COURT FILE NO.: CR -19-90000362-0000

DATE: 2020/09/30

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

VANESSA JANE CANLAS, VANESSA JANE CANLAS, O/A OFFICER, DIRECTOR OR AGENT OF JANE GENERAL SERVICES LTD. AND JANE GENERAL SERVICES LTD., VANESSA JANE CANLAS, O/A OFFICER, DIRECTOR, OR AGENT OF 2322944 ONTARIO LTD. O/A TRI-HAN STAFFING SOLUTION, AND 2322944 ONTARIO LTD. O/A TRI HAN STAFFING SOLUTION

Wendy Levant and Connie Zary, for the Crown

Martin Kerbel, for the Defendant Vanessa Jane Canlas, no one appearing for the corporate Defendants

HEARD: June 5, August 6, and 13, 2020

SPIES J.

REASONS FOR SENTENCe

Overview

[1] On June 5, 2020, the Defendant, Vanessa Jane Canlas, appeared before me with counsel. She and Ms. Levant, counsel for the Crown, consented to the hearing proceeding by way of a video hearing. At that time, Ms. Canlas pleaded guilty to all five Counts in the indictment and I convicted her of the following offences of unlawfully defrauding the Government of Canada, by deceit, falsehood or other fraudulent means, of monies owing to the Government of Canada, contrary to s. 380 (1)(a) of the Criminal Code:

a) Personal income tax owing in excess of $5,000 between December 31, 2011 and May 4, 2015 (Count 1);

b) As an officer, director, or agent of Jane General Services Ltd. of GST/HST owing in excess of $5,000, between April 30, 2011 and February 11, 2015 (Count 2);

c) As an officer, director, or agent of Jane General Services Ltd. of corporate income tax owing in excess of $5,000, between December 31, 2012 and March 4, 2015 (Count 3);

d) As an officer, director, or agent of 2322944 Ontario Ltd. operating as Tri-Han Staffing Solution of corporate income tax owing in excess of $5,000, between March 30, 2012 and June 3, 2015 (Count 4);

e) As an officer, director, or agent of 2322944 Ontario Ltd. operating as Tri-Han Staffing Solution of GST/HST owing in excess of $5,000, between March 30, 2012 and December 1, 2013 (Count 5).

[2] Before Ms. Canlas pleaded guilty, I was also advised that the corporations were not represented by counsel and no plea was entered on their behalf. At the conclusion of the sentencing hearing, those charges were withdrawn by the Crown. I was also advised by counsel that the parties were jointly submitting that Ms. Canlas should be sentenced to a penitentiary sentence of two and one-half years. The Crown also sought a fine pursuant to s. 734(1) of the Criminal Code, in the amount of $833,238, which was vigorously objected to by the Defence. That was the outstanding issue that counsel asked that I determine.

The Facts

Circumstances of the Offences

[3] On June 5th, the Crown provided a Synopsis of facts that Ms. Canlas admitted were true save for all of the facts set out in support of Count 1. With respect to Count 1, Ms. Canlas admitted that she was guilty of fraud of an amount over $5,000, which permitted me to find her guilty of that offence, but she did not admit that she had personally defrauded the government of income tax in the amount of $624,198, as alleged by the Crown. As this was a matter that the Crown wanted to prove, in support for the request that a fine be imposed, it was necessary to adjourn the sentencing hearing to hear evidence.

[4] The sentencing hearing resumed on August 6 and 13, 2020, again by video, with the consent of the parties. At that time, the Crown filed an Annotated Synopsis which corrected a few minor errors and a Crown’s Report for Sentencing that contained the back-up documentation and information in summary form to support the facts asserted in the Annotated Synopsis. The Crown then called Carol Nourdine, who is employed by the Canadian Revenue Agency (“CRA”) and is the investigator in charge of the investigation of Ms. Canlas and her corporations. In her evidence she reviewed the steps she took during her investigation, the documents that were seized and she explained the documentation that backs up the facts asserted in the Annotated Synopsis. Ms. Canlas was then called by the Defence.

(a) The Annotated Synopsis

[5] The Annotated Synopsis (“Synopsis”) provides as follows. The Tab references are to the Crown’s Report for Sentencing.

[6] At all relevant times, Vanessa Jane Canlas owned, operated and controlled Jane General Services Ltd.[^1](“Jane General”). This company was incorporated on February 9, 2011. Ms. Canlas was an officer, director or agent of this corporation.

