SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 233/18

DATE: 2019-09-06

RE: R. v. Michael Scarlett

BEFORE: Mr. Justice Robert B. Reid

COUNSEL: M. Peterson, Counsel for the Applicant E. Vella, Counsel, for the Respondent, Attorney General of Ontario A. Wiese, Counsel, for the Respondent, Director of Public Prosecutions

HEARD: August 26, 2019

DECISION ON FUNDING APPLICATION

[1] The applicant, Michael Scarlett, seeks a “Rowbotham[^1]” order granting a stay of proceedings pursuant to sections 7 and 24(1) of the Canadian Charter of Rights and Freedoms pending the funding of his defence by the respondents.

[2] Mr. Scarlett is charged with four counts of trafficking in fentanyl, contrary to section 5(3)(a) of the Controlled Drugs and Substances Act, and eight counts of possession for the purpose of trafficking involving fentanyl, cocaine, hydromorphone, oxycodone, methadone, marijuana, psilocybin, and Adderall contrary to sections 5(3)(a), 5(3)(a.1) and 5(3)(b) of the Controlled Drugs and Substances Act based on incidents in November and December 2016. As a result of a search following the applicant’s arrest on December 15, 2016, he is charged with two counts of unauthorized possession of a prohibited weapon contrary to section 91(3) of the Criminal Code and one count of possession of property obtained by crime under $5,000 contrary to section 355(b) of the Code. After a preliminary hearing, Mr. Scarlett was committed to trial and the matters are currently before the Superior Court of Justice.

[3] In addition, Mr. Scarlett stands charged with one count of fraud over $5,000 contrary to section 380(1)(a) of the Code from August 2017. That charge is currently outstanding in the Ontario Court of Justice.

[4] In this application, Mr. Scarlett requests state funding for the first set of charges which primarily involve drugs and is therefore within federal prosecutorial jurisdiction, and for the fraud charge which is within being prosecuted by the Provincial Crown.

[5] The applicant filed affidavits sworn February 26 and June 25, 2019. He also testified and was cross-examined during the application hearing.

[6] There was no dispute amongst counsel that the onus is on the applicant to show, on a balance of probabilities, that (a) he has been refused legal aid and has exhausted all appeals from the refusal; (b) he lacks the means to retain counsel; and (c) his representation by counsel is essential to a fair trial.[^2] All three of those elements must be satisfied for the application to be successful.

[7] It was conceded by the respondents based on the application material filed that the applicant has satisfied the first criterion as to the refusal of legal aid and exhaustion of appeals from that decision.

[8] It was conceded by the Federal Crown that the drug charges and related Criminal Code offences are sufficiently serious and complex that the representation by counsel is essential to a fair trial. Therefore, a decision on whether Mr. Scarlett lacks the means to employ counsel will be dispositive of the application on those charges.

[9] Counsel for the Provincial Crown submitted that, as to the fraud charge, both the elements (other than the legal aid refusal) were at issue.

Does the applicant lack the means to employ counsel?

[10] The applicant is 39 years old. For the last six years he has lived with a common-law partner who has four children. He contributes to the household expenses as he is able.

[11] The applicant’s former partner is the mother of his two children. She is married and the children live with her. He pays no child support.

[12] The applicant is in receipt of benefits from the Ontario Disability Support Program (ODSP) in the amount of $1,208.60 per month which he testified constitutes his sole source of income. His stated expenses are about $200 per month greater than his income which he says he manages by adjusting the timing of bill payments. He owns and operates a 2002 Honda Odyssey minivan with minimal value and stated that he has no other assets of significant value. He testified that the 2010 Ford F150 truck which was seized at the time of his arrest is jointly owned with his current partner. No value was ascribed to it. The motorcycle that the applicant bought in 2015 or 2016 is worth, by his estimate, about $1,000.

[13] The applicant and his former partner are the principal shareholders in a private company which carries on a tanning salon business in St. Catharines known as “Me Time Tanning”. That company was incorporated in March 2011 and has carried on business since that time. The applicant testified that he is the general manager. He attends to the business approximately 22 hours per week but receives no pay or dividends. The premises is open about 55 hours per week. The applicant testified that the time when he is not present is covered in part by a “volunteer employee” who receives tanning services for free. Other hours are worked, without compensation, by his former partner and co-shareholder who holds a full-time job in a local winery.

[14] The applicant testified that the business makes no money and barely has revenue sufficient to cover expenses. He juggles the bills for utilities which are typically in arrears and makes payments when he is able from revenue. He maintains the business, despite its unprofitable status. This is because, according to his testimony, he does not like to give up and he and his former partner hope the business will have some value in the future which can be used for the benefit of their children’s education. The business has no significant assets: the premises and tanning equipment are leased. It did own two SeaDoo personal watercraft which presumably were used for the recreational purposes of the owners. He testified that they were sold in early 2019 for $2,000. The business also owns a ThunderCraft cabin cruiser, which was acquired in 2018 and which is stored at his parents’ premises. No value was ascribed to it. The applicant informally estimated the business value to be about $30,000.

