SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CRIMJ(F)3431/09
DATE: 20130201
RE: HER MAJESTY THE QUEEN v. DEBORAH DIECKMANN AND GEORGE SALMON
BEFORE: Baltman J.
COUNSEL:
X. Proestos for the Crown
H. Epstein for Ms. Dieckmann
E. Brown for Mr. Salmon
HEARD: January 23 and 24, 2013
Ruling on Issue Estoppel Application
Overview
[1] The applicant, Deborah Dieckmann, is charged with fraud. The Crown alleges she and others operated a number of businesses which stole several million dollars from the federal government, in the way of “source deductions.” According to the Crown, the culprits carried on a seemingly legitimate business providing payroll services to various employers. However, instead of remitting amounts collected to Canada Revenue Agency (CRA), they allegedly converted them to their own use.
[2] The Crown alleges that the applicant and others attempted to conceal their identities as the real operators of these businesses by frequently changing the names of the businesses and by hiring “nominee” directors to insulate them from the tax authorities.
[3] Before these charges were laid the Applicant was the subject of a civil action, advanced on behalf of the Minister of National Revenue and resolved on the basis of a consent judgment in the Tax Court of Canada. She maintains that the civil action involved the identical and central issue now being advanced by the Crown at her criminal trial and which was resolved in her favour in the civil action. She argues this is a failure to adhere to the doctrine of issue estoppel, and that the remedy for this “abuse of process” is to stay the criminal proceeding.
[4] On January 28, 2013, I ruled that this application should be dismissed, with written reasons to follow. These are my reasons.
Background Facts
[5] The Applicant is the sole proprietor of a business known as “Unique Ventures”, which purportedly offers bookkeeping services for employers. In July 2005 she received two Notices of Assessment from the CRA, advising that she was responsible for unremitted source deductions for the employees of various companies. She filed a Notice of Objection stating that she was not responsible for any unpaid remittances. The CRA maintained its position.
[6] In March 2006 the Applicant filed a Notice of Appeal, stating that she had no employees and merely performed payroll functions on behalf of other companies. She maintained that she was not related to any employer in any way that would give rise to a liability to pay source deductions. In approximately April 2006 the Applicant retained solicitor Donald Fiske to represent her on the appeal.
[7] In January 2007 examinations for discovery were held in the civil matter. Mr. Fiske attended on her behalf. Trial dates were set for September 5-7, 2007. Shortly before the scheduled trial date, the parties attended a pre-trial before a Judge of the Tax Court, where settlement discussions took place. Ultimately, following various negotiations spearheaded by Mr. Fiske, the Department of Justice consented to the reassessment, and conceded that the Applicant was not responsible for remitting source deductions during the period in question.
[8] The parties then entered into a “Consent to Judgment” absolving the applicant from liability for any unpaid remittances, which became the basis of a Judgment signed by Bowie J. of the Tax Court of Canada on September 24, 2007. Shortly after the Department of Justice (DOJ) agreed to discharge all encumbrances (PPSA, writ of seizure and sale) that had been placed on the applicant’s property pending trial.
Position of the Parties
[9] The Defence argues that the failure of the Crown to terminate the current criminal prosecution of her, in light of the resolution of her civil matter, is part of a broad “abuse of process” by the authorities. This particular prong of abuse, in her view, rests on the principle of issue estoppel, and merits a stay of this criminal proceeding.
[10] The Crown maintains that the Applicant has failed to satisfy any of the preconditions established by the case law for issue estoppel, and that in any case the Court should exercise its discretion to dismiss the application.
Analysis
[11] The legal framework for issue estoppel is well established in the case law: R. v. Mahalingan, 2008 SCC 63, [2008] 3 S.C.R. 316, para. 49; Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, para. 25. For the doctrine of issue estoppel to apply, the moving party must satisfy three requirements:
The same question was decided in the prior proceedings;
The judicial decision said to create the estoppel is final; and
The parties to the prior decision are the same persons as the parties to the proceedings in which the estoppel is raised.
[12] If the moving party successfully establishes these preconditions, a court must still determine whether, as a matter of discretion, issue estoppel ought to be applied.
[13] In my view this application clearly falters on the first prerequisite, as nothing was “decided” in the prior civil proceeding. There was no judicial determination here; the matter was resolved on the basis of a consent Judgment, which by definition obviates the need for a court to adjudicate the matter on its merits.
