I. FACTUAL BACKGROUND AND OVERVIEW

Introduction

[1] The applicant, Mohammad Shaikh, seeks a conditional stay of proceedings pending the appointment of state-funded counsel, pursuant to R. v. Rowbotham (1988), 1988 CanLII 147 (ON CA), 41 C.C.C. (3d) 1 (Ont. C.A.). The applicant stands charged, with three co-accused, of committing multiple counts of fraud-related offences contrary to the Criminal Code.

[2] The applicant submits that he has insufficient funds to pay counsel: he has been denied Legal Aid, and exhausted all routes of appeal of that decision. Mr. White, on his behalf, asks this court to stay the proceedings and order that the Attorney General of Ontario pay for his legal defence.

[3] The Crown, represented by Mr. Wagner, opposes the application stating that the legal test for such an order has not been made out. He argues that the applicant could adequately represent himself and, in any event, has not demonstrated that he is indigent.

Background Facts and Allegations

[4] The applicant was the sole officer, director and shareholder of three companies: Creation Food Services, Pita-Pita Bakeries and Holyland Pita Bakery. Between 2010 and 2013, he successfully applied for a number of business loans from TD Canada Trust and Roynat Capital, a subsidiary of Scotiabank.

[5] The Crown alleges that the loans were received as a result of false representations and fake documents. The following is a brief summary of the allegations made by the prosecution.

[6] The applicant made three separate applications for a bank loan from TD Bank. The first, in October 2010, was for the amount of $600,000. The second was for the amount of $959,000. The third, in late 2012, was for a loan of $2 million. On each occasion, the Crown alleges that false documents, including fake invoices and a forged bank draft, were used to persuade the bank to issue the loan.

[7] In May 2013, the applicant obtained a $2.5 million loan from Scotiabank to finance the third TD Bank loan. The Crown alleges that the applicant dishonestly claimed that he owned a company named Creation Food and Services Limited and provided Scotiabank with a copy of a false asset purchase agreement. A few months later, in the summer of 2013, the applicant pursued a second loan from Scotiabank in the amount of $1 million. Once again, the Crown alleges that the applicant provided a false invoice in support of his application.

[8] The applicant is joined on the indictment by three other accused participants. Remy Boghossian acted as the applicant's lawyer with respect to the TD loans. It is alleged that he was untruthful when confirming he had received the applicant's $4.2 million bank draft used to purchase Creation Food and Services. Stuart Rosenthal, is charged on the basis that he provided a false invoice in relation to the second loan and incorporated a shell company for the third loan. Finally, Petar Bozinovski, the third co-accused, is alleged to have prepared a false invoice for the first loan.

[9] After being charged on 29 June 2015, the applicant was released on surety bail. He applied for Legal Aid in August 2016 but was refused because his wife's income, reported to be $64,500, exceeded the threshold. His appeal to the Area Committee was denied on 7 December 2016 for this reason and also because, Legal Aid Ontario (LAO) felt that insufficient financial information had been provided.

[10] The applicant's trial is scheduled to begin on 8 January 2018 and is expected to last four weeks. All three co-accused are currently represented by counsel. Although the disclosure is fairly voluminous, there are no Charter motions and the issues to be decided are largely fact-based. No expert evidence will be called by any of the parties.

The Receivership Order and Mareva Injunction

[11] In support of this application, Mr. Shaikh argues that he has no meaningful assets. In April 2014, the creditors of the applicant’s business brought an application under s. 243 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 and s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C-43 for a Receivership order encompassing all of the assets, undertakings and properties of the applicant’s companies.

[12] On 10 April 2014, a Mareva injunction was granted as a complement to the Receivership order. This prevented the applicant from realising, disposing of, or otherwise dealing with any of the assets. The injunction did, however, provide for the withdrawal of funds for the purposes of ordinary living expenses, legal advice and representation.

