Court File and Parties

Court File No.: CR-15-70000596-0000 Date: 2017-04-26 Ontario Superior Court of Justice

Between: Her Majesty The Queen – and – Emiliana Piccinini, Accused

Counsel: Ellen Weis, for Her Majesty The Queen Rocco Loccisano, for the Accused

Heard: February 21 and 22, 2017

Reasons for Judgment

Dunnet J.: (Orally)

Overview

[1] Emiliana Piccinini is charged with theft over $5000 and fraud over $5000 arising from her employment with Peter B. Cozzi Professional Corporation (“the law firm”). Between 2011 and 2014, Ms. Piccinini received payments in excess of what she would ordinarily have been entitled to as salary. The theory of the Crown is that she obtained the excess funds by falsely disguising them as payroll and by failing to disclose the existence of e-transfers to Mr. Cozzi. Ms. Piccinini asserts that she took the funds with the express permission of Mr. Cozzi for payment of fees that she was owed from 2005 onward.

The Evidence

Peter Cozzi

[2] Peter Cozzi has been a civil litigation lawyer since 1974. From 2005 until her termination on February 25, 2014, Ms. Piccinini was a legal assistant in the law firm and eventually assumed the role of bookkeeper. In that role, she prepared cheques for payroll and payment of Mr. Cozzi’s personal expenses. She had access to the firm’s general bank accounts with the Royal Bank of Canada (“RBC”) and Scotiabank. Mr. Cozzi was the only person with signing authority for the bank accounts.

[3] Ms. Piccinini did not have any authorization to conduct on-line transfers. She had no authority to deposit cheques made out to Mr. Cozzi or the law firm into her personal account.

[4] On February 3, 2014, Ms. Piccinini’s employment was first terminated by Mr. Cozzi because she was not responding to clients and had missed limitation periods. In addition, she had failed to follow Mr. Cozzi’s directions to prepare a diary system to ensure timely completion of her work.

[5] He rehired her pursuant to a written employment agreement, which was signed on February 5, 2014.

[6] On February 25, 2014, Mr. Cozzi received an email from his accountant, Parascevi Kallianos, informing him that Ms. Piccinini had received more payroll cheques than her entitlement for 2013. That same day, Mr. Cozzi met with Ms. Piccinini and asked for an explanation. She said, “I know I owe you money.” He terminated her employment for the second time.

[7] Mr. Cozzi testified that February 25, 2014 was the first time he had received notice that Ms. Piccinini received more payroll cheques than her entitlement. He was asked:

Q. Is there any reason why you would not have known about these prior pay cheques?

A. I would have had to have been alerted by Para or Emilia. They were the two people who managed the accounting and bookkeeping and I relied on them to do that.

[8] At the time of her termination, Ms. Piccinini was earning $60,000 per year. She was ordinarily entitled to receive 26 or 27 payroll cheques per calendar year. She was not authorized to receive any other compensation from the law firm. In particular, she was not authorized to receive a total of 32 payroll transfers in 2011, 36 transfers in 2012, 43 transfers in 2013, or six transfers in the first two months of 2014.

[9] In cross-examination, Mr. Cozzi testified that before February 3, 2014, there was no written employment agreement between Ms. Piccinini and the law firm. He described their working relationship as follows:

The arrangement was one where she was missing a lot of time from work because of health reasons for an extended period of time. It covered probably a number of years. For health reasons, she was complaining about headaches and I continued to pay her full salary even though there were weeks she might have worked – she would be in the office two or three days. So I consider that supportive. I trusted her implicitly. She had the passwords to my bank accounts and could access them. But she wasn’t doing her work properly ….

[10] As a result of her failure to properly prepare documents for a mediation they attended on February 3, 2014, Ms. Piccinini was informed by Mr. Cozzi that he was going to terminate her employment, but he would give her the opportunity to be rehired pursuant to a written employment agreement, which was signed on February 5, 2014.

[11] Mr. Cozzi explained that in the agreement, he converted Ms. Piccinini’s annual salary of $60,000 into an hourly rate, so that if she failed to perform her work duties, her salary would be reduced accordingly.

[12] Article 1.02 of the agreement read:

The employee shall be paid an hourly salary of $28.85 for all time performed at the employer’s workplace and work time out of the office, which out of the office work time must be pre-approved by email or in writing to a maximum of 40 hours per week.

[13] Article 2.03 read:

The employee acknowledges that all salary, vacation pay and expenses payable by the employer have been paid in full to and including the date of termination on February 3, 2014.

[14] Article 3.05 read:

This agreement replaces and supersedes any other contract of employment between the employer and employee.

[15] Before Ms. Piccinini became an employee of the law firm in 2005, she was operating as a paralegal under the registered name of Linx Legal Consultants (“Linx”). Mr. Cozzi denied that Ms. Piccinini merged her practice with his practice. He testified, “She did refer some of her clients to me for representation by me. Nothing more; nothing less.” He maintained that Ms. Piccinini’s clients became his clients and that he charged them for his services as he would any other client.

