CITATION: HMTQ v. O’Connor, 2015 ONSC 1256
COURT FILE NO.: CV-14-1230-00
DATE: 2015-03-12
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO
No one, for the Applicant
Applicant
- and -
MARK J. O’CONNOR, GILMOUR BARRISTERS PROFESSIONAL CORPORATION, and AFTERCARE NURSING SERVICES INC.
William R. Gilmour, for the Respondents, Gilmour Barristers Professional Corporation and Aftercare Nursing Services Inc.
Mark J. O’Connor, self-represented
Respondents
HEARD: February 24, 2015,
at Brampton, Ontario
Justice Price
Reasons For Decision
NATURE OF PROCEEDING
[1] Mark O'Connor, a resident of Buffalo, New York, became a surety in Brampton Ontario for an accused person, Michael Mullins, who was a client of the fitness business that Mr. O’Connor operates in Buffalo. In order to secure Mr. Mullins’ release on bail, Mr. Mullins’ company and employer, Aftercare Nursing Services Inc. (“Aftercare”), in Buffalo, sent $20,000 in trust required for his “cash bail” to an Ontario law firm, Gilmour Barristers, whom Mr. O’Connor retained to represent Mr. Mullins at his bail hearing and for his defence.
[2] Following Mr. Mullins’ bail hearing, Mr. Gilmour deposited his trust cheque for the $20,000 required by the Justice of the Peace for Mr. Mullins’ cash bail to the Ontario Court of Justice to satisfy the requirement in his recognizance of bail, the agreement with the Crown by which Mr. Mullins agreed to comply with the conditions imposed on him, including attending court as required, failing which he would forfeit the money.
[3] The recognizance named Mr. O’Connor as the surety who guaranteed Mr. Mullins’ compliance with his bail conditions, failing which Mr. O’Connor could be required to forfeit a lesser amount, $10,000, although he was not required to deposit that amount in cash. Mr. Mullins signed an “irrevocable assignment of bail” in relation to the $20,000 to Mr. O’Connor, to permit the Crown to seek the forfeiture of the funds for any breach of conditions by Mr. Mullins or for any breach by Mr. O’Connor of his obligation to supervise Mr. Mullins during his release.
[4] When the criminal charges were dealt with, and Mr. Mullins’ recognizance of bail expired, Mr. O'Connor and Aftercare both claimed the funds that were in court. The Crown obtained an order for interpleader in relation to the funds, an order granted to a party claiming no interest in funds in its possession, permitting it to pay the funds into court so that entitlement to them can be determined.
[5] Mr. O’Connor states that he was the source of the $20,000 and is entitled to its return. When the Court asked him, at the hearing, whether he could offer any evidence supporting his position that he was the source of the funds, he replied that he relies on the following:
a) The legal principle that bail funds must be pledged by a surety;
b) The irrevocable assignment of the funds to him;
c) The cheque for $20,000 that the Ministry of the Attorney General issued to him, dated December 31, 2013, upon which the Ministry later stopped payment. He argues that the Ministry would not have paid the cheques to him if he had not been entitled to it.
[6] For the reasons given in a handwritten endorsement at the hearing, and expanded upon here, the funds will be returned to Gilmour Barristers, in trust for Aftercare, who supplied the funds for the purpose of Mr. Mullins’ bail, as that purpose terminated upon the completion of the criminal proceeding against him and the expiry of his recognizance.
[7] Where someone supplies funds to an accused person to enable him to deposit the funds with the court as cash bail to secure his obligations as set out in his recognizance, and the accused signs an irrevocable assignment of the funds to the surety (who guarantees that the accused will comply with the conditions of his bail, failing which the surety may be required to forfeit the amount specified to secure his guarantee), the assignment operates only for the duration of the recognizance. Upon its expiry, the funds revert back to the person who advanced the funds, as the trust relationship has served its purpose.
BACKGROUND FACTS
[8] On July 10, 2010, Michael Mullins, of the Town of Clarence, New York, was charged in Brampton Ontario with the criminal offences of having in his possession a tire iron for a purpose dangerous to the public peace and criminally harassing a woman by following her from place to place, causing her to fear for her safety. Upon his arrest, Mr. Mullins called upon his employer, Aftercare, to help him secure his release on bail.
[9] James Joyce, a resident of New York State and the accountant for Aftercare in July 2010, became aware that Mr. Mullins had been charged with a criminal office in Ontario, was being detained, and was facing a bail hearing. He and Mr. Mullins shared the same personal trainer, Mr. O’Connor, and knew that Mr. O’Connor had previously located a lawyer to help Mr. Mullins in relation to an unrelated offence in New York State. Mr. Joyce therefore asked Mr. O’Connor to find an Ontario lawyer to help Mr. Mullins with the charges in Ontario.
[10] Mr. O’Connor, in an affidavit filed in this proceeding, states:
I had known Mr. Mullins for years in a professional capacity and had been a trusted advisor of his in legal matters that impacted Mr. Mullins personally… During the years that Mr. Mullins came to my wellness facility he was able to significantly improve his health, largely through his own efforts and sheer determination. A trust relationship developed between us as a result. For this reason he wanted me to take the lead in setting up his defence and in securing his release from Maplehurst Prison where he was being held, following his arrest on July 20, 2010. [Emphasis added]
I remained in phone contact with James Joyce regarding my various conversations with Mr. Mullins in Maplehurst and the steps I was taking to secure his release by Friday July 23. Mr. Joyce never questioned the fact that I had been delegated full authority by Mr Mullins to retain counsel, secure his release on bail, and to protect his name, reputation and business good will.
Mr. Joyce secured the initial funds that Mike and I agreed would be required to get him released on bail, and begin to prepare his defence….On July 23, 2010, I appeared at Mike’s bail hearing. I had agreed to act as Mr. Mullins sole Surety, as I was the only friend or family member capable and willing to act in that capacity. I was asked to have Mike take up residency in my home, under strict curfew requirements.
