Court File and Parties

Citation: R. v. Levy, 2016 ONSC 5263 Court File No.: CR-16-40000233 / CR-16-40000249 Date: 2016-08-22 Superior Court of Justice - Ontario

Re: R. v. Gad Levy Before: J. Wilson J. Counsel: Nansy Ghobrial, for the Respondent Applicant, Self-represented Heard: August 19, 2016

And Re: R. v. Armand Levy Before: J. Wilson J. Counsel: Nansy Ghobrial, for the Respondent Applicant, Self-represented Heard: August 19, 2016

Endorsement

The Applications

[1] These Rowbotham applications, brought by the co-accused brothers, Gad Levy and Armand Levy (“the Applicants”), request an Order to conditionally stay the criminal proceedings against them until the Attorney General funds the cost of their defence pursuant to s. 24(1) of the Charter of Rights and Freedoms.

[2] The Applicants, along with six other co-accused, are charged with defrauding the Canadian Small Business Financing Program (CSBFP) in one count of fraud over $5,000 and commission of an offence for a criminal organization, contrary to ss. 380(1) and 467.12 of the Criminal Code.

[3] A four to six month trial with six co-accused is scheduled to begin September 12, 2016. Justice McMahon has been case managing the matter. He denied an amicus curiae application brought by Marshall Kazman in an unreported decision dated January 6, 2016. There have been two other contested Rowbotham applications brought, one which was successful: R. v. Tehrani, 2016 ONSC 2228, [2016] O.J. No. 1849 [Tehrani], and one which was not successful: R. v. Kazman, (June 29, 2016), Toronto, 16-4-50 (S.C.J.). For two of the co-accused the crown entered into a confidential arrangement to provide funding to retain counsel. A trial judge has been assigned. This application to stay the proceedings pending appointment of counsel is brought on the eve of trial.

Overview

[4] The Crown alleges that the Applicants and the co-accused incorporated various corporations and subsequently applied for a variety of CSBFP loans from multiple banks. The Applicants and the co-accused are alleged to have submitted fraudulent business plans for CSBFP loans, and once the loans were secured, it is alleged that fraudulent invoices were submitted to release funds from the CSBFP loans to the various corporations. It is alleged that the Applicants and the co-accused then misappropriated the loan funds and ultimately defaulted on the loans.

[5] The allegations against Armand Levy involve four corporations and total CSBFP loan amounts of $430,000. The allegations against Gad Levy in this fraudulent scheme, involves sixteen corporations and CSBFP loans in the amount of $2,160,000.

The Rowbotham Test

[6] The decision in R. v. Rowbotham, 1988 CanLII 147, 41 C.C.C. (3d.) 1 (Ont. C.A.) [Rowbotham] outlines a three-part test to determine whether a court should stay proceedings pending the appointment of publicly funded counsel. Such an order will be granted in rare and exceptional cases where:

• The Applicant is ineligible for or has been refused Legal Aid and has exhausted all appeals for reconsideration of his eligibility;

• The Applicant is indigent and unable to privately retain counsel to represent him at trial; and

• The Applicant’s right to a fair trial will be materially compromised absent public funding for counsel.

[7] An Applicant must satisfy all three aspects of the Rowbotham test on a balance of probabilities or the application will fail: R. v. Montpelier, 2002 CanLII 34635, [2002] O.T.C. 864 (Ont. S.C.), at para. 37 [Montpelier].

[8] The Applicants argue that they have met the three-part test. The Crown argues that none of the three prerequisites for the test have been met.

Ineligible for Legal Aid

[9] Both Applicants have applied for, and been denied, legal aid.

[10] Armand Levy applied for legal aid on or about May 27, 2016. As a result of information provided by the Applicant, Legal Aid Ontario denied the Applicant a certificate concluding:

Legal Aid Ontario has not accepted that the financial information you provided is credible and complete. Where a legal aid applicant fails to provide credible and complete financial information, the policies of Legal Aid allow the application to be refused.

[11] Armand Levy confirmed that he has not appealed this decision, as he was unaware of his obligation to do so.