[16] He was shown an invoice dated August 1, 2007 addressed to him on the letterhead of Linx Legal ‘Consultant,’ which contained the address, telephone number and fax number of the law firm. The invoice was in the amount of $1079.38 for “professional services rendered on your behalf in connection with file assistance” for eight named individuals. He did not recognize the document and to his knowledge, Linx never operated out of his office.

[17] Mr. Cozzi remarked that on the top right corner of the document, the invoice number was 04/07, but on the bottom right corner, the invoice number was 66. He testified that the format used by the law firm was different than either invoice number on the document. The law firm used a format stating the year with a date under it. He added: “But it is set up more neatly than on this document. They would be aligned properly, and the only way I’d have an invoice number in 2007 of 04 would be sometime in January, not in August.”

[18] He stated, “I may never have received this. It may – it’s simply something she has created, and I haven’t been asked to look for it, so I can’t validate it or refute it.”

[19] Mr. Cozzi recognized the names of three individuals on the document who were referred to him by Ms. Piccinini. He testified that they became his clients and he invoiced them for his time.

[20] He was shown a memorandum dated March 25, 2008 from Ms. Piccinini which read:

Dear Peter,

As per your request, attached is my list of files transferred to you from Linx Legal Consultants up to today’s date. We agreed upon 10% of your fee charged to the clients on the accident benefits claim and 10% of your fee on the tort claim. But you would not pay me any monies on referred clients. If you would like the list with referred clients, I can provide you with a copy. For fees collected in 2006, you paid me those fees in August 2007. For fees collected in 2007, those remain outstanding. Attached is an invoice that I provided you with the fees that you paid me.

[21] No invoice was attached to the document shown to Mr. Cozzi at trial and he did not recall receiving the invoice. He maintained that he did not agree to a fee arrangement with Ms. Piccinini and he did not pay her any fees in 2007.

[22] Mr. Cozzi did not remember anything specific about having difficulties in 2012 with the Canada Revenue Agency (“CRA”) as a result of source deductions on payroll that had not been paid. He was not aware that the CRA “froze” his bank accounts and he did not agree that he opened the Scotiabank account because of problems with the CRA.

[23] When he was asked if he looked to Ms. Piccinini to make payroll payments from her personal bank account to employees Katie Keerma and Rosa Karim, he testified, “That didn’t happen. As far as I’m aware, that didn’t happen.” He stated that he always met his payroll.

[24] When he was shown an invoice dated December 30, 2013 from Emilia Piccinini c/o Linx Legal Consultants to Peter B. Cozzi in the amount of $25,000 plus GST “in payment of all fees for settlements,” he denied that he received the document. He stated that nothing of this nature was ever owed to Ms. Piccinini.

[25] On February 25, 2014, Ms. Kallianos sent an email to Ms. Piccinini with a copy to Mr. Cozzi. The email pointed out that Ms. Piccinini had taken more salary in 2013 than her entitlement. After their meeting in his office that day, he sent the following email to Ms. Piccinini:

I confirm that I terminated you for cause today for the overpayment to yourself of payroll set out in Para’s email. You agreed to repay me all excess payroll amounts. I have asked Para to calculate those amounts for all years and I will forward her information in that regard when I receive it. I have also asked her to review all disbursement payments and will advise you of any I question.

I also confirm that you asked to continue in the short term to process the files you have submitted to mediation. I have asked James to help and he has agreed. Please cooperate with him with the files. You asked to do this on a weekly basis whereby your pay for those hours will be applied to the repayment of your indebtedness to me. You further agreed to enter into a repayment employment or other income or funds [ sic ]. I accepted this proposal if we enter into a written agreement setting out the amount due by you to me to which you agreed.

[26] Ms. Piccinini did not reply to the email or return to the office, other than to pick up her personal items. Mr. Cozzi retained an internet technician to ensure that Ms. Piccinini could not access information on the computer that she used at the law firm. On February 27, 2014, the technician informed Mr. Cozzi that he found information on Ms. Piccinini’s computer suggesting that all of the law firm’s open files were waiting to be burned onto a CD-ROM.

[27] Mr. Cozzi sent an email to Ms. Piccinini asking her if she had burned or attempted to burn a CD of open files or any other digital files. Ms. Piccinini replied that she had not removed any property from the office, digital or otherwise.

[28] Mr. Cozzi denied that he had an agreement, verbal or otherwise, to pay Ms. Piccinini 10% of the fees on files that she brought into the law firm and on files that were settled and that such remuneration would be paid as part of her salary.

Parascevi Kallianos

[29] Parascevi Kallianos provided accounting services to the law firm. Between 2011 and 2014, she received payroll stubs from Ms. Piccinini from which she calculated the amounts owing to the CRA. Mr. Cozzi instructed Ms. Kallianos to direct any questions she had about the payroll documents to Ms. Piccinini.