[7] At all relevant times, Vanessa Jane Canlas also operated and controlled 2322944 Ontario Ltd. operating as Tri-Han Staffing Solution[^2] (“Tri-Han”). This company was incorporated on April 3, 2012. Ms. Canlas was an officer, director or agent of this corporation.

[8] Through the above two corporations, Ms. Canlas provided temporary labour services. The investigation focused on the period May 1, 2011 to December 31, 2014. The CRA seized records from the business premises of the above said corporations, an accounting office and from Vanessa Jane Canlas’ residence. The CRA also obtained banking information from Production Orders of the corporation bank accounts. Ms. Canlas controlled these accounts or was the main signatory on these accounts.

[9] The CRA also collected statements and/or documents from 11 clients of Ms. Canlas. The clients paid Jane General and Tri-Han for temporary labour services. Their payments were deposited into each of the corporation’s bank accounts which Ms. Canlas controlled.

[10] Ms. Canlas also purchased a variety store called Vallon Variety on August 20, 2012. That store was incorporated as JV Variety. The investigation revealed that some of the payments for the temporary labour services flowed into or were comingled with the monies from the variety store.

[11] The investigation showed that the offence of fraud, against the Government, of income tax monies owing to it, was committed by the Ms. Canlas and her two corporations. Ms. Canlas further personally kept the monies owing to the Government and further defrauded the Government of monies she personally owed of income taxes. Total monies owing to the Government, either taxes owing or HST not remitted, for the two corporations and for Ms. Canlas personally, totaled $1,666,476.

[12] The evidence gathered in the course of the investigation revealed that:

• Vanessa Jane Canlas was the main contact person for the clients of Jane General Services Ltd. and 2322944 Ontario Ltd. operating as Tri-Han Staffing Solution;

• She was responsible for invoicing clients, which included GST/HST, and she collected the payments from the clients;

• She deposited the payments collected from the clients into the corporate bank accounts which she controlled;

• She maintained the books and records of the said corporations;

• She provided her accountant with Excel spreadsheets listing the sales invoice numbers, client names and the amount of each invoice;

• Ms. Canlas hid or suppressed the amount of income being earned by not including all of the sales invoices in the spreadsheets provided to her accountant;

• The accountant prepared the financial statements and corporate tax returns based on the false information provided by Ms. Canlas;

• Ms. Canlas collected the GST/HST from her clients;

• Ms. Canlas is the one who prepared the GST/HST returns;

• Based on the invoices and payments by the clients, Ms. Canlas suppressed the sales on the GST/HST returns, thereby further deliberately making it appear as if there were fewer sales, hence less GST/HST to remit to the Government;

• Ms. Canlas used the monies from the income paid to her by her clients and her store, personally such as for living expenses;

• Ms. Canlas did not include these monies that she appropriated into her income tax returns;

• No formal books and records were located;

• Multiple sets of spreadsheet records were located with different income and GST totals.

• In CRA’s calculation of tax owing, Ms. Canlas was given the benefit of all expenses put through both corporations.

Corporate Tax Returns – Counts 2-5 income tax and GST/HST frauds

[13] The false information Ms. Canlas provided resulted in the following understatements and income by which the Government was defrauded:

a) Count 3-Jane General Services Ltd., for the years 2013 and 2014:

• an understatement of taxable income totaling $1,054,221; See Tab 1

• evasion of income taxes owing in the amount of $130,605; See Tab 2

b) Count 4-2322944 Ontario Ltd., o/a as Tri-Han Staffing Solution, for the years 2013 and 2014:

• an understatement of taxable income totaling $1,138,730; See Tab 3

• evasion of income taxes owing in the amount of $138,452. See Tab 4

c) Count 2-Jane General Services Ltd., for the years 2011 to 2014 in GST/HST:

• GST/HST was collected from the clients;

• These were trust monies belonging to the Government;

• Ms. Canlas held them back and did not remit them;

• Amount totaling $525,048. See Tab 5

d) Count 5-2322994 Ontario Ltd., o/a Tri-Han Staffing Solution for the years 2012 and 2013 in GST/HST:

• GST/HST was collected from the clients;

• These were trust monies belonging to the Government;

• Ms. Canlas held them back and did not remit them;