[11] On July 21, 2010, Mr. Joyce arranged for $9,000 USD to be delivered to Mr. O’Connor, “on the express understanding that the funds be used only for the benefit of Mike Mullins.” At the time, Mr. Joyce understood that the funds were for Mr. Mullins’ bail. Later, he learned that they were to be paid to Mr O’Connor as compensation for his locating Ontario counsel for Mr. Mullins to respond to his arrest and charges in Ontario.
[12] Mr. Joyce was later consulted further by Mr. O’Connor, who asked him to provide a further sum of $50,000 to pay for Mr. Mullins’ representation and bail. Mr. Joyce referred that request to Anita Burke, the Director of Accounting for Aftercare, and to Richard Krieger, Aftercare’s Attorney.
[13] Ms. Burke, in an affidavit filed in this proceeding, states that in July 2010, she became aware that Aftercare’s employee, Mr. Mullins, had been arrested and charged under the Criminal Code in Ontario and was facing a bail hearing. She states:
I was presented with a demand by Mark O’Connor for cash to permit him to obtain legal representation. Mark O’Connor also demanded cash to post bail for Mike Mullins. I was uncomfortable with the demands. I did not trust Mark O’Connor.
[14] Ms. Burke states that on July 21, 2010, she caused $9,000 U.S. to be delivered to Mr. O’Connor “on the express understanding that the funds be used only for the benefit of Mike Mullins.” She further states:
I was further imposed upon by the said Mark O’Connor to provide to him the sum of $50,000 to pay for Mike Mullins’ representation and bail. Mark O’Connor demanded that I provide those funds in cash however I declined to do so. I did, however, cause a banker’s draft to be drawn on the account of Aftercare Nursing Services Inc. in the amount of $50,000 to be made payable to Gilmour Barristers – In Trust. Those funds were the property of Aftercare Nursing Services Inc…. Aftercare claims the return of the $20,000 which it provided to be posted as bail for the release of Michael Mullins.
[15] Ms. Burke adds:
At no time did Aftercare Nursing Services Inc. provide any authority to Mark O’Connor to appropriate to himself any of the said $50,000 paid to Gilmour Barristers – In Trust, nor to take any assignment of the beneficial interest in and to that portion of the said funds posted as bail for the release of Michael Mullins to his own benefit. At no time has Aftercare Nursing Services Inc. provided any authority to Michael Mullins in his personal capacity to assign any beneficial interest in any of the said funds to the use of Mark O’Connor.
[16] Mr. O’Connor referred the matter of Mr. Mullins’ defence to Gilmour Barristers, who later became Gilmour Barristers Professional Association on May 10, 2014. On July 22, 2010, William Gilmour, a lawyer with Gilmour Barristers, received a letter from Ms. Burke, enclosing a bank check payable to Mr. Gilmour’s firm in the amount of $50,000. She stated, in her letter, “It is to be used for the benefit of Michael W. Mullins.” In so stating, Ms. Burke created an explicit trust over the funds for the benefit of Mr. Mullins, requiring that Mr. Gilmour use the funds for that purpose only.
[17] Mr. O’Connor apparently had no knowledge of the funds that Ms. Burke provided to Mr. Gilmour, which were to be used to satisfy the Crown’s demand that Mr. Mullins deposit cash bail with the court. Mr. O’Connor says that his understanding was that he would be required to deposit his own money as bail, as a condition of the Recognizance that both he and Mr. Mullins signed. He states:
At all times prior to and during the Bail Hearing, Gilmour Barristers maintained to the Court and the Prosecutor that I would be required to post my own money as bail, as a condition of the Recognizance. The possibility of future contact with the alleged victim and the monitoring problems of non-Canadian citizens living in Western New York made it mandatory that the Surety’s money, in this case, be at risk.
[18] Mr. O’Connor attaches a transcript of the bail hearing that took place before Justice of the Peace D.K. Currie on July 23, 2011. In it, the following exchange appears between Mr. Gilmour, as counsel, and Mr. O’Connor, as proposed surety:
Q. If this court were to see fit to release Mr. Mullins on a judicial interim release pending the disposition of the charges, would you be in a position to post a cash bail in the amount of $20,000?
A. It would – with some difficulty for me at this stage because, as I said, this business is a fledgling business and trying to get the message of age reversal fitness in Buffalo, which is the age reversal capital of the world….
…the food, et cetera, et cetera. So basically the – our business has not been profitable. It’s been basically me putting a great deal of money into it. There isn’t a great deal of cash flow from this business. I’m – I will have to, to dig fairly deeply to, to, to get that money, yes.
Q. Okay. Is that money available in cash…
A. It…
Q. …today?
A. …it is available today. I found it.
Q. Thank you.
[19] In his submissions to J.P. Currie, Mr. Gilmour stated:
I’m going to suggest a bail in the amount of $20,000 to be posted in cash. I’ve had some correspondence by telephone this morning with the office of the court here, Your Worship. I understand that only cash is available as, as bail. I can advise you that I have a draft that I would be putting through my trust account. They have indicated that if the court so orders they will accept a, a bank draft or a certified cheque. I would invite the court to, to include in the order that my certified trust cheque be acceptable for the posting of the $20,000 bail. I am in funds to do that. [Emphasis added]
[20] Justice of the Peace Currie, in reasons, delivered orally, for releasing Mr. Mullins, stated, in part:
The only concern the court has, as indicated, is in regards to the primary and the secondary ground. But it is the opinion of the court that after hearing from a proposed surety, and with proper terms put in place of which you will agree to before being released, and having a knowledge and understanding that Mr. O’Connor has in regards to the system, it is the opinion of the court that a release can be fashioned. Therefore, the onus has been reversed and you will be released on a recognizance of bail. It will be a recognizance of bail in the amount of $20,000 cash deposit, bank draft acceptable from defence, and $10,000 non-deposit. [Emphasis added]
[21] In the discussion that followed, regarding the terms of the recognizance, the following exchange occurred:
MR. GILMOUR: Okay, that’s fine. And, you did specify that the, the cash component could be paid by draft, bank draft.