[30] In 2012, Ms. Kallianos noticed that Ms. Piccinini had received five payroll cheques in addition to the 26 cheques that she should have received. Ms. Kallianos spoke to her about the extra payments and she said that “some of it was vacation pay, some of this was cutoff error, like it would be mixed between the years, and some of it was for overtime work.” Ms. Kallianos did not speak to Mr. Cozzi about the extra cheques. She assumed that if he was signing the cheques, he knew what he was doing.

[31] In 2013, Ms. Kallianos noticed that Ms. Piccinini had received nine payroll cheques in addition to the 27 cheques that she should have received that year. She spoke to Ms. Piccinini who told her that Mr. Cozzi knew about the extra cheques. Ms. Kallianos testified that Ms. Piccinini said that she “needed some money, she got some cheques as advances, and I would see the next year, in the 2013 year, that she would have ten less cheques. So I just let it go.” Ms. Kallianos did not speak to Mr. Cozzi about the extra cheques.

[32] In 2014, Ms. Kallianos noticed that Ms. Piccinini had a combined total of 18 payroll cheques and e-transfers in addition to the 26 cheques that she should have received. When she asked for an explanation, Ms. Piccinini told her that “some of them were hers,” but not all of them.

[33] Because Ms. Kallianos was not able to identify the source of the e-transfers, she asked Ms. Piccinini to clarify the reasons for the excess payments. She testified that Ms. Piccinini told her:

Some of that she said is vacation pay. Some of it, one, probably only one. I don’t know what kind of vacation she was getting. Some of it was extra payments for overtime, and then she gave me a letter of some sort – looked like an invoice, and she said that Peter owed her money and she was getting the money this way. And I said it shouldn’t look like the payroll because, what am I going to say to the government?

[34] Ms. Kallianos became concerned about the tax consequences for a personal loan and telephoned Mr. Cozzi to tell him that she did not believe that the government would accept the explanation that the extra cheques represented repayment of a loan. Mr. Cozzi became upset and told her that he did not owe any money to Ms. Piccinini and he did not understand “how she got so much money.” He asked Ms. Kallianos to send him a list of the cheques and e-transfers.

[35] In cross-examination, Ms. Kallianos stated that when the CRA sent her a letter in 2012 stating that they were going to freeze the RBC account, she informed Ms. Piccinini about it. She did not have a conversation with Mr. Cozzi about the RBC account and she did not know who opened the Scotiabank account on November 7, 2012. She stated that the RBC account was not functioning for a month, but thereafter they were able to deposit money into it and cash payments.

[36] In 2014, when she received the pay stubs from Ms. Piccinini and compared them to the bank statements and calculated the difference between the extra payments to Ms. Piccinini and the amounts that Ms. Kallianos had reported to the government, she “almost fainted.”

[37] Ms. Piccinini explained to her that Mr. Cozzi owed her money and she gave Ms. Kallianos the invoice dated December 30, 2013. Ms. Kallianos telephoned Mr. Cozzi and he said:

Where did Emilia take this money? I said, against your loan. He said, “What are you talking about?” and I said, “Well, I have the invoice.”

Emiliana Piccinini

[38] Emiliana Piccinini testified that when she became a legal assistant in the law firm in 2005, she merged her files with Mr. Cozzi’s files and her clients became clients of the law firm. They agreed that as part of her salary, Mr. Cozzi would pay her 10% of the fee on the files transferred to him upon settlement of each case.

[39] She thought that the first payment was made in 2005 when one case was settled.

[40] On August 1, 2007, she received $1079.38 in connection with an invoice sent to Mr. Cozzi for “professional services rendered on your behalf in connection with file assistance” for eight clients. She stated that this represented her fees.

[41] Ms. Piccinini’s evidence was that in 2011, she received five extra paycheques that represented part of her salary. She explained:

Two of them were for vacation pay that I did not take in 2010 and three were for – well, what happened was in 2011, I went to Italy for a month, and Mr. Cozzi agreed to pay me my vacation pay that I was entitled to, plus he would pay me for the month of July if I remained open and available to him in case he needed me regarding files.

[42] In June 2012, Mr. Cozzi approached Ms. Piccinini and said that he was in a bind with the CRA because he had been informed that source deductions had not been paid on payroll cheques between 2008 and 2011. He wanted her to look into it and see if she could help him resolve the matter. He asked her to take over the role of bookkeeper.

[43] In October 2012, the CRA froze the law firm’s RBC account and Mr. Cozzi opened the Scotiabank account so that he could operate his business.

