her that she told the police in one of her statements that she had seen brochures at the function. She replied that she had not typed the statement although she signed it. She had no recollection of seeing brochures at the dinner.
[73] Ms. Laing confirmed that Mr. Dziadecki had spoken at the function in support of Ms. Morris’ new business. She stated that in her mind King Judah and Advantage were one and the same. The former she believed, was a “sub company” under Advantage.
[74] Ms. Laing conceded that she testified at the preliminary hearing that Ms. Morris had called her and invited her to do business with her. She also conceded that she stated in her January 2007 police statement that Ms. Morris first called her in December 2004. She noted however, that Ms. Morris initially called her after the dinner in the spring or summer of 2004, not in December of the same year.
[75] Ms. Laing admitted that she typed a chronological account of what had happened which she had given to the police when she met them in January 2007. Asked about her decision to invest with Ms. Morris, Ms. Laing noted that Ms. Morris told her that it was a good time to invest before the market took a downturn. She reiterated that Ms. Morris had guaranteed that her $10,000 would be returned to her, along with 7% interest. The form which Ms. Morris prepared stated that the fund was guaranteed.
[76] Ms. Laing conceded that Ms. Morris never told her where her money was going to be invested.
[77] Ms. Laing conceded that the cheques given to her by Ms. Morris did not have the name Advantage on them. She conceded that the address on the cheques was different from that of Advantage. She noted that the cheques were returned N.S.F. and that to avoid a bank penalty she decided against cashing the remaining cheques.
[78] Ms. Laing also conceded that the letter sent to her by Ms. Morris attached to the progress reports did not have the name or logo of Advantage. She noted however, that the address given on the letter was that of Advantage.
[79] Ms. Laing agreed that with respect to the $10,000 she had given to Ms. Morris to invest, all she was making on her investment was 1% given that she had to pay her bank 6% of the 7% she expected to earn on the investment.
[80] When pressed about her reasons for investing with Ms. Morris, Ms. Laing replied that Ms. Morris presented as a God fearing church member of high Christian faith.
[81] Defence counsel suggested to Ms. Laing that she was a savvy investor given that she had previously invested in the Investor Group and also at Bombardier. She replied that Investors’ Group had sent a representative to her for investment purposes. She also explained that she had worked at Bombardier and had acquired shares through the company and as part of the company’s compensation program.
[82] Ms. Laing also conceded that she had done four or five university courses in business at York University. Defence counsel put to her that she had lied in the preliminary hearing when she testified that she had a university degree. She denied this. It was put to her that when asked during the preliminary hearing if she had graduated, she had replied: “I have some university. Yes.”
[83] Ms. Laing confirmed that she had made that response. However, she stated that: “I did not say I have a B.A.”
[84] Ms. Laing also testified that Ms. Morris had falsely claimed that she held a B.A. degree. She stated that she concluded that this was untrue after she asked some people to research this for her.
[85] Defence counsel put to Ms. Laing that she had lied to the police in her August 3, 2005 statement when she stated that she had sent a letter to Mr. Dziadecki. She denied this. In re-examination she produced a draft of the letter, which was dated August 1, 2005, a copy of which had been given to the police on August 3, 2005.
[86] Ms. Laing first testified that she had located a website for King Judah. She admitted in re-examination that the website was actually in the name of Advantage; not King Judah. It indicated: “Maxine Morris Advantage Group of Finance Inc.” The website made no mention of the name King Judah.
C. EVIDENCE OF ABHA WASON
[87] Ms. Wason, a Bank of Montreal manager, identified a sole proprietorship agreement filed with her bank by Ms. Morris which stated that Ms. Morris carried on business as King Judah Financial Services. The account was opened on December 6, 2004. Ms. Morris was the signing officer. The name of Errol Lowe was added on July 19, 2005 as having a Power of Attorney in the account.
[88] On December 6, 2004, a deposit of $10,000 was made in the account. One thousand dollars of this amount was transferred to another account while $8,000 cash was withdrawn from the account.
[89] On December 21, 2004, $13,643 was deposited into the account. There were two major withdrawals from the account, one involving $8,000 and the other involving the sum of $4,000.
[90] The deposit made into Ms. Morris’ account on December 6, 2004 was an RBC cheque, payable to King Judah Financial, from the account of Eileen Laing.