• Amount totaling $248,173. See Tab 6

Personal Tax Returns of Vanessa Jane Canlas - Count 1, tax fraud

[14] The relevant or additional facts pertaining to the fraud concerning Vanessa Jane Canlas on Count 1 include:

• Vanessa Jane Canlas controlled and had access to the bank accounts of Jane General and Tri-Han;

• Ms. Canlas operated the variety store, JV Variety and had access to and controlled its bank account;

• She had access to the Vallon Variety bank account, the predecessor store to JV Variety;

• Her store offered money transfer services using Reliable Peso (“Reliable”) or Western Union;

• She collected money from her customers to transfer overseas;

• A large amount of her customers paid in cash and some paid in debit;

• Books and records were seized showing the request for money transfers, payments, and service fees;

• There was approximately $2 million in money transfers from customers collected by Ms. Canlas and her variety store. Of that, $1,297,356.20[^3] was cash;

• See summary chart at Tab 7;

• This $2 million was money to be transferred and some fees to be paid to Reliable and Western Union;

• During the same period, only $59,289.40 in cash overall was deposited into the Variety Store business bank accounts;

• See chart listing all cash deposits at Tab 8;

• Canlas transferred $2,213,000 from the Jane General and Tri-Han corporate bank accounts into the Variety Store Accounts to cover the payments to Reliable and Western Union;

• See Tab 9 of sample transfers to cover payments by Variety Store to Reliable and Western Union

• See Tab 10 of all the transfers totaling $2,213,000;

• None of the $2,213,000 was found recorded in any of the company books as a loan or salary or shareholders loan or benefit to anyone;

• Instead, Ms. Canlas used the income from Jane General and Tri-Han for their temporary labour services to cover the full amount of what she owed Reliable and Western Union for the money transfers;

• The cash that was received from the customers was not fully being deposited into the Variety Store bank accounts and was not reported by the Variety Store;

• This made it appear as if the net income from Jane General and Tri-Han was less by $2,194,000[^4];

• This reduced the taxes owing by those two companies;

• Ms. Canlas kept or appropriated the $2,213,000;

• Ms. Canlas did not report the $2,213,000 in her income tax returns for the years 2012- 2014;

• This resulted in a fraud on the Government of the taxes evaded personally by Ms. Canlas in the amount of $624,198.

[15] There is additional evidence that Ms. Canlas used Jane General and Tri-Han income for her own personal benefit, without reporting it as a taxable benefit, and further falsely lowering the income of her companies. That evidence included payment by these companies for her living expenses such as rent, RESP, mortgage, clothing, and payment of personal credit cards. See examples at Tab 11.

[16] CRA also analyzed her personal bank accounts and found transfers from Jane General and Tri Han to the personal accounts of Canlas that were more than what was reported as income she had received on her T4 slips.

[17] The evidence also revealed that Ms. Canlas made personal expenditures that did not reconcile with the income she did report for 2012 to 2014. For example,

• In 2012 to 2014 she transferred approximately $79,144.60 through Reliable and Western Union to family overseas; See Tab 12

• Ms. Canlas made a reservation deposit of approximately $682.82 CDN on a condominium in the Philippines in 2013 worth approximately $69,000 CDN; See Tab 13 and

• Cash receipts totaling approximately $120,000 for personal living expenses directly linked to Canlas were seized from the home and business. See summary chart at Tab 14

[18] This is to be compared to the income she reported for those same three years which totaled approximately $100,529.

[19] In total, Vanessa Jane Canlas, as an officer, director or agent of Jane General Services Ltd., and 2322944 Ontario Ltd. operating as Tri-Han Staffing Solution, and Jane General Services Ltd. and 2322944 Ontario Inc. operating as Tri Han Staffing Solution, and Canlas personally did deliberately cause the Government of Canada to be defrauded of taxes in the amount of $1,666,476, as summarized in the chart below:

Count	Taxpayer	Period	Tax	Under Reported Income	Tax Defrauded
3	Jane General Services Ltd.	2013 and 2014	Income	1,054,221	130,605
2	Jane General Services Ltd.	May 2011 to December 2014	GST/HST		525,048
4	2322944 Ontario Ltd. (Tri- Han)	April 2012 to March 2014	Income	1,138,730	138,452
5	2322944 Ontario Ltd. (Tri- Han)	April 2012 to October 2013	GST/HST		248,173
Total - Jane General & Tri-Han				2,192,951	1,042,278
1	Vanessa Jane Canlas	January 2012 to December 2014	Income	2,213,000	624,198
Total				4,405,951	1,666,476

[20] As already stated, all of the facts in the Synopsis were admitted by Ms. Canlas at the time she entered her guilty pleas save for those stated in support of Count 1.