[44] In October 2013, the CRA froze the Scotiabank account and Mr. Cozzi asked Ms. Piccinini to use her personal account to issue a payroll cheque to Katie Keerma for $1414.72 and to Rosa Karim for $1028. Ms. Piccinini relied on the following cheques to support her assertion that she paid the employees from her personal bank account:

• cheque #417 for $1414.72, debited to the Scotiabank account on September 11, 2013;
• cheque #442 for $1414.72, debited to the Scotiabank account on October 7, 2013;
• cheque # 217 for $1414.72, debited to her account on November 13, 2013;
• cheque #7262 for $1414.72, debited to the RBC account on November 21, 2013;
• cheque #424 for $1028, debited to the Scotiabank account on September 27, 2013;
• cheque #440 for $1028, debited to the Scotiabank account on October 4, 2013;
• cheque #239 for $1028, debited to her account on November 15, 2013;
• cheque #7260 for $1028, debited to the RBC account on November 21, 2013;

[45] Ms. Piccinini acknowledged that although the RBC account was frozen in October 2012, she received a cheque from the RBC account on October 24, 2012 and the RBC account was active between September 28, 2012 and October 31, 2012. Her explanation was that she contacted the CRA and agreed to make some payments if the CRA would “unfreeze” the account and that is what happened.

[46] She acknowledged that in November and December 2013, her salary was paid from the RBC account.

[47] Ms. Piccinini denied that Mr. Cozzi was not aware that she was taking extra paycheques from the law firm’s bank accounts or that the reason she paid the employees’ salaries was because she did not want to tell him there was not enough money in the bank accounts to cover their payroll.

[48] She was asked if Mr. Cozzi reimbursed her for paying the employees’ salaries and she said that he gave her his Canada Pension Plan and Old Age Security cheques and a cheque payable to him from the law firm’s trust account. She deposited the three cheques into her personal account.

[49] She acknowledged that she also deposited into her personal account a cheque for solicitor’s fees dated October 22, 2012 in the amount of $1402.33. Her explanation was that the CRA had frozen Mr. Cozzi’s RBC account. He had no money and asked her to cash the cheque for him. She denied that she deposited his cheques into her account without his knowledge.

[50] According to Ms. Piccinini, she and Mr. Cozzi had many discussions about the 10% fee arrangement and they always agreed. She kept a running tab of fees brought in, files settled and amounts paid on her computer at work.

[51] She testified that during the first week of January 2014, she gave Mr. Cozzi a copy of the invoice dated December 30, 2013 for $25,000 plus GST “in payment of all fees for settlements.” She gave Ms. Kallianos the original invoice at the same time. She explained that these were files that she settled for the law firm.

[52] When Mr. Cozzi saw the invoice, he started to yell at her and said that he wanted to see all of her work and her fees. She told him that these were the fees owing to her and that he could check the fees himself on the computer.

[53] On February 2, 2014, Ms. Piccinini sent Mr. Cozzi an email stating that she could not access her computer at work. She was aware that the firm’s computer technician was trying to fix the problem. She maintained that from that point on, she did not have access to her computer.

[54] On February 3, 2014, Mr. Cozzi accused Ms. Piccinini of missing a limitation period, which she denied, and he fired her. Then he told her that he needed her help and would rehire her and pay her a salary based on an hourly rate.

[55] On February 4, 2014, Mr. Cozzi gave her an employment agreement and told her to review it with someone else before signing it. She consulted someone and was going to make changes to the agreement. She signed it without making any changes. Even though the two signatures on the document appear to have been witnessed on February 5, 2014, Ms. Piccinini denied that she signed the agreement on that day. She stated, “It could have been maybe a couple of weeks after.” She testified that the only reason she signed the agreement was because Mr. Cozzi told her that she would not be paid unless she signed it.

[56] On February 25, 2014, Ms. Kallianos telephoned Ms. Piccinini and told her that she had sent her an email that morning regarding her payroll payments. Ms. Piccinini told Ms. Kallianos that she had not seen the email because she was unable to access her computer.

[57] That afternoon, Mr. Cozzi spoke to Ms. Piccinini in the office about an email that he had received from Ms. Kallianos with a list of the extra cheques that had been paid to Ms. Piccinini in 2013. Ms. Piccinini told Mr. Cozzi that they were probably the cheques for her fees, but she could not comment on it at that time.

[58] On February 27, 2014, Ms. Piccinini received an email from Mr. Cozzi accusing her of burning a disc of the open files in the law firm. She testified:

I did not do it. One, I didn’t know how to do it. I’m not very computer – I’m not very good with computers. I didn’t know how to burn it. I did not burn it. I told him that in the email.

[59] In cross-examination, Ms. Piccinini stated that in 2005, their fee arrangement was 10% of the fees on files that were transferred from Linx to the law firm. In 2007, the agreement changed to 10% of the fees on accident benefit files that she settled. The fees were to be part of her salary. She denied that she was paid a commission.

[60] She testified that the monies owing to her were invoiced through Linx Legal ‘Consultant.’ Until 2012, Ms. Kallianos prepared the income tax returns for Linx. It is unclear from the evidence whether Linx Legal Consultant was a different corporate entity from Linx Legal Consultants.

[61] Ms. Piccinini testified that the receipts were kept at the law firm and she was not allowed to take them with her when her employment was terminated. She agreed that she asked Ms. Kallianos for the original receipts. She stated that Ms. Kallianos did not give them to her.

[62] Ms. Piccinini’s evidence was that after she was paid $1079 in 2007 pursuant to the fee arrangement, she was not paid again pursuant to the arrangement until 2012 because Mr. Cozzi was having financial problems.