[91] The deposit made into Ms. Morris’ account on December 21, 2004 was a TD bank cheque in the amount of $13,643.00 dated December 20, 2004 from the account of E. Laing.
[92] The $8,000 withdrawn from the account was done by a cheque payable to Maxie Morris. Ms. Wason testified that this was a cash withdrawal. Had it been a bank draft, certified cheque or money order, there would have been a notation on the cheque confirming this.
[93] The $4,000 withdrawn from the account on December 21, 2004 was done by a cheque made out to Judah Sanctuary of Praise. This cheque was also cashed.
[94] The signature on both cheques resemble Ms. Morris’ signature that appears on the documents generated when she opened the account.
[95] On February 14, 2005, a cheque issued by Ms. Morris, payable to Eileen Laing, in the amount of $15 was returned NSF.
[96] On July 18, 2005, a cheque issued by Ms. Morris, in the amount of $54 was returned NSF.
[97] Ms. Wason testified that the fee for processing an NSF cheque is $30.
[98] The address of King Judah Financial was 3709 Windhaven Drive, Mississauga, Ontario.
[99] Two cheques, in the amount of $54, were honoured by the Bank of Montreal.
D. EVIDENCE OF AVI KOREN
[100] The 44-year old Official Receiver with the Office of the Superintendent of Bankruptcy, Government of Canada, testified that he oversaw bankruptcies under the Bankruptcy Act of Canada.
[101] He examined debtors who declared bankruptcy under oath for three reasons:
(a) for conduct of the debtor;
(b) disposition of the assets of the debtor;
(c) reasons for bankruptcy.
[102] Ms. Morris filed for bankruptcy on September 6, 2005. She did so voluntarily. Mr. Koren examined her on February 9, 2006. He concluded that he would not discharge her. He did so because of concerns that she had not met her undertakings that involved the production of documents such as bank statements and receipts. The significance of not being discharged is that the debtor remains liable for all of his or her incurred debts.
[103] Ms. Morris had previously filed for bankruptcy but had been discharged.
[104] After Mr. Koren examined Ms. Morris on February 6, 2006, a hearing was conducted by a bankruptcy judge. There was a “No Order” disposition which meant that the judge did not make an order regarding the discharge of Ms. Morris from bankruptcy. To that extent, Ms. Morris is still liable for her outstanding debts.
E. EVIDENCE ON CONSENT
[105] A document from Industry Canada was filed on consent and marked as Exhibit 25. It contains a corporate name of Judah Sanctuary of Praise Inc. The registered office is 3709 Windhaven Drive, Mississauga, Ontario, L5N 7V2. It lists three directors one of whom is Kwame Smith. Mr. Kwame Smith is the son of Ms. Morris.
F. THE LAW
[106] In R. v. Zlatic (1993), 79 C.C.C. (3d) 466, the Supreme Court of Canada stipulated the essential elements of the offence of fraud. It noted as follows:
The elements of the offence of fraud are discussed in a general fashion in R. v. Théroux, [1993] 2 S.C.R. 5, S.C.C. No. 22249. For the purposes of this case, it suffices to state that the actus reus of fraud will be established by proof of:
the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and
deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim's pecuniary interests at risk.
Correspondingly, the mens rea of fraud is established by proof of:
subjective knowledge of the prohibited act; and
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).
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.
[107] For a finding of guilty of the offence of fraud the court must find a nexus between the prohibited act and the deprivation suffered by the complainant or the risk of deprivation he or she was exposed to. The dishonest act or misrepresentation must not necessarily be the only cause of the deprivation. There may well be other factors or ingredients in the “causal soup”, to use Doherty J.’s expression in R. v. Hamilton and Mason, [2004] O.J. No. 3252 (Ont. C.A.) in the deprivation suffered by the complainants. As long as the misrepresentation was a major or significant cause of the deprivation, the offence of fraud is made out. See R. v. Nette, 2001 SCC 78, [2001] S.C.J. No. 75.
[108] With respect to the mens rea of the offence, the Supreme Court of Canada also noted in Theroux, supra, that:
the mens rea would then consist in the subjective awareness that one has undertaken a prohibited act (the deceit … or other dishonest acts) which could cause deprivation in the sense of depriving another of property or putting that property at risk. If this is shown, the crime is complete. The fact that the accused may have hoped the deprivation did not take place or may have felt there was nothing wrong, with what he or she is doing, is not a defence.