THE COURT: Yes, bank draft.
MR. GILMOUR: Thank you.
THE COURT: Mm-mm.
MR. GILMOUR: Actually, I, I, I don’t mean to be difficult but I’m dealing with a draft coming in from the United States, and I know the bank’s going to want to look to me for comfort on it, and I think I would be more likely to be able to do something very quickly if it was a certified solicitor’s trust cheque.
THE COURT: I just indicated bank draft, or I can just put basically down, if you would like, put down – you’re a respected member of the court, you’re a member of the court, that cheque from the firm of?
MR. GILMOUR: Gilmour Barristers, thank you.
THE COURT: Would be sufficient and satisfy the court, and I will accept that. How is that?
MR. GILMOUR: Thank you, Your Worship. [Emphasis added]
[22] On July 23, 2010, following the bail hearing, another Justice of the Peace, John Farnum, released Mr. Mullins on a recognizance of bail (“the recognizance”). The recognizance provided that Mr. Mullins was being released on $30,000 bail, consisting of $20,000 “cash” and two amounts of $10,000, without deposit, one by Mr. Mullins, and one by his named surety, Mr. O’Connor. The recognizance, which was signed by Mr. Mullins and Mr. O’Connor before J.P. Farnum, noted: “Cheque from the office of Gilmore Barristers accepted”.
[23] The recognizance required Mr. Mullins to reside with his surety, business travel excepted, and to report to the airport division of the Peel Regional Police Service by telephone every Monday, and to report every second Monday in person. It further required him to abstain from communicating with the victim and from attending at her residence or place of employment, and to abstain from possessing any prohibited or restricted weapon or applying for or possessing any license or authorization pursuant to the Firearms Act.
[24] Upon his release on bail on July 23, 2010, Mr. Mullins signed a number of forms, including “an Assignment of Cash Bail”, which he says he understood to be a formality, assigning his ownership of the cash he was depositing as his bail to his surety, Mr. O’Connor. The funds, which Mr. Mullins’ employer, Aftercare, sent to his Ontario lawyer in trust, as Mr. Mullins did not himself have the necessary funds for his bail, belonged to Aftercare. The Assignment, which Mr. Mullins attaches to his affidavit, was a pre-printed form, bearing the seal of the Ontario Court of Justice in Brampton, and addressed to the Clerk of that Court. It was signed by Mr. Mullins, and witnessed by Justice of the Peace Farnum. It stated the following:
I, Michael Mullins, of 6137 Highgrove Park, Clarence N.Y. 14051, do hereby assign my cash bail in the amount of $20,000.00 to Mark J. O’Connor of 530 Cottonwood Drive, Williamsville, N.Y. 14221 and this shall be your good and irrevocable authority and direction to pay the said money to the assignee named above. [Emphasis added]
[25] Two months later, on September 21, 2011, Mr. Mullins pleaded guilty to the offence of criminal harassment before Justice Bigelow and was granted a conditional discharge with probation for a twelve month period. The weapon charge was withdrawn. Mr. Mullins finished serving his probation a year after that, on September 20, 2012, without incident and without any breach of the terms of his probation. As a result, the court was required to refund the money that had been deposited with it for his bail.
[26] On September 23, 2011, Mr. Gilmour wrote to Mr. O’Connor reporting on the outcome of the criminal proceeding against Mr. Mullins. Mr. O’Connor, before entering the fitness business, had been a lawyer in New York State, until he was suspended, and therefore had some knowledge of criminal procedure in the United States. Mr. Gilmour concluded his letter with the following:
We acknowledge the great service and yeoman’s work that you did for Mike in assisting us, acting as his surety and contacting us on his behalf. We also acknowledge your request for compensation. We are unable, in Canada, to pay any consideration to a person who acts as a surety (ie: it is criminal here to act as a bail bondsman). Further, under our Rules of Professional Conduct a lawyer cannot pay a referral fee to another person (and only recently could we share fees among firms on the same matters without sending separate bills to the client). I am not sure how that works without of jurisdiction lawyers however my understanding from you is that you are no longer licensed or in active practice. In this case, while you were of great assistance to Mike, I could not argue that the assistance was such that it could only have been provided by a lawyer acting as such. Rather, you acted as a good friend in Mike’s interest. In any event, it would be mandatory that I get client leave (in writing) to pay you anything. When I sought that leave, Mike told me that he had already paid you $10,000 and that I was prohibited from paying you directly any further. Mark, I detect no ill will towards you from Mike, and he has indicated to me that he will be in touch with you. Please make such arrangements as are appropriate for compensation directly with Mike. [Emphasis added]
[27] Mr. Mullins made a request, through Mr. Gilmour, for the return of the bail funds, so that he could return them to Aftercare. On September 26, 2011, Mr. Gilmour sent a letter to the Bail Registrar, Ontario Court of Justice in Brampton, noting that he had received a call from the Court earlier that day with respect to the return of the $20,000 bail monies that had been deposited with the court for Mr. Mullins’ bail. Mr. Gilmour stated:
The Bail was posted though our offices from my trust account. You now propose to return trust monies handled through my account in accordance with a direction which I have not seen and contrary to instructions which I have from my client. We have delivered a signed Direction Re: Return of Bail monies of which you have acknowledged receipt. Please do not return those funds except upon an Order of the Court obtained upon notice to us. You are proposing to mishandle trust monies by paying them to a person other from whom you received tem (sic) in an absence of any direction from us and in the face of a contrary direction from the beneficial owner of the funds served upon you by our offices. To be clear, both our client, as beneficial owner of the posted funds and our offices as the acknowledged source of the funds have directed you to pay the funds to our order – in trust. [Emphasis added]