[63] She agreed that when Mr. Cozzi asked her to take over the bookkeeping responsibilities, she had no experience with the law firm’s accounting practice, or accounting generally. She also agreed that she had no authorization to sign cheques without Mr. Cozzi’s knowledge.

[64] Crown counsel reviewed the law firm’s banking records with Ms. Piccinini and, in particular, the cheques marked “payroll” that were paid to her between 2011 and 2014.

[65] She had no explanation for why she received so many payroll cheques in such a short space of time on April 6, 14 and 20, 2011, on May 4, 13 and 24, 2011 and again on June 1, 2011.

[66] When she was asked about the payroll cheques she received on August 8, 9, 19 and 26, 2011, each for the same amount, she stated that they could have been vacation pay for July. She agreed that she also received vacation pay in July.

[67] She did not remember why she received payroll cheques on September 14, 19, 26 and 30, 2011 and suggested that they could have been for a backlog of vacation pay. She stated that she was not involved in writing payroll cheques in 2011.

[68] She did not recall why she received four cheques between January 9 and February 3, 2012 and she did not have an explanation for why she received seven cheques between March 5 and April 30, 2012.

[69] She had no explanation for why she received two separate cheques on April 30, 2012, each for the same amount and each marked “payroll (April 16 - 30).”

[70] Ms. Piccinini agreed that she received cheques in May 2012 on May 14 for $1584.38, May 18 for $1584.34, and May 28 for $1584.3, and that the cheques in June 2012 followed the same pattern whereby the second of the three payroll cheques for each month was for four cents less than the other two.

[71] When she was asked about the payments marked “payroll” that she received on August 1, 13, 20, and 31, 2012, (two payments were made on the last of those dates) where three of those payments stated that they were for the same payroll period (August 20 - 31), Ms. Piccinini testified that she believed that August 2012 was the month that the fee arrangement entered into in 2007 was initiated.

[72] She did not recall receiving two separate payroll cheques for $1644.07 on September 24 and 27, 2012, each marked “September 15 – 28,” in addition to a payroll cheque for the same amount on September 14, 2012.

[73] She thought that one of three payroll cheques for $1644.07 that she received on December 4, 11 and 20, 2012 respectively could have been for her fees.

[74] She agreed that she received payroll cheques on January 3, 17 and 25, 2013, each in the amount of $1644.07, and an e-transfer to Linx for the same amount. Ms. Piccinini maintained that she was authorized to receive on-line transfers of salary.

[75] She could not explain why she received cheques on February 4 and February 13, 2013 respectively, each in the amount of $1648.85, and each marked “payroll to February 15,” in addition to a cheque received on February 28, 2013. She thought that the e-transfer to Linx on February 18, 2013 in the same amount could have been for fees.

[76] Ms. Piccinini stated that in March and April 2013, she received three cheques instead of two and they were for payroll, including her fees.

[77] In May 2013, she received four cheques and an e-transfer to Linx, all in the amount of $1648.85, but offered no explanation for the payments.

[78] In June 2013, three cheques were issued to her in the amount of $1648.85, each of which was marked “payroll up to June 21. One cheque was dated June 14, 2013 and two cheques were dated June 21, 2013. She testified that these cheques were for the backlog of fees owing to her since 2007.

[79] She added that this was also the reason that she received four cheques and an e-transfer to Linx in August 2013, all for the same amount.

[80] Ms. Piccinini had no explanation for why both Mr. Cozzi and Ms. Kallianos testified that before February 25, 2014, they had never seen the December 30, 2013 invoice.

[81] She denied that she told Ms. Kallianos that the document represented a loan. She did not recall how she arrived at the figure of $25,000.

[82] She agreed that she received an e-transfer on January 2, 2014 in the amount of $1648.85 and cheques in the amount of $1652.08 on January 10, 15 and 30, 2014, all marked “salary.”

[83] She agreed that although Mr. Cozzi started taking issue with her work in January 2014, she continued to receive extra salary payments.

[84] She acknowledged that none of the cheques that she received between 2011 and 2014, purportedly for the fee arrangement made reference to an invoice number. She also acknowledged that no one would be able to know the reason for the payments by looking at the cheques.

[85] She maintained that she had no access to her email account at the law firm from the end of January 2014 until her termination. When she was shown emails exchanged between herself and Mr. Cozzi on February 25 and February 27, 2014, and it was suggested to her that she did have access to her email account, she said, “I can’t – I can’t remember.”

[86] Ms. Piccinini denied that she told Mr. Cozzi on February 25, 2014 that she owed him money. She denied that she received an email from Mr. Cozzi confirming that she had agreed to pay him the excess payroll amounts. Later in her evidence, she acknowledged that she must have received the email because she responded to his email on February 27, 2014, asking her if she had burned a CD of the open files, which was in the same chain of emails. Ultimately, Ms. Piccinini testified that she did not remember reading the email stating that she had agreed to repay all excess payroll amounts.