[15] In support of his evidence of the financial state of the business, the application contained four pages (of 14) from the corporate bank account showing transactions from March 27 to May 30, 2019. As well, the applicant provided “cashout summary reports” for the business for 2018 and for 2019 from January through May which he testified were the computer printouts showing all revenue received by the company during those months. As well, he provided balance sheet information showing net income of -$11,944 for 2017 and -$9,702 for 2016, apparently excerpted from a financial statement, as well as several past due utilities accounts from 2019.

[16] As to his personal finances, the applicant provided his Notice of Assessment from 2018 which showed total income of $13,884. He provided a single page of a CIBC bank statement showing redacted deposit account details. That page showed a negative balance of $944.26 and an ATM withdrawal in an undisclosed amount dated February 12, 2019. No other personal banking documents were produced. The applicant testified that he has a savings account, a chequing account and a credit card account at the CIBC but that there are no positive balances. He did identify an RDSP account containing about $7,000 which he testified is not available for withdrawal until he reaches age 49 as well as a small RESP of $1,300 held for the benefit of his children. Part of the material provided by the applicant to Legal Aid was a CIBC statement in the name of the applicant for the period February 1 to February 28, 2018 showing a closing balance of $1,162.91.

[17] Mr. Scarlett testified that his physical and mental disabilities, by virtue of which he qualifies for the ODSP, are such that he cannot realistically hold a job beyond the minimal requirements of his part-time, unremunerated work for his company. In any event, he believes that any alternative income would not be sufficient to replace ODSP benefits and support the cost of his extensive drug regime which is currently available to him through the ODSP.

[18] In response to his application to Legal Aid Ontario, as to financial information, the applicant was asked to provide:

“his 2016 personal, corporate and business tax returns, including all schedules and attachments and the corresponding notices of assessment, a set of unaudited financial statements for 2017 for Me Time Tanning and 1844821 Ontario Inc. including notice to reader, balance sheet and income statement, bank statements for all personal, business, corporate accounts, held both jointly or severally, including any closed accounts, for the period February 1, 2017 to February 28, 2018, a statement of accounts from all institutions, a copy of most recent ODSP benefit statement, a copy of all insurance policies for home, vehicles, and business, and a current list of all vehicles, boats, trailers, motorhomes, recreational vehicles owned by the applicant, including a list of any items disposed of in the past 12 months, showing the date of sale and the amount received.”[^3]

[19] According to the reasons for decision by Legal Aid Ontario denying the applicant’s appeal, “[t]he applicant did not provide any of the requested information. Where complete and credible financial information is not provided, legal aid coverage will be refused. The applicant was determined to be financially ineligible based on his failure to provide complete and credible information.”[^4]

[20] The applicant initially indicated to Legal Aid, through legal counsel, that some of the information was not his to disclose based on the fact that others owned certain of the vehicles and since providing the information could compromise his defence. In response to the latter concern, general counsel for Legal Aid Ontario wrote advising that communications with Legal Aid were solicitor client privileged.

[21] Ultimately, Legal Aid Ontario determined that: “the information provided by the applicant [was] insufficient to properly assess his financial circumstances and determine his financial eligibility for legal aid coverage.”

[22] In summary, on behalf of the applicant, it was submitted that he is impecunious. He has very modest income from the ODSP and no other income source. The tanning business holds no prospect of providing money in the foreseeable future. Any vehicles or watercraft that he owns have minimal value. He has received an estimate from counsel, at non-legal aid rates, that the cost of his defence (based on private lawyer rates) will be between $25,000 and $30,000. He is not able to budget for installment payments of such a substantial retainer and has no friends or family willing or able to provide the necessary funds. He has no prospects of earning income from any other source in a sufficiently larger amount than the ODSP provides.

[23] On behalf of the respondents, it was submitted that the applicant did not provide adequate financial information to Legal Aid Ontario and therefore he should not be able to make a successful application for state funding. In addition, he has not provided full financial disclosure in this application by way of documentation sufficient to satisfy the court of impecuniosity. He is not credible in asserting that he receives no compensation from his so-called “volunteer” employment as general manager of his own company. He has not made efforts to sell that company (or at least his interest in it) or to realize on other assets including vehicles and watercraft.

Analysis:

[24] There is no doubt that the applicant, and for that matter the court, would benefit from the availability of legal counsel in dealing with the charges that the applicant faces. However, that is not the basis upon which the court in this application must base its decision. As one of the three elements that must be determined, it is the applicant’s onus to demonstrate on a balance of probabilities that he lacks the means to employ counsel.