[28] On July 27, 2011, Mr. O’Connor submitted a “Bail Request for Completed Matters” to the Ontario Court of Justice for the return of the $20,000 to him. On July 29, 2011, Mr. Gilmour sent a further letter to the Bail Registrar of the Ontario Court of Justice, confirming that he had received instructions to bring an application before the Superior Court “for the recovery of our client’s bail money, should you propose to pay his funds out other than to us in trust in accordance with the Direction delivered to you following the conclusion of Mr. Mullins case and the end of his judicial interim release.” He further stated:
I confirm that it is our client’s position that his more recent direction revokes and supersedes his earlier direction made in favour of his surety, who did not post the bail monies. Our client advises that he is unaware even that he is purported to have signed such a direction. I confirm further that the bail deposit was made by our client through our trust account from certified funds deposited with us drawn on the account of Michael Mullins’ company Aftercare Nursing. The funds did not originate form Mark O’Connor. [Emphasis added]
[29] Mr. O’Connor filed, with his responding material in this proceeding, a copy of a cheque to him dated December 12, 2013, which he had received from the Ministry of the Attorney General – Bail and Restitution Office - in the amount of $20,000. The back of the cheque indicates that the cheque was dishonoured when presented on March 13, 2014. It is not clear from the evidence before me what the circumstances were in which this cheque was issued and later dishonoured. In the absence of such evidence, I infer that an error was made by the court office, which was later detected, and that payment was stopped on the cheque before it was presented for payment.
[30] On March 19, 2014, Her Majesty the Queen in Right of Ontario (“the Crown”), commenced the present proceeding by a notice of application in which it sought an interpleader order permitting it to pay the $20,000 bail deposit, less the costs of the application, into court to await the outcome of a proceeding in this court between Mr. O’Connor and Gilmour Barristers. It stated that the grounds for the motion were that Mr. O’Connor and Gilmour Barristers had made adverse claims to the funds paid as bail for Mr. Mullins, and now in the possession of the Court Services Division, a branch of the Ministry of the Attorney General, and that the Crown claimed no beneficial interest in the property, other than a lien for costs, fees or expenses arising from the application.
[31] On June 18, 2014, Emery J. made an interpleader order, and the Court Services Division paid the $20,000 that had been deposited to it for Mr. Mullins’ bail into this Court to the credit of this proceeding. Pursuant to leave granted by Justice Emery, the Crown then withdrew from the proceeding, so that this Court could determine entitlement to the funds as between the respondents, Gilmour Barristers, on behalf of Aftercare, who had paid the money into court and now ask to be added as a respondent, and Mr. O’Connor.
[32] Aftercare was represented at the hearing before me. It requested an order adding it as a respondent to the application. It would be affected by the outcome of the proceeding, and will therefore be added as a party.
[33] Aftercare additionally seeks the following:
(a) An order granting it leave to amend the Application by adding the names of the respondents Gilmour Barristers Professional Association and Aftercare Nursing Services Inc.;
(b) A declaration that the $20,000 deposited for the bail of Michael Mullins is the property of Aftercare, which paid the funds to Gilmour Barristers in trust, who paid the funds into the criminal court;
(c) An order giving effect to Aftercare’s settlement offer to Mr. O’Connor, who referred Aftercare to Gilmour Barristers; and,
(d) An order directing the court to return the funds to Gilmour Barristers Professional Association in trust for Aftercare, less $8,000 CDN to be paid to Mr. O’Connor, less any costs he was found to owe to Aftercare in this proceeding.
THE ISSUES
[34] The court must determine who is entitled to the bail monies that were deposited in court, and how those funds are to be distributed.
POSITIONS OF THE PARTIES
[35] Gilmour Barristers submit that they reached what they believed was an agreement with Aftercare and Mr. O’Connor. Under the terms of the Agreement, attached as Exhibit “D” to the affidavit of Peter Girouard, a lawyer with Gilmour Barristers, the funds were to be paid to Gilmour Barristers in trust, who would apply them as follows:
a) First, an amount would be paid to Gilmour Barristers, on behalf of Aftercare, for any costs ordered in the application proceeding;
b) Second, $8,000 CDN would be paid by certified cheque to Mr. O’Connor, less the above-mentioned costs;
c) Third, $12,000 would be paid to Aftercare Nursing Services Inc.
[36] Gilmour Barristers state that after reaching the agreement, but before Mr. O’Connor signed it, Mr. O’Connor demanded $8,000 USD, not $8,000 CDN. The law firm then took the position, on behalf of Aftercare, that they would pay $8,000 CDN to Mr. O’Connor less any costs that they incurred in obtaining a declaration from the court as to their entitlement to the funds.
[37] Aftercare submits that it paid the bail monies to Gilmour Barristers in trust, on the explicit understanding that they were to be used for Mr. Mullins’ benefit in securing his release on bail. It submits that it is entitled to the return of the funds because the purpose for which it gave the funds, and the condition upon which Mr. Mullins assigned the funds to Mr. O’Connor, has terminated.
[38] Aftercare’s counsel states that Gilmour Barristers, whose costs now amount to in excess of $9,200, has authorised him to waive any claim to costs against Mr. O’Connor beyond the $8,000 that Aftercare was initially prepared to pay him from the $20,000. Additionally, counsel states that the Crown withdrew from the proceeding pursuant to the interpleader order made by Emery J. and makes no claim for costs.