G. ANALYSIS
[109] The Crown submits that Ms. Morris intentionally misled Ms. Laing into believing that a) she was a successful investor; b) her company was affiliated with Advantage; and c) that Ms. Laing’s investment would be guaranteed in order to induce her into investing with King Judah Financial Services. The Crown submits that viva voce evidence of Mr. Dziadecki and Ms. Laing, coupled with the documentary evidence, reveal that Ms. Morris intentionally misled Ms. Laing into believing that her company was affiliated or associated with Advantage. The progress reports which Ms. Morris sent to Ms. Laing further indicate that Ms. Morris misled Ms. Laing into believing that there would be no loss of her initial deposit. The Crown also submits that rather than investing Ms. Laing’s money, Ms. Morris cashed substantially all the money she received from Ms. Laing on the very day she deposited the monies into her bank account with no explanation as to their whereabouts.
[110] Mr. Gravesande, in his usual eloquent and passionate manner, essentially submits that Ms. Laing’s testimony amounts to nothing more than a cornucopia of conflicts, concoctions and contradictions. He submits that Ms. Laing was not misled or fraudulently induced in any way by Ms. Morris to invest her money. Ms. Laing invested her money with the expectation of making a profit. Unfortunately, Ms. Morris had no control over the vicissitudes of the market. Mr. Gravesande urges me to find that his client lacked the mens rea to defraud Ms. Laing.
[111] In support of his major contention that Ms. Laing’s testimony should be given little or no weight, Mr. Gravesande points to a number of instances in her testimony which he describes as being material inconsistencies that raise grave doubts about her credibility. Each of these will be dealt with in turn.
[112] For example, he submits that Ms. Laing’s testimony that the function at the Radisson Hotel was simply to promote King Judah was flatly contradicted by the testimony of Mr. Dziadecki. Mr. Dziadecki testified that the purpose of the function was for Ms. Morris to show appreciation to her clients for their support. Ms. Laing testified that Mr. Dziadecki endorsed Ms. Morris’ new business but had no recollection of what he said at the function. Ms. Laing further contradicted her earlier August 3, 2005 statement to the police that the function was a business seminar.
[113] In my view, there is ample evidence to suggest that this function was much more than a mere gesture of appreciation for Ms. Morris’ clients. I accept Ms. Laing’s testimony that a banner prominently proclaimed the name of Ms. Morris’ new business, King Judah Financial, Billion Dollar Dinner. Mr. Dziadecki testified that he had not heard the name of this new venture before. The function was a lavish event. Mr. Dziadecki described it as looking like a wedding. He also observed the banner advertising what he thought was a new business venture. Both he and Ms. Laing testified that the head of the church was present and even spoke at the function. Mr. Dziadecki spoke and expressed his happiness about Ms. Morris’ success.
[114] Mr. Gravesande urges the court to rely on Mr. Dziadecki’s testimony that Ms. Morris told him that the dinner was merely to express appreciation for her clients. I am very sceptical of this aspect of Mr. Dziadecki’s testimony for a few reasons. He had difficulty recalling many details about the function. He could not recall if he had received a written invitation. He could not recall if anyone had promoted King Judah Financial at the function despite the fact that this was the very first time he had heard of the company. Neither could he recall if he received a gift from Ms. Morris. He also had no recollection of what Ms. Morris spoke about.
[115] Mr. Dziadecki’s selective amnesia may well be explained by the fact that he wished to avoid any insinuation that he either knew about King Judah before the function or was affiliated in any way to the company.
[116] I find as a fact that Ms. Morris went to great expense to host what can only be termed a lavish function. It is highly unlikely that she would have done so merely to say thank you to her clients. Ms. Morris’ post function conduct by repeatedly contacting Ms. Laing who she met at the function reinforces this conclusion. To that extent, I disagree with the suggestion that this part of Ms. Laing’s testimony should be dismissed as a material contradiction or falsehood.
[117] Secondly, Mr. Gravesande submits that Ms. Laing also misled the court with respect to the nature of investment she expected Ms. Morris to make on her behalf. He submits that she repeatedly testified that Ms. Morris never provided her with specifics about the investment vehicles she would deploy on Ms. Laing’s behalf.