Legal Principles

[13] There is no automatic constitutional right to representation by counsel at trial: R. v. Rain, 1998 ABCA 315, 223 A.R. 359, at para. 36, leave to appeal refused, [1998] S.C.C.A. No. 609. However, sections 7 and 11(d) of the Charter guarantee the right of an indigent accused to state-funded counsel if there would otherwise not be a fair trial.

[14] The test for the provision of state-funded counsel can be found in Rowbotham, at p. 70, and reads as follows:

[W]here the trial judge finds that representation of an accused by counsel is essential to a fair trial, the accused, as previously indicated, has a constitutional right to be provided with counsel at the expense of the state if he or she lacks the means to employ one. Where the trial judge is satisfied that an accused lacks the means to employ counsel, and that counsel is necessary to ensure a fair trial for the accused, a stay of the proceedings until funded counsel is provided is an appropriate remedy under s. 24(1) of the Charter...

[15] These principles were distilled by Molloy J. in R. v. Williams, 2011 ONSC 7406, [2011] O.J. No. 5862, at para. 5, into the following three conditions:

(1) that the applicant is ineligible for, or has been refused, Legal Aid and has exhausted all available appeals;

(2) that the applicant is indigent and has no means to retain counsel otherwise; and,

(3) that the applicant’s right to a fair trial will be materially compromised if he is forced to proceed to trial unrepresented by counsel.

[16] The onus of proving these conditions rests upon the applicant on a balance of probabilities. All three conditions must be satisfied for the application to succeed. It must be remembered that it is only in a “rare and exceptional case” that a Rowbotham application will be granted: R. v. Rushlow, 2009 ONCA 461, 96 O.R. (3d) 302, at para. 19. The onus on the applicant is accordingly, a heavy one: Rowbotham, at p. 70. ; R. v. Cai, 2002 ABCA 299, 170 C.C.C. (3d) 1, at paras. 8 and 10.

[17] In the circumstances of this case, there is no dispute that the applicant has been refused Legal Aid and exhausted all avenues of appeal.

Accordingly, I turn to the remaining two conditions.

II. WILL THE APPLICANT’S RIGHT TO A FAIR TRIAL BE COMPROMISED?

[18] The first two limbs of the Rowbotham test are largely factual, but the third – the requirement of a fair trial – engages the Charter. In considering whether an applicant’s right to a fair trial will be compromised, the court must examine the complexity of the case and the seriousness of the consequences: Rushlow, at para. 19. Generally, courts will look at the applicant’s ability to participate in the proceedings, as well as the evidentiary issues, the seriousness of the charges, and likelihood of imprisonment: Rushlow, at para. 20.

[19] The applicant testified about his educational background, telling the court that he had obtained a degree from the University of Southern California in 1983, followed by a Masters in Business Administration in 1988, and an MBA from York University in 1998. He has enjoyed a long career in running businesses, maintaining accounting, and administrative functions. He was involved in the clothing manufacturing industry from 1996 to 1999 and started up the Pita-Pita bakery in 2010. Prior to April 2014, the applicant owned three bakeries, delivering product throughout the Greater Toronto Area, and was the owner and sole officer of the business in charge of 22 employees. The applicant’s responsibilities included the strategic business direction of the company, the acquisition of funds through loans, and the identification of other companies for acquisition. According to the applicant, the combined revenue of the bakeries was $7.5 million.

[20] The notion that this case has complexities requiring the assistance of counsel is superficially attractive. On closer examination, however, it is clear that there are very few legal intricacies involved. As has been noted, there are no Charter motions to be argued. The Crown's allegations are quite simple: the applicant obtained loans through misrepresentations and the use of false documents. Any complexity flows from the manner in which the applicant's financial matters were conducted. With his background, the applicant is more likely to understand the factual issues than a lawyer not ordinarily versed in business practices.

[21] The jurisprudence appears to have recognised this type of milieu. In R. v. Solleveld, 2011 ONSC 3045, [2011] O.J. No. 6693, the accused faced multiple counts of fraud and conspiracy to commit fraud with several unrepresented co-accused. The length of the trial was estimated to be six months and up to 100 potential witnesses were anticipated. In dismissing the Rowbotham application, Whitten J. found that the accused would know far more about the intricacies of the business enterprises at issue than most counsel.