The Position of the Crown

[87] The Crown submits that there is no dispute that Ms. Piccinini was ordinarily entitled to 26 or 27 paycheques per year and that Mr. Cozzi was the only person with signing authority for the firm’s bank accounts.

[88] The position of the Crown is that the law firm’s bank records show that in 2011, 2012, 2013, and the first part of 2014, Ms. Piccinini received $49,096.78 in excess of what she should have received as salary, calculated as follows:

• in 2011, there were five additional transfers; the largest single payment was $1457.35, resulting in a total excess payment of $3046.24;
• in 2012, there were ten additional transfers; the largest single payment was $1644.07, resulting in a total excess payment of $14,998.78;
• in 2013, there were 17 additional transfers; the largest single payment was $1648.85, resulting in a total excess payment of $28,020.89; and
• in 2014, there were two additional transfers; the largest single payment was $1652.08, resulting in a total excess payment of $3030.87.

[89] The theory of the Crown is that Ms. Piccinini obtained the excess funds by falsely disguising them as payroll and by failing to disclose the existence of the e-transfers to Mr. Cozzi. Although Ms. Piccinini claimed that she took the funds with the express permission of Mr. Cozzi as payment of fees she was owed from 2005 onward, Mr. Cozzi denied that he authorized any such payments.

[90] The Crown contends that the evidence of Ms. Piccinini lacks credibility and reliability and the evidence as a whole establishes beyond a reasonable doubt that she had no right to the excess funds and took the monies, knowing that she had no right to do so.

[91] Accordingly, the Crown asks the court to find Ms. Piccinini guilty on both counts.

The Position of the Defence

[92] The position of the defence is that there is a lack of evidence to satisfy the court beyond a reasonable doubt that Ms. Piccinini is guilty of the offences charged.

[93] The defence acknowledges that Ms. Piccinini received five extra cheques in 2011, nine or ten extra cheques in 2012, and 17 cheques and some e-transfers in 2013, which were deposited into her personal bank account from the law firm’s bank accounts. It is submitted that Mr. Cozzi had the sole signing authority for the cheques and that the Crown has adduced no evidence of forgery.

[94] The defence asserts that the excess payments and e-transfers represent fees paid to Ms. Piccinini and Linx Legal Consultant pursuant to an agreement and/or verbal understanding that she would be paid a percentage of fees on settled files that were brought into the law firm in 2005 by Linx and a percentage of fees on new files she brought into the firm after she became a legal assistant in 2005. It is asserted that Mr. Cozzi directed Ms. Piccinini to take the fees in the form of a salary.

[95] The defence submits that in addition to their verbal understanding, there was a written agreement that included a fee schedule of files brought into the firm, amounts paid, and amounts owing, which was kept in Ms. Piccinini’s personal files on her office computer. It is submitted that after the end of January 2014, she was not given access to her computer.

[96] The defence contends that in 2012, the law firm’s financial affairs were in turmoil. Employee remittances were not being paid; bank accounts were being frozen by the CRA and payroll was not being met. It was in this environment that Ms. Piccinini was asked by Mr. Cozzi to deal with the CRA and assist with bookkeeping.

[97] It is submitted that Mr. Cozzi intended to terminate Ms. Piccinini’s existing relationship with him prior to February 3, 2014 and to rehire her based on a written agreement. He retained a computer technician on February 2, 2014 to ensure that Ms. Piccinini would be unable to access her personal files.

[98] The defence argues that the evidence of Mr. Cozzi and Ms. Piccinini and their accountant, Ms. Kallianos, contained serious discrepancies with respect to whether or not: (a) fees were paid for files transferred from Linx to the law firm; (b) there were difficulties with the CRA; (c) the law firm’s bank accounts were frozen; (d) the Scotiabank account was opened because the RBC account was frozen; (e) Ms. Piccinini was asked to meet payroll for two employees; and (f) Mr. Cozzi received the December 30, 2013 invoice.

[99] Accordingly, the position of the defence is that there is a lack of reliable evidence upon which to found a conviction.

Analysis

[100] Theft involves the taking of another person’s property fraudulently and without colour of right, with intent to deprive the owner of it.

[101] The actus reus of fraud requires deceit, 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.

[102] The mens rea of fraud requires 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.

[103] Between 2011 and 2014, Ms. Piccinini received over 200 payments by cheque or e-transfer from the law firm’s bank accounts. All of the cheques expressly stated that they were for “payroll” or “salary” and often stated the pay period to which they applied. There is nothing about these cheques that, on their face, would lead an observer to believe that they were issued for any other reason.

[104] Ms. Piccinini received an increasing number of payroll transfers over time. In 2011, she received extra cheques in April, May, August and September.

[105] In 2012, the frequency accelerated and she received extra cheques in eight of twelve months. Cheques began appearing with memo lines that purported to pay her multiple times for the same pay period.