[118] Mr. Gravesande is correct that Ms. Laing repeatedly testified to that effect. That, in my view does not diminish her credibility. She repeatedly testified that Ms. Morris spoke glowingly about her success in business and her proven ability to make investors’ money grow. That Ms. Morris scrupulously or unscrupulously cultivated this image of success is borne out by the fact that she held a lavish function at the Radisson Hotel, attended by the head of a prominent church in Mississauga. I cannot find that Ms. Laing’s testimony on this point can be described as a material inconsistency.
[119] Furthermore, Mr. Gravesande submits that the court should reject Ms. Laing’s testimony that Ms. Morris assured her that the Ontario Securities Commission would guarantee her investment given her admission that she knew about the Commission prior to meeting Ms. Morris.
[120] The fact that Ms. Laing knew about the Commission before she met Ms. Morris is not proof that Ms. Morris did not make this misrepresentation to Ms. Laing. This is not a recent fabrication being made by Ms. Laing. She made a similar accusation in her August 11, 2005 letter to Mr. Dziadecki. Ms. Laing testified that Ms. Morris made the guarantee to her along with an undertaking that she would not lose her investment. She testified that this representation, along with King Judah’s affiliation with Advantage, played a substantial role in her decision to turn over her savings to Ms. Morris for investment purposes.
[121] Mr. Gravesande also questions Ms. Laing’s testimony about being fraudulently induced to invest with Ms. Morris’ company on the ground that she is an intelligent and savvy investor who had previously been involved in the stock market. He submits that Ms. Laing “attempted to cover herself in a veil of ignorance” about the stock market in a cynical attempt to blame Ms. Morris for the loss of her investment. Her investment in Bombardier and in the Investors Group proves, according to Mr. Gravesande, that Ms. Laing was not the financial neophyte she claimed to be.
[122] Mr. Gravesande is correct that Ms. Laing had some previous experience in the market. It was only in cross-examination that she revealed that while working as an employee of Bombardier, she had acquired stocks in that company. She noted that the value of those stocks had diminished but that she still retained them.
[123] There was no evidence presented about the amount of money paid by Ms. Laing for these stocks. That would likely have given some indication about the amount of financial risk she was exposed to by buying these stocks.
[124] Ms. Laing gave uncontradicted evidence that she was saving to purchase a home. It is therefore very unlikely that Ms. Laing would simply “roll the dice” as Mr. Gravesande suggests, by simply transferring all or virtually all her savings to Ms. Morris with no assurances about the preservation of her initial deposit or investment. It is even more unlikely that she would have risked $10,000 from her RBC line of credit to make a mere 1% interest on her investment, without assurances that there would be no risk to the principal amount.
[125] Another aspect of Ms. Laing’s testimony that “eviscerates” her credibility, according to Mr. Gravesande, is her testimony that she searched the website of King Judah and was later forced to admit that the website contained absolutely no reference to King Judah. The problem with this submission and its suggestion that Ms. Laing was trying to mislead the court is that without any prompting or request, Ms. Laing voluntarily produced the documents relating to the website. Clearly, her actions negate any suggestion that she was cynically trying to deceive the court or trying desperately to implicate the accused.
[126] The final part of Ms. Laing’s testimony that is unworthy of belief, according to Mr. Gravesande, is her testimony that her letter to the Official Receiver was written by herself rather than attorney, Gary Bennett. Mr. Gravesande points to Ms. Laing’s April 3, 2005 statement to the police in which she stated that she had retained Mr. Bennett and gave the police his telephone number. That statement, Mr. Gravesande submits, provides irrefutable proof that Mr. Bennett was likely the author of the complaint to the Official Receiver.
[127] The problem with this submission is that Ms. Laing neither wrote this statement, reviewed it nor signed it. It is a report prepared by a police officer based on a statement Ms. Laing made to him or her. She denied telling the police that she retained Mr. Bennett. There is no evidence that she did. To that extent, I cannot conclude that Ms. Laing provided false testimony by denying that she retained Mr. Bennett.