[22] Similarly, in Williams, another case of fraud and multiple co-accused, Molloy J. denied a Rowbotham application on the same basis stating, at para. 16, that the applicant’s background and education left him “far better positioned to represent himself effectively than is the case for the vast majority of the population who are often required to proceed to trial before our courts without the benefit of legal counsel.”

[23] The case at bar is no different: the applicant’s professional experience, training and education indicates that he would be able to adequately represent himself without counsel. During the course of his testimony, it was clear that the applicant was articulate, intelligent, and more than able to advance his arguments when faced with questions from the Crown.

[24] Accordingly, I find that the applicant has failed to discharge his onus that his right to a fair trial would be compromised without representation. This finding is, on its own, sufficient to dismiss the application. For the sake of completeness, however, I turn to the second issue argued, at some length, by both counsel.

III. DOES THE APPLICANT LACK THE MEANS TO RETAIN COUNSEL?

[25] LAO declined the applicant a Legal Aid certificate on the basis that he had other financial sources that were able to fund his defence, namely his wife, Alicia Gouveia, and his sister, Maryam Sadrieah. LAO’s further concern was that the applicant had failed to provide complete and credible financial information. LAO’s opinion, whilst not determinative of the issue of whether the applicant has the means to retain counsel, is a factor to be taken into account: R. v. Magda, [2001] O.T.C. 370 (Ont. S.C); and R. v. Tang, [2011] O.J. No. 6694 (Ont. S.C.).

Did the Applicant Have Other Financial Sources?

[26] The Crown alleges that the applicant had an alternative source of income: his wife Alicia Gouveia. Mr. Wagner submits that the court should take account of her income and her ability to act as a source of potential funds for legal representation. The applicant, however, argues that Ms. Gouveia’s income is irrelevant as they were separated prior to the charges being laid. In support of his application, Ms. Gouveia provided an affidavit and was cross-examined by the Crown.

[27] Both the applicant and Ms. Gouveia testified that they were married in 2001 but separated in April 2014. They did not sign a separation agreement and have taken no steps to start divorce proceedings. When their matrimonial home of 76 Birkendale Drive in North York was sold, Ms. Gouveia took all of the proceeds of sale. This, they claimed, was the result of a verbal agreement based on Ms. Gouveia’s status as titleholder of the property and the person who made all of the mortgage payments. The applicant testified that he continued to co-habit with Ms. Gouveia after their separation to take care of their son. He also felt that there was no other affordable alternative. Ms. Gouveia, however, testified that the applicant was “in and out” of the house and was co-habiting “on and off.”

[28] Both agreed that Ms. Gouveia paid all of the applicant’s living expenses and allowed him the use of her car.

[29] I found Ms. Gouveia to have very little credibility: her account of events was replete with material inconsistencies. For example, in her sworn affidavit, she testified that her annual salary was $64,000 per annum. However, when cross-examined by Mr. Wagner, she claimed that her take home pay was approximately $6000 per month, an amount that greatly exceeded her previously attested to salary. When challenged on that point, she claimed that her affidavit must have been incorrect and the product of a faulty memory. When asked to specify her current salary, she professed not to know. By coincidence, the applicant’s affidavit also claimed that Ms. Gouveia earned $64,000 a year.

[30] Ms. Gouveia also declared that she made a mortgage payment every month with respect to the couple’s home throughout the duration of their marriage. When the house was sold for $2 million, she testified that there was a total charge of $1.7 million remaining on the property, leaving her with $300,000 as the net proceeds. In her affidavit, however, she claimed that the outstanding amount of charges at sale was $1.9 million. Again, this discrepancy was blamed on a memory lapse even though the sale of the home had been only three years earlier and her affidavit was signed in May of this year.

[31] The entire thrust of Ms. Gouveia’s testimony was that precious little money came from the sale of the house. Even though she claimed to have made a mortgage payment every month, the Land Registry Office records revealed that, in 2007, the entire mortgage had been discharged. In 2013, a new mortgage was obtained in the amount of $470,000. Ms. Gouveia had no explanation for this discrepancy other than that the Land Registry document must be wrong.