[14] Significantly, the Applicant cannot provide me with one example in the case law where a previous consent judgment satisfied the prerequisite for a prior decision. In fact, the cases suggest quite the opposite: in Mahalingan, the Supreme Court observed that issue estoppel “applies only to findings on a prior trial” (my emphasis), and that the determination of whether an issue was decided at the earlier trial must be based on a “review of the relevant portions of the transcript of the first trial” (paras. 23-6). Implicit in those comments is the expectation that a judge (or a jury) previously grappled with the merits of the issue and decided it in the applicant’s favour.
[15] In several other places the Supreme Court made it clear only a judicial finding will provide the foundation for issue estoppel: at para. 31 it noted the principle operated to prevent the Crown from re-litigating an issue that “has been determined” in a prior criminal proceeding “whether on the basis of a positive finding or reasonable doubt”; at para. 33 it stipulated that only issues resolved in the applicant’s favour as part of an acquittal, or on which findings were made, are estopped; at para. 52 it observed that the accused must show that the question had been “resolved on the merits” in her favour in the earlier proceeding. Thus even if the earlier matter had proceeded to trial (which did not happen here), it would be necessary to demonstrate “from the trial judge’s findings” - or in a jury trial, infer from an acquittal - that the issue was resolved in the applicant’s favour.
[16] In this case there was no judicial finding in the civil matter. The applicant argues that because the dispute was the subject of a judicial pre-trial, and then resolved through a settlement that was incorporated into a judgment signed by a judge in the Tax Department, it is the equivalent of a “decision”. That ignores the reality of consent judgments, which are often nothing more than a judge “rubber stamping” a settlement between parties. As the Supreme Court stated in Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, when considering whether a consent order based on an unconscionable separation agreement should be set aside (para. 64:
[The unconscionable agreement] makes it unnecessary to deal with the effect of the consent order since, as Osborne J.A. observed in McCowan v. McCowan (1995), 1995 1085 (ON CA), 14 R.F.L. (4th) 325 (Ont. C.A.), at para 19, “it is well established that a consent judgment may be set aside on the same grounds as the agreement giving rise to the judgment”. This approach was explained by James G. McLeod as follows:
This rule reflects the reality that a consent judgment is not a judicial determination on the merits of a case but only an agreement elevated to an order on consent. The basis for the order is the parties’ agreement, not a judge’s determination of what is fair and reasonable in the circumstances.
(Annotation to Thomsett v. Thomsett, 2001 BCSC 546, 16 R.F.L. (5th) 427, at pp. 428-29)
[17] There may have been any number of reasons why the Department of Justice decided to settle the civil matter in this case. Mr. Fiske, who testified on this application, acknowledged that as the trial date approached the DOJ notified him they were unable to locate a key witness, and therefore wished to adjourn the matter. The applicant opposed the adjournment. Undoubtedly a trial date looming with the State missing a key witness gave the applicant a tactical advantage. Mr. Fiske agreed he cannot say precisely why the DOJ agreed to settle the file, and of course the Judgment is silent on that point.
[18] Nor is it clear that the civil and criminal proceedings were focussed on the identical issue. Although both involved allegations that the applicant was responsible for unpaid remittances, it is unclear whether the scope of the reassessment is identical. The bulk of Mr. Fiske’s file, which he returned to Ms. Dieckmann, was not produced by her on this application. That leaves this Court with insufficient evidence to clearly identify what the assessments in the civil file related to, in order to meaningfully compare them with the matters at issue in this criminal prosecution.
[19] Mr. Fiske also testified that he understood from the outset that the criminal and civil suits were completely unrelated, that there was effectively a “Chinese wall” between them. And no one suggested to him that the settlement of the civil matter would bring an end to the criminal proceeding. He knew the applicant had another lawyer – Dev Bains – representing her on the criminal matter, and kept him abreast of the developments on the civil side.
[20] Ironically, the only judicial determination of this matter to date has been that of Allen J., who presided over the preliminary hearing and concluded, obviously, that there was sufficient evidence upon which a properly instructed jury could convict the applicant.
[21] For all those reasons I conclude there has been no prior decision of the matter at issue in this criminal trial, and therefore the first precondition for issue estoppel has not been met. In light of my conclusion on the first prerequisite, it is not necessary for me to address the remaining requirements.
[22] The application is dismissed.
Baltman J.
DATE: February 1, 2013
COURT FILE NO.: CRIMJ(F)3431/09
DATE: 20130201
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: R. v. Dieckmann and Salmon
BEFORE: Baltman J.
COUNSEL: X. Proestos for the Crown
H. Epstein for Ms. Dieckmann
E. Brown for Mr. Salmon
Ruling on Issue Estoppel Application
Baltman J.
DATE: February 1, 2013