[25] The applicant relies on his testimony to which I have referred. He has not supported that testimony with financial records of his personal circumstances and as relate to his company except by way of selected excerpts.

[26] His evidence was that he has worked in an unpaid capacity as general manager of his company for years, hoping that it will one day turn a profit or increase in value as an asset. He also testified that his former partner and fellow shareholder as well as another individual provide unpaid services to keep the business operating. Those circumstances are unusual, and at the very least call for detailed documentary support if they are to be believed. It is incumbent on the applicant to support his evidence with complete and comprehensive financial information from the company which one would expect should be at minimum from the calendar year that the charges were laid, namely 2016, to date.

[27] Likewise, the applicant should have submitted comprehensive personal financial information by way of banking and income tax records sufficient to demonstrate the lack of any sources of income other than from the ODSP.

[28] In addition, the applicant admitted that his company owns a Thunder Craft cabin cruiser to which I have referred above. The company had also purchased the two personal watercraft which the applicant testified were sold earlier in 2019. No proof of the sale price of those watercraft or appraised value of the cabin cruiser were provided nor was there any explanation of how the company, in its subsistence financial position, could have afforded the acquisitions initially. The applicant himself purchased a motorcycle in 2015 or 2016 which he continues to own together with his 2002 minivan. No effort was made to apply for the release of that asset, presumably so it could be sold, on application under s. 462.34(4) of the Criminal Code. Nor was there any indication of its value.

[29] The lack of complete financial information from the company and as to his personal circumstances appear to have been the basis upon which Legal Aid Ontario denied eligibility for a certificate. It seems inappropriate that the applicant be granted state funding when he has repeated the failure to provide detailed financial information that resulted in a denial of legal aid in the first place.

[30] Orders granting state funding in cases such as this are exceptional rather than routine. The funding of legal services through Legal Aid Ontario remains the primary method by which the accused persons of modest means are able to hire counsel. In applications such as this, when legal aid has been denied, candor and completeness on the part of an applicant is critical to satisfying the onus of demonstrating a lack of financial means to engage counsel.

[31] As this court observed in R. v. Kalaichelvam, 2015 ONSC 7246 at paragraph 11:

A claim of indigence cannot be based on cursory and unsubstantiated claims. There must be credible and relevant disclosure in support of the claim, before the remedy of a stay pending state funding should be considered. [citations omitted] The amount of detail necessary to meet this criteria will vary depending on the circumstances of each case.

[32] The applicant has demonstrated no attempts to sell assets either owned personally or by the company (or for that matter, his interest in the company itself).

[33] In summary, the failure on the part of the applicant to be comprehensive in his financial disclosure of both his personal and corporate circumstances in support of his oral evidence of indigence leads to a conclusion that the applicant has not satisfied his onus to demonstrate his lack of financial means to retain counsel.

Is the applicant’s representation by counsel essential for a fair trial?

[34] Based on the conclusion above as to demonstrated indigence, it is not strictly necessary to determine that his right to a fair trial will be materially compromised if state-funded counsel is not provided.

[35] As noted, the issue is not relevant to the application as it relates to the drug and related charges based on the concession of complexity made by counsel for the Federal Crown.

[36] As to the outstanding fraud charge, and regardless of my conclusion as to indigence, I find that the matter is not sufficiently complex to justify a stay pending state funding.

[37] It is acknowledged that a period of incarceration will be sought in the event of a finding of guilt. As such, the matter is serious. However, it is not complex. The circumstances seem to be relatively straightforward: did the applicant earn income while receiving ODSP benefits which income was not permitted under the terms of his application for benefits?

[38] The case for the prosecution does not appear to rely on complicated records. The applicant can be taken to be knowledgeable about his own financial circumstances. Although there was evidence of some learning disability and mental health issues, the applicant was able to successfully complete a year in community college and at university. To the extent that assistance was required for reading, he was able to access computer technology. Presumably that technology continues to be available to him. As well, the applicant is not unsophisticated in that he has operated the tanning salon business as general manager since 2011.

[39] As a result, and regardless of the failure of the applicant to satisfy his onus as to the inability to retain counsel, I conclude that his right to a fair trial on the fraud charge would not be materially compromised if he did not have a lawyer.

Conclusion:

[40] For the foregoing reasons, the application is dismissed.

Reid J.

Date: September 6, 2019

[^1]: R. v. Rowbotham 1988 CanLII 147 (ON CA), [1988] O.J. No. 271 (OCA) [^2]: R. v. Rushlow, 2009 ONCA 461 (Ont. C.A.) at para. 17 [^3]: Legal Aid Ontario, Notice of Decision on Appeal dated May 31, 2018 [^4]: ibib.