[106] In 2013, the frequency accelerated further and she was also receiving payroll payments by e-transfer. In that year, she received 43 payroll payments, including extra payments in nine of twelve months.

[107] In 2014, the payroll payments continued at the same rate as in 2013.

[108] The defence contends that the absence of evidence should leave the court with a reasonable doubt about the guilt of Ms. Piccinini. The defence points to the fact that during cross-examination, Mr. Cozzi often replied that he had no knowledge of an issue put to him and explained that he would need to look through his records.

[109] In R. v. Simpson, 2015 SCC 40, [2015] 2 S.C.R. 827, at paras. 37-38, the Supreme Court of Canada reiterated that “a proposition put to a witness during cross-examination does not constitute evidence of the proposition, unless the witness adopts it as true” and that a witness’s “inability to reject the suggestions put to him does not shed any light on whether those suggestions are true or not. Without more, all that his answers convey is that he was not personally aware” of the events in question. “To rely on his answers as evidence of something further … [is] not open to the trial judge.”

[110] The defence attacked Mr. Cozzi’s evidence by pointing to his inability to remember problems he was having with the CRA; his denial that he saw the December 30, 2013 invoice; his denial that he asked Ms. Piccinini to pay two employees’ payroll, and Ms. Piccinini’s claim that he fired her without cause.

[111] The bank records show that the CRA freeze was not for a significant period of time. Mr. Cozzi relied on Ms. Piccinini and Ms. Kallianos to handle his financial affairs and Ms. Kallianos testified that she did not speak with Mr. Cozzi about the CRA situation. She spoke with Ms. Piccinini. There is no credible evidence that Ms. Piccinini spoke to Mr. Cozzi about the CRA situation, or any evidence that the CRA contacted Mr. Cozzi directly.

[112] The only person who claimed to have been aware of the existence of the December 30, 2013 invoice was Ms. Piccinini. I accept the evidence of Ms. Kallianos that she saw the invoice for the first time on February 25, 2014, after she confronted Ms. Piccinini about the excess payments and Ms. Piccinini told her that the payment was on account of a loan. Ms. Kallianos spoke to Mr. Cozzi and pointed out that the document that Ms. Piccinini had given her represented “fees for settlements” and added GST and, therefore, it was not a loan. Regardless, Mr. Cozzi denied the existence of a loan to Ms. Piccinini.

[113] There is no independent evidence that Mr. Cozzi asked Ms. Piccinini to cover his payroll for two employees. At one point, Ms. Piccinini told Ms. Kallianos that she was covering the payroll, but this amounts to nothing more than a self-serving statement. Further, the court cannot draw any conclusion from a series of bank transactions purporting to show that Ms. Piccinini covered the payroll.

[114] In November 2013, Ms. Piccinini deposited into her personal account a Government of Canada Old Age Security cheque, Canada Pension Plan cheque and a trust account cheque, each of which was payable to Mr. Cozzi. She claimed that Mr. Cozzi gave her the cheques because he had asked her to personally finance two employee payroll cheques because of lack of funds. Mr. Cozzi denied any such suggestion. The total amount of the cheques differs from the total amount of the alleged payroll payments to the employees.

[115] Further, the bank records show that there were five payroll transfers to Ms. Piccinini in October and November 2013, including a transfer on November 1 for $1648.85. At the time of the transfers to Ms. Piccinini, there was only $710 in the RBC account. At the time she deposited her November 1, 2013 cheque, the Scotiabank account was overdrawn.

[116] It is plausible, as the Crown suggests, that as a result of the excess payments to Ms. Piccinini, Mr. Cozzi was unaware that his bank accounts had been depleted to the point where he could not meet his payroll. Therefore, his belief that he had always met his payroll does not undermine his evidence.

[117] In any event, whether or not Mr. Cozzi asked Ms. Piccinini to cover his payroll is not relevant, in my view, to the issue of whether there existed a fee arrangement between them.

[118] Ms. Piccinini claimed that Mr. Cozzi made the decision to terminate her employment before February 2, 2014. There is no foundation in the evidence to support such an assertion.

[119] Ms. Piccinini’s evidence was that in 2005, she and Mr. Cozzi agreed to a fee arrangement in addition to her regular salary. Mr. Cozzi denied that he ever authorized any such payments and testified that the monies were taken from him unlawfully.

[120] Ms. Piccinini claimed that she was paid some of the fees owing to her in 2007 and she purported to confirm this in a memorandum to Mr. Cozzi in March 2008. Mr. Cozzi denied the validity of the memorandum.

[121] According to Ms. Piccinini, she took over the payroll duties in June 2012 when Mr. Cozzi asked her to sort out the difficulties with the CRA, despite the fact that she had no accounting experience. She could not explain why Ms. Kallianos recalled her handling the payroll beginning in 2011. If Ms. Piccinini is to be believed, the extra payments in 2011 and the first half of 2012 were mistakes by others.

[122] She claimed that Mr. Cozzi knew that these payroll cheques were for her fees and received a memo with each extra paycheque. None of these memos were produced at trial. She claimed that the documents existed at the law firm and Mr. Cozzi prohibited her from getting access to them after he terminated her employment.