[128] Ms. Laing, according to Mr. Gravesande, lied to the court during the preliminary hearing in this case by indicating that she had graduated from university. In my view however, her evidence does not support this interpretation. She never said that she had a Bachelor’s degree of any kind. Secondly, her response to Mr. Gravesande’s question at the preliminary hearing about whether she had graduated was, “I have some university, yes.” That response can hardly be construed as a declaration that she graduated from the university.
[129] Despite the fact that Ms. Morris could not recall when Deeper Life Ministries changed its name to Kingdom Covenant Ministries, or the name of the church when she met Ms. Morris, or how many cheques she cashed or when Ms. Morris first called her, I find her to have been a very credible witness. She testified in a straightforward but forceful manner. She was candid about certain gaps in her recollection. She voluntarily provided documentation even when it conflicted with her testimony. Accused of lying when she testified that on August 3, 2005, she gave the police a copy of a letter she had sent to Mr. Dziadecki on August 11, 2005, she produced a copy of the letter, the authenticity of which was not challenged, confirming that she had indeed given the police a copy of the letter. Her testimony that she could not reach Ms. Morris by telephone in the early months of 2005 mirrored that of Mr. Dziadecki who had a similar problem. Most importantly, the documents marked as Exhibits 1, 5 and 6 confirm her testimony that Ms. Morris had led her to believe that King Judah was associated with Advantage and that Ms. Morris had assured her that there would be no loss or risk to her investment.
[130] Mr. Gravesande however, submits that the documentary evidence presented by the Crown does not corroborate Ms. Laing’s testimony. He submits that there is a serious doubt about whether Ms. Laing received the bookmark identified as Exhibit 1 in the trial. He submits that the second bookmark about Ms. Morris’ school in Jamaica is a copy of an original which raises doubts about whether Ms. Laing received the bookmarks at the Radisson Hotel function.
[131] Ms. Laing explained that she mistakenly believed that she had left an original copy of the bookmark with the police. She apparently did not, given her testimony that she still had an original copy in her possession. In my view there is nothing to suggest that Ms. Laing did not receive the bookmark at the Radisson Hotel dinner. It is entirely conceivable that she did, given the evidence that Ms. Morris was launching a new business. Indeed, Mr. Dziadecki had never heard about it before the dinner.
[132] A huge banner had the words, King Judah Financial, Billion Dollar Dinner inscribed on it. There was business material in the room although Mr. Dziadecki claimed not to have seen them. There is no basis for me to conclude that Ms. Laing got the bookmark from some unknown location or person.
[133] Regarding the bookmark marked as Exhibit 1, Mr. Gravesande makes a clever argument by submitting that it could be interpreted as stating, “Maxie Morris, a member of Advantage Group of Finance”. If read in this manner, then there would not be any misrepresentation in the words on the bookmark.
[134] The words on the bookmark however, do not lend themselves to such an interpretation. In bold capitalized print it states, “King Judah Financial”. Under this caption, appear the words, “A member of Advantage Group of Finance” with the address of the latter appearing below. The bookmark unequivocally conveys the message that King Judah is a member of Advantage.
[135] Regarding Ms. Morris’ business card, Mr. Gravesande urges me to find that Advantage printed the card. I do not believe that it did. Mr. Gravesande is correct by noting that Mr. Dziadecki’s testimony does not exclude the possibility that the company printed the card. That is because he did not review every authorization his wife made about the printing of business cards for his brokers.
[136] Based on Mr. Dziadecki’s evidence however, it is very unlikely that his company printed the card. He testified that the picture of a broker never appeared on the cards printed by his company. Secondly, the cards are all printed from templates prepared by the company. These templates do not have images of brokers. To that extent, the card in question would not have been printed by Advantage. The fact that Mr. Dziadecki did not have a “real” card of Ms. Morris when he testified does not constitute proof that his company printed the card, as Mr. Gravesande suggests.
[137] Ms. Laing testified that two cheques, one for $15 and another for $54 were returned NSF. She also testified that she cashed one $15 and one $54 cheque. That is clearly at odds with Ms. Wason’s testimony that two $54 cheques were cashed.
[138] This inconsistency in the testimony of Ms. Laing and Ms. Wason can hardly be described as a material inconsistency. The cheques were received by Ms. Laing seven years ago. It would not be possible to remember every single detail regarding this incident. Her evidence that two of the cheques were returned NSF is corroborated by Ms. Wason. So too is her testimony that she did not try to cash any of the other cheques. This discrepancy does not impugn Ms. Laing’s credibility.