[39] Mr. O’Connor states that, for the reasons set out above, he was the source of the $20,000. When the Court asked him how he had provided the funds (i.e. by cheque, money order, wire transfer, etc.), he declined to respond, other than to note that the answer to the question was not to be found in the evidentiary record.
[40] Mr. O’Connor further stated that he had made no agreement with Gilmour Barristers or Aftercare regarding the distribution of the funds.
FINDINGS OF FACT
[41] I make the following findings of fact and law:
a) The $20,000 that was paid for Mr. Mullins’ bail originated from the trust account of Gilmour Barristers, who received the funds from Mr. Mullins’ employer, Aftercare. Aftercare provided a cheque in the amount of $50,000 for the benefit of Mr. Mullins, including his bail.
b) I draw an adverse inference from Mr. O’Connor’s failure to provide evidence that he was the source of the funds, that such evidence does not exist or that, if it does exist, it would not be favourable to the position he takes as to entitlement.
c) Gilmour Barristers provided the bail funds directly to the Ontario Court. Mr. O’Connor only ever held the funds notionally, and did so, pursuant to the irrevocable assignment, as a trustee during the period of Mr. Mullins’ bail.
d) Mr. Mullins assigned the bail funds to Mr. O’Connor for the limited duration of his recognizance of bail. Mr. Mullins regarded the assignment as a formality, and both the request of the Justice of the Peace for the assignment, and Mr. Mullins giving the assignment, appears to have resulted from a confusion with Justice of the Peace Currie’s order, which clearly required $20,000 cash and an additional $10,000 with no deposit from either Mr. Mullins or Mr. O’Connor, as his surety. Whatever the intention, the necessity for it ended with the termination of Mr. Mullins’ recognizance of bail, when the charges against him were fully disposed of.
e) The assignment to Mr. O’Connor was irrevocable during the period of the recognizance only. An assignment of bail money, whatever its source, is to enable the Crown to secure the forfeiture of the funds by estreatment in the event Mr. Mullins defaulted in his obligations under the recognizance. Neither Mr. Mullins nor Mr. O’Connor has any legal or equitable interest in the funds beyond the period when the recognizance was in effect.
f) An agreement was not reached between Gilmour Barristers, on behalf of Aftercare, and Mr. O’Connor, owing to their disagreement over the currency exchange on the $8,000 that was offered to Mr. O’Connor.
g) Gilmour Barristers does not owe any legal obligation to pay a referral fee to Mr. O’Connor. Indeed, neither Mr. O’Connor nor Gilmour Barristers asserts such an obligation, and counsel for Aftercare acknowledges that it may be professional misconduct to pay such a fee in these circumstances. While Mr. Girouard, on behalf of Aftercare, says that Mr. Connor requested the $8,000 as a referral fee, he says that the basis for Aftercare’s and Gilmour and Barristers’ offer (or, as they viewed it, agreement,) to pay that amount to him was simply as a payment in settlement of the dispute, to bring about an end to the litigation.
LEGISLATION AND JURISPRUDENCE
The legal basis for cash deposits on judicial interim release orders
[42] Judicial interim release orders are governed by section 515 of the Criminal Code. That section provides:
515(1) Subject to this section, where an accused who is charged with an offence other than an offence listed in section 469 is taken before a justice, the justice shall, unless a plea of guilty by the accused is accepted, order, in respect of that offence, that the accused be released on his giving an undertaking without conditions, unless the prosecutor, having been given a reasonable opportunity to do so, shows cause, in respect of that offence, why the detention of the accused in custody is justified or why an order under any other provision of this section should be made, and where the justice makes an order under any other provision of this section, the order shall refer only to the particular offence for which the accused was taken before the justice.
(3) Where the justice does not make an order under subsection (1), he shall, unless the prosecutor shows cause why the detention of the accused is justified, order that the accused be released
(e) if the accused is not ordinarily resident in the province in which the accused is in custody or does not ordinarily reside within two hundred kilometres of the place in which he is in custody, on his entering into a recognizance before the justice with or without sureties in such amount and with such conditions, if any, as the justice directs, and upon his depositing with the justice such sum of money or other valuable security as the justice directs.[^1] [Emphasis added]
[43] Section 515, in its structure and wording, provides for an escalating series of measures of increasing security to respond to circumstances of proportionate risk. Circumstances of minimal risk may be managed by a simple undertaking from the accused, with such conditions as the Justice directs, the breach of which conditions could trigger one or more of the consequences provided for in the Criminal Code in the event of such breach, namely:
a) s. 524(1)(a): arrest for contravening an undertaking
b) s. 524(4): cancellation of the undertaking and ordering that the accused be detained in custody for a further bail hearing,
c) s. 534(5): release on an undertaking or recognizance;
d) s. 145(5.1): prosecution for the indictable or summary conviction offence of breaching an undertaking, punishable by up to two years’ imprisonment.
[44] Circumstances of greater risk may be managed by release on a recognizance with a specified amount, with or without sureties, but without deposit. Breaching the conditions of such a recognizance can trigger, in addition to those consequences that can result from the breach of an undertaking, an estreat proceeding by the Crown, undertaken pursuant to sections 770 to 771 of the Criminal Code. If that proceeding results in a finding that the accused breached a condition, the recognizance can be forfeited, whereupon the accused and his sureties become judgment debtors of the Crown, each in the amount that the judge orders him to pay, and an order and writ of fieri facias, may be filed with the sheriff for enforcement against the property of the accused or surety. If the writ is not satisfied, a warrant of committal of the accused or surety to jail may issue pursuant to s. 773(3).