[12] Gad Levy applied for legal aid on two occasions and was denied assistance. On appeal, the decision of the Area Committee, dated July 11, 2014, was upheld and confirmed:

Where the applicant fails to provide complete and credible financial information, the policies of Legal Aid allow an application to be refused. In this case, as the applicant’s declared expenses exceed the applicant’s spouse’s declared income, and considering the deposits in his bank account from December, 2013 to January 2014, I am not satisfied that the applicant has provided complete and credible information to legal aid.

[13] An applicant must make every attempt to obtain legal aid prior to seeking Rowbotham relief and there should be a clear record before the court of the final denial of legal aid coverage. It is clear that Armand Levy’s appeal rights are not yet exhausted.

[14] As well, if an Applicant fails to make adequate, credible disclosure to legal aid, the first prerequisite in the Rowbotham test cannot be met: Montpelier, at paras. 34-35; R. v. Tang, [2011] O.J. No. 6694 (S.C.J.).

[15] Both Applicants were denied legal aid, as their disclosure was not accepted as credible and complete. In these circumstances, the Applicants cannot meet the first requirement: that their legal aid rights have been exhausted. It appears clear upon a review of the legal aid file, that the Applicants, through their own conduct, tainted their applications by incomplete and less than candid disclosure.

[16] I adopt the reasoning of Nordheimer, J. in R. v. Tang, [2011] O.J. No. 6694 (S.C.J.) at para. 3 on this issue:

The conclusions reached by Legal Aid Ontario, while not determinative, are relevant to my determination of this [Rowbotham] application…the failure of [the Rowbotham Applicant] to be open and transparent regarding his resources and sources of funds underlies the refusal of Legal Aid Ontario to provide him with a certificate…That situation is entirely of [the Applicant’s] own making. He cannot rely on his failure to be upfront regarding such matters to justify the fact that he has been refused legal aid. Consequently, [the Applicant] does not satisfy the first criterion [of the Rowbotham application].

[17] The first component of the three-part Rowbotham test has not been met.

Proof of Indigence

[18] To meet the test of indigence, an applicant must satisfy the court on a civil standard that he or she has exhausted every possible source of funds available to retain counsel. A person is not required to be destitute, but must demonstrate a willingness to sacrifice and take reasonable financial steps to retain counsel: R. v. Drury, 2000 MBCA 100, 47 W.C.B. (2d.) 512, at paras. 33, 45, 47, 48, 58, 59, 65.

[19] To prove indigence, an applicant must make full and complete financial disclosure.

[20] The financial disclosure provided by both Armand and Gad Levy is sketchy and incomplete. The Crown has made clear demands in writing for detailed corroborating financial disclosure, which has not been provided.

[21] Gad Levy has been able to borrow $50,000.00 from friends and family, but no details of where this money came from have been provided. He has an undisclosed friend paying his rent. There is no disclosure of where the money is coming from to pay the additional monthly living expenses of $1600 to $1700 per month.

[22] Both Applicants had their own real estate investment businesses before they were arrested. It appears from the material that has been filed, that since the arrest of the Applicants they have experienced significant financial reversals and difficulties. They are apparently not working and are declaring no taxable income. The assets that Gad Levy had personally, and through corporations, have been lost in power of sale proceedings. Armand Levy had two corporations that are now in receivership.

[23] Despite this, the material filed does not meet the threshold for proving indigence. After reviewing the material, there are many questions left unanswered as to what is really going on. The source of the various bank deposits and source of funds to meet living expenses remains a mystery. The Applicants’ support available from family or friends has not been specifically canvassed in their materials.

[24] For these reasons I conclude that the Applicants have failed to meet the second part of the Rowbotham test of proving indigence. Proving financial hardship or difficulty is not sufficient to meet the more stringent test for indigence. Full and candid financial disclosure is required to meet this aspect of the Rowbotham test.

Counsel is Essential to Ensure a Fair Trial

[25] The last consideration of the three-part Rowbotham test is to determine whether the right to a fair trial will be materially compromised if the Applicants are required to proceed to trial without legal representation.