[139] Ms. Laing testified that Ms. Morris led her to believe that King Judah Financial was an associate of Advantage and that that representation was a factor in her decision to transfer her money to Ms. Morris’ company for investment. Mr. Dziadecki gave uncontradicted evidence that his company had no association or affiliation with King Judah Financial.
[140] Mr. Gravesande maintains that the document prepared by Ms. Morris regarding the $10,000 received from Ms. Laing’s line of credit makes no reference to Advantage and to that extent, there was no misrepresentation. He makes a similar argument regarding the second form relating to the December 8 transaction that involved the transfer of $13,643 from Ms. Laing’s T.D. account to King Judah Financial.
[141] While neither document makes specific reference to Advantage both give the address of King Judah Financial as 2065 Dundas Street East, Suite 105, Mississauga, Ontario. That is the address of Mr. Dziadecki’s company, Advantage. This address appears in two sections on both documents. The address of King Judah Financial, according to the bank records marked as Exhibit 23, is 3709, Windhaven Drive, Mississauga. The information on Exhibit 5 concerning the address of King Judah Financial is clearly a misrepresentation in that it falsely suggests that the company shares the same address with Advantage.
[142] Furthermore, both forms contain the word “guaranteed” under a caption “Fund name”. That word, in and of itself, does not constitute proof that Ms. Morris told Ms. Laing that her initial deposit was guaranteed.
[143] The documents marked as Exhibit 6 however, in conjunction with Ms. Laing’s testimony and Exhibit 5, constitute cogent proof that Ms. Morris intentionally misled Ms. Laing into believing that the money she invested with King Judah Financial would be guaranteed. The covering letter is undated but Ms. Laing made a note on it indicating that she received it on December 31, 2004. Ms. Morris sent two “Plan Account Reports” to Ms. Laing. Both of them falsely give the address of King Judah Financial as being 2065 Dundas Street East, Suite 105, Mississauga. One sets out the “Plan Activity Summary for the period December 2004-July 2005.” It indicates the account amount to be $13,643 with an interest of $1,091.44. The second progress report relating to the $10,000 which Ms. Laing gave to Ms. Morris indicates a payment amount of $250. Significantly, both reports state: “There will be no loss of initial deposit.”
[144] This latter statement is self-explanatory. It is clearly part of the sales pitch of Ms. Morris given to Ms. Laing to persuade her to allow Ms. Morris to invest on her behalf. It corroborates Ms. Laing’s testimony that Ms. Morris told her specifically that there would be no risk to the funds she transferred to Ms. Morris for investment purposes.
[145] Mr. Gravesande submits that all the cheques given by Ms. Morris to Ms. Laing contain King Judah’s correct address and to that extent, this raises some doubt that Ms. Morris misled Ms. Laing about the relationship between King Judah and Advantage. The cheques however, were all dated after the transfer of Ms. Laing’s money to King Judah. The documents before the transfer all show King Judah’s address as being that of Advantage.
[146] Would Ms. Morris have paid the interest amounts on Ms. Laing’s line of credit if she intended to defraud Ms. Liang? In my view she would. It would have given Ms. Laing an added incentive to invest with Ms. Morris. More importantly, Ms. Morris’ “Plan Account Report” indicates that the total interest earned by Ms. Laing would be reduced by all monthly payments which Ms. Morris gave to her.
[147] The “Plan Account Reports” indicate that the investment period was for 24 months rather than the six months which Ms. Laing testified. The Reports however, indicate that the “Plan Activity Summary” is for the six month period between December 2004 and July 2005. There is therefore no material discrepancy between Ms. Laing’s testimony and the documentary evidence.
[148] The business records marked as Exhibit 23B also raises serious doubts that Ms. Morris invested any of the money she received from Ms. Laing. She deposited the $10,000 from Ms. Laing’s Line of Credit into the bank account she opened on December 6, 2004. There was a flurry of transactions from the account following this deposit none of which seemed to have been remotely related to any investment. Ms. Morris cashed $8,000. There is no information about what happened to this money. She transferred $1,000 to another account, the purpose of which is unknown. On the same day, the account balance was depleted by Debit Card purchases from Bell World, Wal-Mart, The Bay and Phantom Outlet. The activity continued the next day with Debit Card purchases from Staples, Kinko’s and an ABM withdrawal.