(b) Evidence of Ms. Nourdine

[21] Ms. Nourdine has been working as a fraud examiner for the CRA since January 2006. She was initially in the audit department and has been an investigator since September 2015. She was assigned to this case in February 2017 and has been the lead investigator. As she testified Ms. Nourdine had the case file accessible to her on a laptop and I gave her permission to refer to her file as required to refresh her memory.

[22] Ms. Nourdine began her evidence by stating where the searches for documents in the possession of Ms. Canlas and her corporations were executed in December 2016. The CRA searched three locations: 78 Bergen Road (“Bergen”), which is the personal residence of Ms. Canlas and the business address for Tri-Han; 1156 Warden Avenue, which is the business address for Jane General; and the office of Ms. Canlas' accountant, Remedios Francisco.

[23] Ms. Nourdine explained generally the categories of the various documents seized which included correspondence with Ms. Francisco. In addition, personal tax returns for Ms. Canlas and other CRA documents were seized. The companies had no formal set of books and records - there was no general ledger as one would expect, but Excel spreadsheets were seized. There were several copies of spreadsheets, for example, for 2011, that had different amounts stated on them. Electronic records were seized as well as bank records of the corporations’ bank accounts. All payments made out of the bank accounts were categorized by Ms. Nourdine. In addition, eleven witnesses from the clients that retained Jane General or Tri-Han for temporary staff to be supplied to them by Ms. Canlas were interviewed.

[24] During the search of Ms. Canlas' home, $10,000 in cash was found in the bottom drawer of a two-door cabinet at the foot of the bed and other cash was found in the main dresser next to the head of the bed. Ms. Nourdine testified that she knew this was Ms. Canlas' bedroom because of pictures that were there and documents with her name on them which were found in the same room. The cash was not seized. It was given to Ms. Canlas.

[25] Ms. Nourdine briefly explained her process for determining the amounts owing by Jane General and Tri-Han for corporate taxes and GST/HST, but as the facts set out in the Synopsis in support of Counts 2-5 are admitted as accurate, it is not necessary to review that evidence beyond what is stated in the Synopsis. I do find it significant, however, that in support of Counts 3 and 4, Ms. Nourdine summarized the income of Jane General and Tri-Han for the years 2013 and 2014 as reported by Ms. Canlas and as calculated by her and Ms. Canlas did not dispute that accounting. This becomes relevant to Ms. Canlas’ position that she used cash received by JV Vallon to pay cash to employees of Jane General and Tri-Han for salary. Ms. Nourdine testified that in making these calculations she reviewed all of the deposits into the corporate bank accounts and then traced those back to the invoices to the clients of Jane General and Tri-Han.

[26] Ms. Nourdine testified that since the audit began, Jane General has stopped operating and that its last tax return was filed in 2015. Tri-Han was dissolved in September 2014. Neither corporation had any assets to pay the amount owing for income tax and GST/HST which totals $1,042,278 and Ms. Nourdine advised that the CRA has cancelled these debts.

[27] The evidence of Ms. Nourdine that is particularly important to this sentencing is her evidence relevant to the facts alleged by the Crown in the Synopsis in support of Count 1, which alleges that in the three-year period of January 2012 to December 2014, Ms. Canlas underreported her personal income by $2,213,000, thus defrauding the government of the taxes that she would have owed, had this personal income been reported, in the amount of $624,198. As already stated, this was disputed by Ms. Canlas save that she did admit evading more than $5,000 in personal tax resulting in my finding her guilty of Count 1.

[28] As set out in the Synopsis, at all relevant times, Ms. Canlas owned, operated and controlled Jane General and Tri-Han which both provided temporary staffing solutions to various businesses in Toronto. Jane General was incorporated in February 2011 and Tri-Han was incorporated in April 2012. Sheila Marco, who Ms. Canlas testified was her sister-in-law, was shown as the president of Tri-Han until February 2013 when Ms. Canlas became president and Ms. Marco was stated to be a 50% shareholder and director of both corporations. However, during the course of Ms. Nourdine's evidence, Mr. Kerbel conceded that Ms. Canlas ran Jane General, Tri-Han and JV Variety and this is consistent with the records Ms. Nourdine reviewed.