[45] Circumstances of greater risk still may require management by release on a recognizance with sureties and with the deposit of cash. Such circumstances include those arising when the accused is a non-resident, who is presumptively more likely not to attend court for his trial, because he may be beyond the territorial jurisdiction of the court and less readily made subject to the consequences described of breaching the terms of his recognizance. In this case, a breach may trigger estreat and forfeiture of the amount deposited, pursuant to s. 771(4) of the Criminal Code. That section provides:
771(4) Where a deposit has been made by a person against whom an order for forfeiture of a recognizance has been made, no writ of fieri facias shall issue, but the amount of the deposit shall be transferred by the person who has custody of it to the person who is entitled by law to receive it.
[46] This “ladder principle” of measures of escalating restrictiveness to manage circumstances of increasing risk was described by Healy CJQ who, in R. c. Anoussis, analyzed the rationale for cash bail in explaining why he had decided to release an accused without requiring a cash deposit in that case. He stated:
The structure for interim release adopted in Part XVI has been called the "ladder" principle. (Thompson (1972) 1972 CanLII 1274 (BC SC), 7 C.C.C. (2d) 70 (B.C.S.C.)). At its core this means, as already noted, that release is favoured at the earliest reasonable opportunity and, having regard to the risk of flight and public protection, on the least onerous grounds. The first option to consider is release upon an undertaking without conditions (s. 515(1)). Second, if the prosecution considers that this will not secure the aims of Part XVI it may seek to show cause for other, non-monetary conditions (s. 515(2)(a)). Only in the last resort should those conditions include a requirement for cash by deposit or recognizance by the accused or a third party (s. 515(3)). These are the steps on the ladder. Even then, however, there is a progression in the types of cash conditions that may be sought and imposed under paragraphs 515(2)(b) through (d) and (e) and, again, the policy favours less onerous conditions unless cause is shown for more onerous grounds. (Horvat (1972) 1972 CanLII 1371 (BC SC), 9 C.C.C. (2d) 1 (B.C.S.C.), note 19; Trotter, note 13, p. 245.)[^2] [Emphasis added]
[47] Historically, a release with cash bail was the standard form of release. Over the years, the requirement for cash bail came to be viewed as overly restricting release, and the current sections were introduced as part of the Bail Reform Act in 1970. The Alberta Court of Queen’s Bench reviewed the history of the cash bail section in R. v. Folkes. Marceau J. stated:
Prior to the 1972 Bail Reform Act, S.C. 1970-71-72, c. 37, release was left to the discretion of the bail judge. Cash bail was the predominant form of release at this time. This system garnered heavy criticism, and was radically reformed by the Bail Reform Act. This Act added s. 457 (2) (the predecessor of s. 515 (2)) to the Criminal Code of the time, which codified the forms of release available to a bail judge. Sections 457 (2) (a) and (b) are identical to the current s. 515 (2)(a) and (b). Section 457 (2)(c) permitted the judge to release an accused on a recognizance with sureties but without a deposit of cash or valuable security. S. 457 (d) was functionally the same as the current s. 515 (e), and applied to accused persons being held in a province where they are not resident or to accused persons residing at least 100 miles away from the place they were in custody (as opposed to 200 km. like in the present legislation). This new bail system was designed to generally do away with the requirement for the accused to deposit money unless they were not normally resident in or near the jurisdiction in which they were in custody (See Gary Trotter, The Law of Bail in Canada, 2nd ed. (Toronto: Carswell, 1999) [Trotter] at 247). [Emphasis added]
However in 1975, the Code was further amended by the Criminal Law Amendment Act, S.C. 1974-75-76, c. 93, which added subsection (c.1) (which would later become s. 515(2)(d)). Subsection (c.1) was virtually identical in wording to the current subsection (d) and allowed for an accused person to be released (with the consent of the prosecutor) by entering into a recognizance without sureties but by depositing a sum of money or other valuable security.
Following the 1972 amendments, the Criminal Code has no provision allowing for bail under a recognizance with sureties and a cash deposit unless the accused normally lives in another province or resides over 200 km. from the place they are in custody.[^3] [Emphasis added]
[48] The B.C. Supreme Court, in R. v. Saunders, considered the purpose of cash bail, holding that the requirement in s. 515 for the Crown’s consent to cash bail for an accused who is a local resident violated the right of reasonable bail in s. 11(e) of the Charter of Rights and Freedoms and must be read down to include the words “which consent may not be unreasonably refused.”[^4] The court cited R. v. Pearson, in which Lamer C.J.C. had stated, on behalf of the Court:
Most of the current bail provisions in the Criminal Code were enacted in the Bail Reform Act, S.C. 1970-71-72, c. 37. The Bail Reform Act established a basic entitlement to bail. Bail must be granted unless pre-trial detention is justified by the prosecution. In R. v. Bray (1983), 1983 CanLII 1981 (ON CA), 2 C.C.C. (3d) 325 (Ont. C.A.), at p. 328, Martin J.A. described the Bail Reform Act as "a liberal and enlightened system of pre-trial release". In my view, s. 11(e) transforms the basic entitlement of this liberal and enlightened system into a constitutional right. Section 11(e) creates a basic entitlement to be granted reasonable bail unless there is just cause to do otherwise.[^5] [Emphasis added]
[49] In the present case, the court required both cash and a surety. The cash was required from the accused, not from the surety. In addition to the cash bail to be provided by Mr. Mullins, both Mr. Mullins and Mr. O’Connor, as surety, were required, by signing the recognizance, to pledge $10,000, with no deposit, which would be subject to estreat proceedings in the event that Mr. Mullins failed to comply with the terms of the recognizance.
[50] Mr. Mullins made an irrevocable assignment of his cash bail to Mr. O’Connor. An assignment of a legal right, in Ontario, is provided for by Rule 11.01 of the Rules of Civil Procedure. It provides:
11.01 Where at any stage of a proceeding the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the proceeding shall be stayed with respect to the party whose interest or liability has been transferred or transmitted until an order to continue the proceeding by or against the other person has been obtained.