[32] The inconsistencies did not end there. Ms. Gouveia initially testified that after selling the house and paying off miscellaneous fees, she walked away with “something short of $100,000”. Moments later, that amount changed to $20-30,000. When questioned on this variation, Ms. Gouveia again revised the figure, this time to $40-50,000.

[33] Having heard Ms. Gouveia testify, I found her to be an evasive witness seeking to conceal her true wealth and relationship with the applicant. In my view, the more likely reality is that the applicant and Ms. Gouveia are not separated. Their portrayal of an estranged couple is simply a means of isolating her finances from the applicant’s. I note that Ms. Gouveia’s claim that the bulk of the money - at one point $370,000 in borrowed funds - obtained from the house had been dissipated by paying off taxes, utilities and living expenses was unsupported by any form of documentation.

[34] Mr. White submits that even if I disbelieve the applicant and Ms. Gouveia’s evidence of their marital status, the issue is immaterial in the context of a Rowbotham application. He submits that family members should not be required to assist with the funding of legal fees relying upon the cases of R. v. Eid, 2013 ONSC 7084, [2013] O.J. No. 5184 and R. v. Dadshani, [2008] O.J. No. 455 (S.C.).

[35] Mr. Wagner, on the other hand, asks that I find the position of the spouse to be different to other family members. He cites R. v. Malik, 2003 BCSC 1439, [2003] B.C.J. No. 2167, at para. 22; R. v. Pearen, [1998] O.J. No. 4119 (O.C.J.), at paras. 17-20; and Italy v. Seifert, 2003 BCSC 351, [2003] B.C.J. No. 471, at paras. 22-30; and R. v. Sterling, 2004 CanLII 198 (ON SC), [2004] O.J. No. 2794 (S.C.) as authorities for this proposition.

[36] In my view, the divergence in the law referred to by counsel rests on the type of family member involved. In Eid, the court felt that an applicant’s brother could not be compelled to provide financial assistance. In Dadshani, the court took the same view with respect to the applicant’s parents.

[37] The cases cited by the Crown, however, recognise the distinctive role of a spouse in financial matters. This makes perfectly good sense. A person’s income, liabilities and means to afford services is, by any ordinary standard, calculated on a “per household” basis with the total revenue of the income earners in the family unit being assessed. There can be no reason to separate the two and focus on only one income when trying to determine whether an applicant can afford to retain a lawyer.

[38] In my view, the applicant has failed to show indigence on this point.

Efforts to Raise Additional Funds

[39] Even if I am wrong on this point, the applicant’s marital status has an alternative implication. In Malik, Stromberg-Stein J., at para 23, placed an evidentiary burden on a Rowbotham applicant to demonstrate the following:

a) extraordinary financial circumstances;

b) attempts to obtain funds to retain counsel;

c) prudence with expenses and prioritization of payment of his legal fees;

d) efforts to save for the cost of counsel and to raise funds by earning additional income;

e) he has made all reasonable effort to use his assets to raise funds, for example by obtaining loans;

f) whether he is in a position to pay some of the costs of counsel;

g) the income and assets of his spouse and family.

[40] See also: R. v. Drury (L.W.), 2000 MBCA 100, 150 Man. R. (2d) 64, leave to appeal refused, [2000] S.C.C.A. No. 619; R. v. Kalaichelvam, 2015 ONSC 7246, [2015] O.J. No. 6161, at para. 10; R. v. Clarke, 2013 NSSC 177, [2013] N.S.J. No. 292, at para. 81; and R. v. Kazman, 2016 ONSC 4320, [2016] O.J. No. 3685, at paras. 20-24.

[41] In Drury, at para. 33, the court explained that although an applicant is not required to become destitute, they bore the onus of satisfying the court “that he or she had exhausted all possible routes to obtain counsel to the extent necessary to ensure a fair trial in the particular circumstances of their case.”