[123] Ms. Piccinini did not know if source deductions were withheld from the extra paycheques and paid to the government. She was not concerned that there might be tax implications if the CRA treated the extra payroll cheques as salary, despite the fact that she had testified that the reason she was handling the payroll was because source deductions had not been paid between 2008 and 2012. This explanation for why Ms. Piccinini began handling payroll was not put to Mr. Cozzi in cross-examination.

[124] Ms. Piccinini claimed that Mr. Cozzi was aware that she was receiving e-transfers and a memo was presented to him for each transaction. She claimed that Ms. Kallianos had the original documents and had refused to return them to her. This was not put to Ms. Kallianos in cross-examination.

[125] Mr. Cozzi testified that Ms. Piccinini was not authorized to deposit cheques that were payable to him into her personal account. The bank records show that Ms. Piccinini deposited a cheque made out to Mr. Cozzi for solicitor’s fees dated October 22, 2012 into her personal account.

[126] Ms. Piccinini claimed that Mr. Cozzi asked her to cash the cheque because his RBC account was frozen. When she was confronted with the RBC bank statement for October 2012 showing that the account was fully active during that month, she had no explanation in response.

[127] Ms. Piccinini testified that when she gave the purported December 30, 2013 invoice to Mr. Cozzi, he became upset. She had no explanation for his reaction, even though she claimed that he had known about the fee arrangement for years and that they had many discussions about it and always agreed.

[128] She stated that Mr. Cozzi handed her an employment agreement and told her to get advice about it. Nonetheless, he pressured her to sign it. She claimed that the agreement falsely stated that it was signed and witnessed on February 5, 2014. She had no explanation for why the agreement stated that she had been paid in full up to February 3, 2014.

[129] Ms. Piccinini denied admitting to Mr. Cozzi on February 25, 2014 that she owed him money. She acknowledged that she did not correct his email to her in which he reiterated his understanding that she had admitted to owing him money. She maintained that she did not see the email even though she responded to the email chain after Mr. Cozzi’s email to her was received.

[130] Mr. Cozzi testified and Ms. Kallianos understood that Ms. Piccinini was only entitled to receive her regular 26 or 27 paycheques each year. This explains why Ms. Kallianos was surprised every year to discover that Ms. Piccinini had received extra payments and questioned her about them.

[131] Ms. Piccinini gave varying excuses to Ms. Kallianos for the excess payments, none of which referenced any compensation or fee arrangement. Moreover, the employment agreement made no reference to any compensation package.

[132] In my view, the fact that there is no evidence that Mr. Cozzi’s signature on the excess cheques was forged is irrelevant. Even if Mr. Cozzi signed the cheques, Ms. Piccinini failed to disclose to him that by January 2013, she was already paying herself electronically for the same pay periods. The e-transfers total almost $10,000 for salary.

[133] In her evidence, Ms. Piccinini described a series of events that bore no relation to the recollections of Mr. Cozzi or Ms. Kallianos, conflicted with the bank records and was not supported by documents authenticated by anyone other than herself.

[134] I find that there is no credible evidence to support the existence of a 10% fee arrangement under which Ms. Piccinini said that the excess payments were made. The court cannot correlate the specific amounts of the extra cheques and e-transfers to the alleged fee arrangement. The few documents that Ms. Piccinini produced were of questionable authenticity. In my opinion, her evidence was internally inconsistent, unsupported by evidence, unreliable and, in many respects, defied common sense.

[135] Mr. Cozzi denied the existence of a fee arrangement under which the excess payments and e-transfers were made. His evidence was internally consistent, supported by common sense and the bank records and unshaken on cross-examination. I accept his evidence as credible and reliable.

[136] Ms. Kallianos performed accounting duties for Mr. Cozzi and for Ms. Piccinini. She had no reason to be biased in favour or against a particular witness. I accept her evidence as credible and reliable where it corroborated Mr. Cozzi’s evidence on the following key issues: (a) Ms. Piccinini was only to have been paid 26 or 27 paycheques each year; (b) Mr. Cozzi was not informed about any excess payments before February 25, 2014; (c) the news came as a surprise to Mr. Cozzi; and (d) Ms. Piccinini never alluded to the existence of any fee arrangement with Mr. Cozzi in explaining the extra payments she had received in the years from 2011 to 2013.

[137] Applying R. v. (W.)D., [1991] 1 S.C.R. 742, 63 C.C.C. (3d) 397, I am satisfied beyond a reasonable doubt on the evidence that I accept that Ms. Piccinini is guilty of fraud over $5000 and theft over $5000. As there is an overlapping factual and legal nexus between the two offences, the theft over charge is conditionally stayed pursuant to R. v. Kienapple, [1975] 1 S.C.R. 729, 44 D.L.R. (3d) 351. A conviction will be entered to the offence of fraud over.

Dunnet J. Date: April 26, 2017 Released: April 26, 2017