[51] An accused commonly makes an irrevocable assignment of bail monies to a lawyer, or the Legal Aid Plan, in order to provide the lawyer or Plan with security for the payment of their fees when the accused has limited funds and has deposited what funds he has for bail. Ratushny J. of this Court, in R. v. Estephan, noted that what the accused assigns, in such cases, is not the funds themselves, but his right to require the court to pay the funds to him. She stated:
I agree that assignment of bail monies is appropriate, however, it is only an assignment of the accused’s entitlement to those monies. The accused, by the terms of his recognizance of bail, has agreed that he owes Her Majesty the Queen the cash bail deposit “if he fails in any of the conditions” of bail. Cash bail deposits, therefore, amount to secured funds payable to the Crown on default and in the case of an absconded accused where there is obvious default, they can’t at the same time and by virtue of the discretion available to the Court under section 771(2), also amount to security for legal fees owed to defence counsel.[^6] [Emphasis added]
[52] In R. v. Webster, Veit J., of the Alberta Queen’s Bench, refused an application for relief from forfeiture by lawyers who had received assignments of bail monies from their client in a case where the accused client had absconded.[^7] He held that lawyers, as assignees from their clients of bail money, have standing to ask for relief from forfeiture, and that the forfeiture proceeding does not have to be taken in the name of the accused, but can be taken in the name of the assignee himself.[^8] Explaining the terms of the Judicature Act of Alberta, Veit J. noted that an assignee who meets the conditions of the statute has a legal right to the benefits of the contract of assignment subject to whatever limitations applied to the right of the assignor. He stated:
…Under the Judicature Act, an assignee who meets the conditions of the statute has a legal right to the benefits of the contract. Section 21 of the Act is reproduced here for ease of reference:
(1) When a debt or other legal chose in action is assigned by an absolute assignment made in writing under the hand of the assignor and not purporting to be by way of charge only, if express notice in writing of the assignment has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim the debt or chose in action, the absolute assignment is effectual in law to pass and transfer
(a) the legal right to the debt or chose in action from the date of the notice of the assignment,
(b) all legal and other remedies for the debt or chose in action, and
(c) power to give a good discharge for the debt or chose in action without concurrence of the assignor,
and is subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted.[^9]
[53] Veit J. held that an assignee held a lesser right than a surety to bail monies deposited to ensure the accused’s attendance in court and good behaviour pending appearance. After reviewing the status of sureties with regard to the forfeiture of monies deposited by them, he stated:
[31] An assignee from the accused steps into the accused's shoes. The assignee does not have the right to a better pair of shoes than the accused had. Therefore, the assignee will be treated as the accused would have been and not according to the somewhat more lenient standard applied to sureties.
[54] Mr. O’Connor, in receiving an irrevocable assignment of Mr. Mullins’ cash bail, took that assignment subject to the trust under which the Court Services Division, on behalf of the Court, held the funds it had received from Gilmour Barristers, on behalf of Mr. Mullins. The Court held the funds as cash bail for the specific purpose of securing Mr. Mullins’ obligations as set out in his recognizance.
[55] Gilmour Barristers, in turn, received the funds from Aftercare, which had paid the funds to that firm in trust for the benefit of Mr. Mullins and, more particularly, for the specific purpose of his bail and defence. Because this Court is determining entitlement to the funds as between Mr. O’Connor and Gilmour Barristers, it must determine the nature of the right that Mr. O’Connor derived from the irrevocable assignment of the funds to him by Mr. Mullins.
[56] Mr. Mullins’ right to receive the funds from the Court is subject to the trust that was impressed on the funds when the Court received them from Gilmour Barristers. That trust was that the funds be used only for the specified purpose of securing Mr. Mullins’ obligations under his recognizance, so that they would be available to be forfeited to the Crown in the event that Mr. Mullins breached the terms of his recognizance.
[57] Similarly, Mr. Mullins assigned his right to receive the funds to Mr. O’Connor for the purpose of enabling the Crown, in the event of a breach by Mr. Mullins, to secure the forfeiture of the funds as against Mr. O’Connor as well as against Mr. Mullins. In other words, the same funds were used to satisfy the requirement in the recognizance for cash bail from Mr. Mullins and for Mr. O’Connor’s guarantee of the further $10,000 that was required without deposit of funds.
[58] The funds, while in the hands of the Ontario Court, were impressed with an express trust because they were paid by Gilmour Barristers to the Court for the specified purpose, and once that purpose was at an end or failed, the trust was exhausted and the funds reverted to the settlor of the trust.[^10]
[59] An express trust is made out where the three certainties are met, namely, intent, subject matter, and object. In Henry v Henry, the Ontario Court of Appeal invoked the text of Waters Law of Trusts, and stated:
For the trial judge to determine the existence of a valid trust, it was necessary that he apply the facts which he found to be the essential characteristics of a trust, which are often referred to as "the three certainties". The essential characteristics of a trust are described in the following passage in D.W.M. Waters, Law of Trusts in Canada, 2nd ed. (Toronto: Carswell, 1984), at p. 107:
For a trust to come into existence, it must have three essential characteristics. As Lord Langdale M.R. remarked in Knight v. Knight, in words adopted by Barker J. in Renehan v. Malone and considered fundamental in common law Canada, first, the language of the alleged settlor must be imperative; second, the subject matter or trust property must be certain; third, the objects of the trust must be certain. This means that the alleged settlor, whether he is giving the property on the terms of a trust or is transferring property on trust in exchange for consideration, must employ language which clearly shows his intention that the recipient should hold on trust. No trust exists if the recipient is to take absolutely, but he is merely put under a moral obligation as to what is to be done with the property. If such imperative language exists, it must, secondly, be shown that the settlor has so clearly described the property which is to be subject to the trust that it can be definitively ascertained. Third, the objects of the trust must be equally clearly delineated. There must be no uncertainty as to whether a person is, in fact, a beneficiary. If any one of these three certainties does not exist, the trust fails to come into existence or, to put it differently, is void.[^11] [Emphasis added]
[60] On the evidence before this court, Ms. Burke for Aftercare advanced $50,000 to Gilmour Barristers for the “benefit of Michael Mullins.” A trust relationship was created here whereby the settler was Aftercare, the trustee was Gilmour Barristers, and the object was Michael Mullins. Ms. Burke’s letter to the Gilmour law firm was that the money was to be used for the benefit of Mr. Mullins. The certainty of intent of the trust was met as it was clear that these funds were to be used by the lawyer at Gilmour Barristers for Mr. Mullins’ benefit.