[29] Ms. Nourdine testified that based on her review of the bank records, Ms. Canlas was the one who opened the bank accounts and she had signing authority and was the only one who used the bank accounts. Ms. Marco was listed on bank documents as having a power of attorney, but there is no evidence that she ever used it. Ms. Canlas signed all of the cheques and most of the deposit slips and was the one who corresponded with the accountant, providing her with financial information for the preparation of income tax returns. Based on Ms. Nourdine’s interviews of the clients of Jane General and Tri-Han, Ms. Canlas was the person that they spoke to – they did not speak to Ms. Marco and she did not write any cheques and there is no correspondence from her with the accountant. Ms. Canlas was the one who prepared and filed the GST/HST returns. Finally, there is no evidence of any payment to Ms. Marco as a 50% shareholder. No evidence of shareholder loans to Ms. Canlas or Ms. Marco from the corporations were found in the records.

[30] Ms. Nourdine testified that operating Jane General and Tri-Han would have been a lot of work. She found evidence of about 430 temporary staff/employees offered by Jane General and Tri-Han over the four years she investigated. She found 1,260 invoices sent by Ms. Canlas from the two corporations to the clients, who were generally invoiced weekly. Ms. Canlas was also the one who sent all of the correspondence to the clients and her accountant. Based on Ms. Nourdine’s review of the documents seized, she testified that Ms. Canlas paid the temporary staff/employees that were hired to supply these clients weekly. Some were paid in cash. Ms. Canlas issued T4s to the temporary staff although Ms. Nourdine testified that in some cases, no T4s were issued. There were about 5,000 cheques written by Ms. Canlas for all of the corporate accounts and she signed all of the bank slips for Jane General and Tri-Han - over 1,000 bank slips. She filed 71 monthly filings of GST/HST and payroll, made monthly WSIB payments, prepared daily sheet summaries, ordered supplies for JV Variety and transferred money to JV Variety to cover the transfers to Reliable and Western Union.

[31] Ms. Nourdine reviewed the chronological events set out at Tab B of the Crown Record and the Defence took no issue with that summary. As set out in the Synopsis, Ms. Canlas purchased Vallon Variety store from Jesse Vallon on August 20, 2012. Both Ms. Canlas and Mr. Vallon signed the Agreement of Purchase and Sale and that date is when JV Variety was incorporated with Ms. Canlas as president. The Agreement of Purchase and Sale shows the price of $100. In addition, $25,000 was to be paid to Mr. Vallon, but Ms. Nourdine could not find evidence of that payment. According to the corporate records Ms. Marco became president of JV Variety in November 2015 and the company was transferred to her in December 2015 and dissolved in July 2016.

[32] Although the bank records for Tri-Han show Mr. Vallon as having a power of attorney on the account and an opening document had his signature, there with a scratch through it, Ms. Nourdine testified that she does not believe he was shown as a partner. He was given a card to access the account, but there was no activity on the card. Ms. Nourdine testified that there is no evidence that Mr. Vallon used the Tri-Han account at all or that he was involved in the operation of Tri-Han, Jane General, or JV Variety. Ms. Nourdine testified that she does not believe that Mr. Vallon was on the Jane General bank account at all.

[33] Ms. Nourdine did, however, find evidence of some payments to Jesse Vallon which are summarized at Tabs 29 and 30. T4s, presumably for income earned, were issued by Ms. Canlas on behalf of Tri-Han to Mr. Vallon for 2012 and 2013 for a total of $35,433, which is consistent with the only evidence of actual payments to Mr. Vallon, which were from Tri-Han for the period from April 19, 2012 to February 21, 2013 which totalled $35,057.88.

[34] In cross-examination Ms. Nourdine was asked if she knew of any interest Mr. Vallon had in the variety store after 2011. She testified that as far as she knows Mr. Vallon relinquished all rights to the variety store after he sold it to Ms. Canlas. She answered that after the Agreement of Purchase and Sale was signed on August 20, 2012 and JV Variety was incorporated, Vallon Variety continued to have a bank account, but Ms. Canlas signed the cheques. That account was closed in 2013 and at that point Ms. Canlas only signed cheques on the JV Variety bank account. As I understand the evidence, there was only ever one variety store. No evidence was given as to why the bank account for Vallon Variety was kept open and continued to be used for deposits and transfers after Ms. Canlas purchased the variety store from Mr. Vallon.