[42] Assuming the truth of the separation from his wife, the applicant was obliged to prioritise expenses for payment of legal fees and show that he had made all reasonable efforts to raise funds using his assets. When the matrimonial home was sold, there is no dispute that, in legal terms, the applicant was entitled to half the net proceeds of the house. According to the applicant, he chose not to collect those proceeds because Ms. Gouveia had made all of the payments and the house was in her name.

[43] He was entitled to make that sacrifice. However, having opted for a financial decision to benefit his wife, the applicant cannot now expect the public purse to pick up the tab for his legal expenses. In the context of a Rowbotham application, the applicant was obliged to pursue his share of funds from the matrimonial home. His failure to do so fails the criteria to demonstrate that he has made all efforts to raise funds.

[44] Finally, the applicant appears to have made negligible efforts to obtain employment as a means of paying counsel. His job applications have been restricted to positions in property management because that is his preferred work. He subsequently testified that he had applied to Walmart approximately three months prior to the hearing. This was his last attempt at obtaining employment. Accordingly, I find that the applicant has not made any reasonable attempts to find employment to raise funds to retain counsel.

Failure to Provide Details and Documentation

[45] In R. v. Kizir, 2014 ONSC 1676, 304 C.R.R. (2d) 287, Lalonde J. observed, at para. 46:

In Borean, at para. 8, the Court held that the inquiry into the applicant’s finances must be more than cursory, and a finding on the issue should not be based merely on unsubstantiated statements of alleged facts by the accused. A significant and in-depth review of the facts is required.

[46] In making a Rowbotham application, the applicant is under an obligation to provide supporting documentation verifying the information contained in his affidavit: R. v. Craig Wright (SCJ, unreported 28 June 2013); and Kazman, at paras. 33-35.

[47] As described previously, the Mareva injunction contained an exception for the financing of legal representation and living expenses. The applicant claims that he did not attempt to request any funds because the amount contained in the frozen assets was insufficient.

[48] The Crown complains that there was a dearth of financial disclosure confirming this position. Even though it had requested the Receivership Report from the applicant, that document was not disclosed, apparently through oversight, until after the Rowbotham hearing had commenced. Despite the applicant’s testimony that he provided the Receivers with all relevant information concerning his assets, they found only $1000 in a personal account – an amount that invokes surprise when considering the applicant’s business generated $7.5 billion.

[49] When questioned on the precise details of the assets covered by the Mareva injunction, the applicant told the Crown that this information could be found in the Receivership Report. However, that document contains no mention of the injunction or the assets.

[50] Moreover, the applicant testified that he had supplied particulars about the location of his assets to the Receivers. However, when acting on this information, the Receivers found that no assets existed at two of the locations and, were advised, at a third address, that equipment belonging to the applicant had been moved “to an unknown location.” When confronted by the Crown on this point, the applicant insisted that the Receivers had made “a mistake.”

[51] I find that the applicant has not been forthcoming about his financial means and has failed to provide the requisite financial disclosure necessary when seeking public funding for his defence.

[52] For all the above reasons, the Rowbotham application is dismissed.

S.A.Q. Akhtar J.

Released: 14 August 2017

CITATION: R. v. Shaikh, 2017 ONSC 4826

COURT FILE NO.: CR-17-10000123-00MO

DATE: 201708--

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

MOHAMMAD SHAIKH

REASONS FOR JUDGMENT

S.A.Q. Akhtar J.

R. v. Shaikh, 2017 ONSC 4826

Case Summary

I. FACTUAL BACKGROUND AND OVERVIEW

Introduction

Background Facts and Allegations

The Receivership Order and Mareva Injunction

Legal Principles

II. WILL THE APPLICANT’S RIGHT TO A FAIR TRIAL BE COMPROMISED?

III. DOES THE APPLICANT LACK THE MEANS TO RETAIN COUNSEL?

Did the Applicant Have Other Financial Sources?

Efforts to Raise Additional Funds

Failure to Provide Details and Documentation

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Statutory Provisions 3

Legal Tests 1

Legislation 3