[61] In finding a trust relationship, it is not necessary “for any technical words or expressions for the creation of a trust”.[^12] Instead, all that is needed is that the intention to create a trust can be inferred with certainty. As the terms of the trust were outlined in the letter by Ms. Burke, the fact that they gave wide discretion to the law firm by stating that the money was to be used for Mr. Mullins’ benefit does not impede the finding of a trust.
[62] Gilmour Barristers used its discretion under the trust to advance the $20,000 to the Ontario Court to serve as Mr. Mullins’ cash bail and to satisfy the court that Mr. O’Connor had sufficient assets to act as surety in the amount of $10,000 without cash deposit. The fact that Mr. Mullins made an assignment, and that Mr. O’Connor was the assignee and surety, has no relevance to the determination of who is entitled to the trust funds. Neither Mr. Mullins nor Mr. O’Connor had an ownership interest in the $20,000 advanced to the Court. The money was not paid to Mr. Mullins. It was paid to the Court, or to the Crown on behalf of the Court, for bail.
[63] Mr. Mullins never owned the money that Gilmour Barristers paid to the court. He was a beneficiary in trust, who notionally held the proceeds, but Aftercare gave a discretion to Gilmour Barristers, as trustee, to use the money for his benefit. That firm exercised its discretion by paying the money to the Ontario Court so that it benefited Mr. Mullins. How it benefited him was at the discretion of the trustee, and Gilmour Barristers exercised that discretion to post the cash bail as required. As the money was not paid to Mr. Mullins, he had no assignable interest in the money. He could not assign what he did not own. Mr. O’Connor could not receive an assignment from an assignor who had no right to the property he had assigned.
[64] In so far as Court required the funds in the event that they were required for forfeiture if Mr. Mullins breached his bail, that purpose could not be met because Mr. Mullins fulfilled the conditions of his recognizance. In these circumstances, the trust either failed or its purpose was served and the money must revert back to the settler by operation of law.
[65] If the irrevocable assignment of the cash deposit of $20,000 to Mr. O’Connor was intended to indemnify him for the guarantee that he provided, without a cash deposit, pursuant to the recognizance, and I make no finding in this regard, it is likely that the arrangement was illegal. Equally, if it was intended to serve as a fee paid to Mr. O’Connor for acting as Mr. Mullins’ surety, it was also illegal. Section 139 (1) of the Criminal Code provides, in this regard, as follows:
139(1) Every one who wilfully attempts in any manner to obstruct, pervert or defeat the course of justice in a judicial proceeding,
(a) By indemnifying or agreeing to indemnify a surety, in any way and either in whole or in part, or
(b) Where he is a surety, by accepting or agreeing to accept a fee or any form of indemnity whether in whole or in part form or in respect of a person who is released or is to be released from custody,
Is guilty of
(c) an indictable offence and is liable to imprisonment for a term not exceeding two years, or
(d) an offence punishable on summary conviction.
[66] Having regard to the foregoing, I conclude that the Ontario Court held the trust money in an express trust that served its purpose, or failed, and that Mr. O’Connor has no valid claim to the proceeds. For these reasons, it is ordered that:
The $20,000 paid into this Court shall be paid out of court, with any accrued interest, to Gilmour Barristers Professional Corporation in trust, to be remitted by that party to Aftercare Nursing Services Inc.
As neither Gilmour Barristers Professional Association nor Aftercare seek the costs of the application from Mr. O’Connor beyond the amount that may be due to him, there will be no order for costs.
Justice David Price
Released: March 12, 2015
CITATION: HMTQ v. O’Connor, 2015 ONSC 1256
COURT FILE NO.: CV-14-1230-00
DATE: 2015-03-12
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO
Applicant
- and -
MARK J. O’CONNOR, GILMOUR BARRISTERS PROFESSIONAL CORPORATION and AFTERCARE NURSING SERVICES INC.
Respondents
REASONS FOR DECISION
Price, J.
Released: March 12, 2015
[^1]: Criminal Code, R.S.C. 1985, c. C-46
[^2]: R. c. Anoussis, 2008 QCCQ 8100
[^3]: R. v. Folkes, 2007 ABQB 624, paras. 15 to 17
[^4]: R. v. Saunders, 2001 BCSC 1363
[^5]: R. v. Pearson (1992), 77 C.C.C. (3d) 134 (S.C.C.), per Lamer C.J.C., at p. 141
[^6]: R. v. Estephan, 2004 CanLII 66309 (ON SC), para. 12
[^7]: R. v. Webster, 1994 CanLII 9166 (AB QB)
[^8]: Ibid, para. 15
[^9]: Ibid, para. 16
[^10]: Sterkenburg Estate v Sterkenburg, {2005] O.J. No. 1935 at para. 18 (Sup. Crt.)
[^11]: Henry v Henry (1999), 30 E.T.R. (2d) 89 (ONCA), at para. 14
[^12]: Waters’ Law of Trusts, 4th edition at pg. 141