[35] Tab 15 sets out the details concerning the purchase of the Ms. Canlas’ residence, the Bergen residence. It was purchased in August 2011 for $290,000 and title is in the names of Ms. Canlas and Sheila Marco. A mortgage in the amount of $283,627 was registered on title, with the first mortgage payment to commence in October 2011. There is now a caution that was put on by the trustee in bankruptcy in April 2016. An updated search was done (see Tab 20) and there is no change. The home was valued at between $315,000 and $325,000 in February 2016 by a realtor who provided an opinion letter.

[36] Ms. Canlas filed for personal bankruptcy in April 2016. A Statement of Affairs dated April 1, 2016, that Ms. Canlas swore was a “full, true and complete statement of my affairs” as of that date and “fully discloses all property and transaction of every description that is or was in my possession” is in the Crown’s Record. The reason for the bankruptcy is stated to be that her “income is insufficient to meet mounting debts due to credit mismanagement and high monthly interest charges”. The only asset listed of any real value was the Bergen residence, but Ms. Canlas stated that she only had a 50% interest in the property. She valued the residence at $319,800, which after the mortgage left her share valued at $33,900, although she only stated it as $23,900, possibly taking into account the cost of any sale. As for her debts, apart from the mortgage and a small loan on a vehicle, Ms. Canlas listed three credit cards that Ms. Nourdine advised were being paid through the corporations. The outstanding amounts on those cards were shown as $19,500. Ms. Nourdine advised that Ms. Canlas had six different credit cards in total and that they were all being paid through the corporation.

[37] As for other debts, Ms. Canlas stated that $950,000 was owing to the CRA. Ms. Nourdine advised that this was a result of the audit of Jane General and was the amount found to be owing to the CRA including interest and penalties. Ms. Nourdine advised that the amounts owing by both Jane General and Tri-Han for income tax and GST/HST have been cancelled given that these corporations have no assets.

[38] The trustee in bankruptcy for Ms. Canlas’ estate has advised that he intends to oppose Ms. Canlas’ discharge. There is a great deal missing from Ms. Canlas’ Statement of Affairs. For example, in answering the question as to whether or not she has operated a business in the last five years, she referred only to Jane General which she stated she operated as an employment agency from February 1, 2011 to December 1, 2015. She did answer “yes” to the question of whether or not she had sold or disposed of any property in the prior 12 months, but she made no reference to Tri-Han or JV Variety. Furthermore, also she was asked in the form to state in the five years prior if she had made any sale or disposed of property or had made any gifts to relatives or others in excess of $500, there is no reference to any transfer of funds, including the $79,000 Ms. Canlas sent to the Philippines that I will come to, or the $40,000 Ms. Marco advised Ms. Nourdine that Ms. Canlas had transferred to her.

[39] Turning to the facts in support of the Crown’s position with respect to Count 1, as already stated, Ms. Canlas had access to the bank accounts of JV Variety and Vallon Variety, the predecessor store to JV Variety. There is no dispute that JV Variety offered money transfer services using Reliable or Western Union. Books and records were seized showing the request for money transfers, payments, and service fees. Based on those records, Ms. Nourdine calculated the total amount of money transfer payments received from customers for Reliable or Western Union for the three years of 2012 to 2014 at Tab 7 of the Crown’s Record. In summary, $2,375,214.64 was received from customers and of that amount, $1,297,356.20 was received in cash,[^5] $643,149.93 was received by debit and $159,612.12 was received by cash or debit.

[40] The money received from customers for transfers should of course have been sent directly by JV Variety to Reliable and Western Union. However, Ms. Nourdine determined that most of this money was not deposited into the bank accounts of Vallon Variety or JV Variety. Ms. Nourdine testified she could not locate all of this money going into the Vallon Variety or JV Variety bank accounts, nor was it reported by JV Variety in its income tax returns. Furthermore, as set out in Tab 7, Ms. Nourdine determined, based on daily sales summary sheets that someone at JV Variety prepared everyday, Ms. Canlas owned the store, that an additional amount of $518,187.76 in cash was collected by JV Variety from regular store activities. However, as set out at Tab 8, what is significant is that based on the bank accounts of Vallon Variety and JV Variety for the three years in question, only $59,289.40 in cash was deposited from all activities. Accordingly, there does not appear to be any dispute that most of the money received for the transfers was not used to pay those transfers, although Ms. Nourdine advised that there were some payments from the bank accounts of Vallon Variety or JV Variety to Reliable and Western Union.