[26] It is presumed that a trial judge will ensure a fair trial. This presumption can be rebutted if the Applicants are not competent to represent themselves or the case is complex.

[27] The Applicants are experienced businessmen. Both have a grade 12 education and a good command of the English language. Each presented well in court as intelligent. Each had various real estate companies prior to their arrest.

[28] The Applicants are launching an 11(b) Charter application for delay. Their application asserts that the time to bring this matter to trial is excessive and that “[t]his is a relatively straightforward, non-complicated or complex matter.” The Crown agrees with their assertion in this Rowbotham application.

[29] In oral submissions before me, both Applicants confirmed that the case was not complex, although there was a lot of paper in the productions presented by the crown.

[30] An insight into the actual complexity of the case, as compared to the apparent complexity, may be gleaned from the reasons of Justice McMahon when he considered an amicus curiae application brought by one of the co-accused in R. v. Kazman (January 6, 2016), Toronto, 16-4-50 (S.C.J.), at p. 9, 10 [Kazman]:

In examining the complexity of this case, this case distills down to its simple key elements: that is, whether the [Applicants] participated in providing forged or fraudulent documents to receive loans from five major Canadian banks.

Further, whether the funds advanced ….were used for the purpose intended by the government program…It is not one of tracking the money. It simply comes down to whether [they] participated in obtaining bank loans by fraud, and whether [they] used the funds for an improper purpose other than what was represented to the bank and the government.

[31] There are admittedly huge volumes of documents. At first blush the task of self-representation appears daunting. A forensic accountant will give evidence to analyze the funds borrowed. As pointed out by McMahon, J. in Kazman, this is not a case involving shell corporations or offshore entities. The Applicants have business experience and the transactions in question are in relation to funds borrowed and activities that took place in their own corporations.

[32] Similar to the accused in R. v. Hanorah (September 14, 2015), Brampton, CRIMMOT(P)902/15 (S.C.J.), at para. 19 and R. v. Pilon (June 5, 2015), Ottawa, CR-14-302290 (S.C.J.) the Applicants here are “intimately involved in and familiar with the facts that form the core of the allegations and his own proffered defence.”

[33] I note that Rowbotham applications brought in cases with significant complexity and lengthy trials have been denied: Solleveld, 2011 ONSC 3045, [2011] O.J. No. 6693, at para. 3, 25, 28, 29, 30, 40, aff’d 2014 ONCA 418, 120 O.R. (3d.) 678; R. v. Williams, 2011 ONSC 7406, 98 W.C.B. (2d.) 583 (S.C.J.), at paras. 2, 11, 12.

[34] The Applicants have been business owners and operators for a number of years. To date, the Applicants have been representing themselves throughout these proceedings. The Applicants have not provided any evidence to indicate that they are incapable of understanding the charges against them or that they would be unable to effectively participate in these proceedings.

[35] The Applicant Armand Levy has indicated multiple times on the record that he is prepared to proceed to trial without counsel. Gad Levy had previously retained two lawyers to assist him, but now alleges that he has run out of funds.

[36] In assessing the third branch of the Rowbotham test, I have concerns why these Applications have been brought so late in the day on the eve of trial. Why did Armand Levy wait to apply to Legal Aid in May 2016 if he was genuinely concerned about proceeding without counsel?

[37] I have read the two other decisions of my colleagues considering Rowbotham applications of two of the co-accused. In Tehrani, Molloy J. concluded that the applicant’s right to a fair trial would be compromised as English was not his first language and he would be unable to cross-examine witnesses effectively. In Kazman, Clark J. reached the opposite conclusion based upon the facts before him. These applications are fact dependent and fact specific. I do not find either decision particularly helpful in determining the applications brought before me.

[38] Without doubt it will be challenging for all parties, and the trial judge, to proceed to trial without all parties being represented by counsel. However, I am not satisfied that the Applicants have met their onus of proving that appointing counsel is essential to ensure a fair trial in the facts of this case.

[39] As outlined in these reasons, I find that the Applicants have not met the onus of proof to satisfy any component of the three-part test for a successful Rowbotham application. Hence, these Applications are dismissed.

J. Wilson J.

Date: August 22, 2016