[149] Similarly, the $13,643 received from Ms. Laing was deposited into Ms. Morris’ King Judah Financial account on December 21, 2004. Ms. Morris wrote a cheque to herself for $8,000 and cashed that amount on the same day. She wrote a cheque for $4,000 to a company of which her son was one of three directors and that amount was similarly cashed from the account. There was an ABM withdrawal of $201.50 from the account on the same day. The next day, there were debit card purchases from Trillium Import, Wal-Mart and Staples in addition to the cashing of a cheque addressed to Ms. Morris, in the amount of $600. There is no information about what happened to the $12,000 cash withdrawals from the money which Ms. Morris received from Ms. Laing. The balance in the account as of January 5, 2005, one day before the Plan Account Reports which Ms. Laing received from Ms. Morris, was $37.07.
[150] Mr. Gravesande correctly submits that Ms. Morris has no control over the vicissitudes of the stock market. The reality however, is that there is no evidence that Ms. Morris invested any of Ms. Laing’s money in that market. The reports marked as Exhibit 6 provide no information about any institution or fund that the money was invested in.
[151] Mr. Gravesande submits that Ms. Laing was not the only signing officer on the account where Ms. Laing’s funds were deposited. Indeed, Errol Lowe is indicated as a signing officer on the bank’s records. Mr. Lowe apparently signed a number of cheques on the account evidenced by the signature “E. Lowe” that appears on cheques dated August 13, 2005, October 15, 2005, November 15, 2005 and December 15, 2005.
[152] Significantly however, the bank records reveal that Mr. Lowe was only added to the account as a signing officer on July 19, 2005, well after the deposit of and withdrawal of Ms. Laing’s money from Ms. Morris’ account.
[153] The bank records marked as Exhibit 23A, also reveal an important piece of information that is relevant to Ms. Laing’s contention that Ms. Morris fraudulently induced her to give King Judah her money. Ms. Laing testified that Ms. Morris falsely led her to believe that King Judah was affiliated with Advantage.
[154] The bank records show that King Judah Financial was not an incorporated company but a name under which Ms. Morris carried on business. The significance of this is that Mr. Dziadecki gave uncontradicted evidence to the effect that:
i) Ms. Morris was not licenced to sell investments except Insurance policies with National and possibly R.E.S.P.s;
ii) Ms. Morris would not have been permitted to have her company listed on Exhibit 5 as the company receiving Ms. Laing’s investment;
iii) His brokers were not authorized to make any guarantees such as that on Exhibit 6, other than that provided by Insurance companies.
[155] This is an unfortunate case. Ms. Laing is an intelligent woman who had some limited exposure in investment prior to meeting Ms. Morris. She succumbed to Ms. Morris’ enticements to invest for a number of reasons including the misrepresentations that her deposit would not be at risk and would be returned upon request, her belief that King Judah Financial was affiliated with a reputable company called Advantage and her belief that Ms. Morris was a God fearing individual who had achieved great financial success through her expertise in investment.
[156] The misrepresentations about the security of the investment and the connection between King Judah and Advantage turned out to be false. They played a significant role in Ms. Laing’s decision to transfer her money to Ms. Morris for investment purposes. Ms. Morris withdrew substantially all of Ms. Laing’s money on the very same days that she deposited the money into her account. There is no evidence that she invested any of that money. The rest of the money was consumed by purchases or other withdrawals. Ms. Laing has not received any of her money back.
H. CONCLUSION
[157] In the court’s view, Ms. Morris intentionally made a number of misrepresentations to Ms. Laing to induce her to give her money for investment purposes. As a result Ms. Laing was deprived of $23,643 on account of these misrepresentations.
[158] Despite Mr. Gravesande’s excellent representation of his client, I have no option, based on the totality of the evidence that I accept, to find Ms. Morris guilty of the offence beyond a reasonable doubt.
Andre J.
Released: January 31, 2013
COURT FILE NO.: CR-10-0082-00
DATE: 20130131
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN
- and –
MAXIE MORRIS
REASONS FOR JUDGMENT
Andre J.
Released: January 31, 2013