[41] As set out by Ms. Nourdine at Tabs 9 and 10, by her calculations, a total of $2,213,000 from Jane General and Tri-Han was transferred by Ms. Canlas into the Vallon Variety or JV Variety bank accounts and of that amount, $1,570,000 was paid to Western Union and Reliable for customer transfers. Ms. Nourdine testified that the amount of $2,213,000 was income that Ms. Canlas should have reported as income of the corporations but she did not find any record in any of the company books and records or T1 tax returns that any of this amount of $2,213,000 was received as income or paid out as a loan, salary, shareholder loan or benefit to anyone. As a result, these transfers resulted in the net income of these corporations being under reported that in turn resulted in those corporations’ failure to pay taxes owing as set out in Counts 3 and 4.

[42] The position of the Crown is that this amount of $2,213,000 was misappropriated by Ms. Canlas because there is no record of it in any of the corporations’ books as salary or a shareholder loan. It is the Crown’s position that as a result of Ms. Canlas’ failure to report this amount as income in her personal income tax returns for the years 2012- 2014, she avoided paying personal taxes in the amount of $624,198, as alleged in Count 1.

[43] In cross-examination, Ms. Nourdine was asked if it was possible that the cash received by the Vallon Variety or JV Variety for transfers as set out in Tab 7 could have been used to pay cash for salaries to the temporary staff/employees of those corporations and that the money transferred to the variety store bank accounts by Jane General and Tri-Han was actually repayment for those payments to staff. Ms. Nourdine responded that she had not reviewed any documentation that supported that suggestion and that there was an absence of evidence that that happened.

[44] As already stated, Ms. Nourdine testified that she found evidence of about 430 temporary staff offered by Jane General and Tri-Han over the four years she investigated. She found 1,260 invoices sent by Ms. Canlas from the two corporations, to the clients of those two corporations and based on Ms. Nourdine’s review of the documents seized, she testified that Ms. Canlas paid the temporary staff/employees that were hired to supply these clients weekly. She acknowledged that many times employees were paid in cash but that it was through Tri-Han or Jane General. Ms. Nourdine stated that Ms. Canlas issued T4s to the temporary staff, although in some cases no T4s were issued.

[45] Ms. Nourdine’s calculation of the amount paid to the temporary staff for the years 2013 and 2014 by Jane General and Tri-Han is set out at Tabs 1 and 3. She testified that she reviewed the invoices to the clients, that those invoices had time sheets and pay stubs attached as well as the corporations’ bank statements. She found that the clients all paid by cheque. She reviewed all of the deposits into the corporations’ bank accounts and traced each deposit to a sales invoice to a client. She also reviewed all of the time sheets and followed all of the transfers out of the corporate accounts and categorized them. Ms. Nourdine explained that she noticed some employees were being paid by cash by Jane General and Tri-Han and the average was $3,000 and so she counted any cash withdrawals from the two corporations that was under $3,000 as salary to the temporary staff in her calculations. Ms. Nourdine also included a total of $85,314.33 in payments made by Jane General to 2147329 Ontario Corporation and RPF Management Services, companies owned by Ms. Francisco, Ms. Canlas’ accountant as part of her salary calculations because the accountant advised her that she would pay cash to some of the temporary staff and then Ms. Canlas would reimburse her through Jane General.

[46] In cross-examination, Ms. Nourdine was asked if there could have been further cash payments to the temporary staff beyond what she found. She testified that people paid with cash were shown as withdrawals from the accounts on pay day and she treated all withdrawals as a payment to a temporary staff/employee for salary if the amount was less than $3,000.

[47] Mr. Kerbel put the theory of the Defence to Ms. Nourdine that much of the cash received by Vallon Variety or JV Variety from customers for the payment of transfers by Reliable and Western Union was not deposited into the Vallon Variety or JV Variety store bank accounts because it was used by Ms. Canlas to pay wages in cash to the temporary staff of Jane General and Tri-Han. In answer to further questions, Ms. Nourdine confirmed that a total of $1,572,452 was received by Vallon Variety or JV Variety in cash and that it is her position that this money was misappropriated by Ms. Canlas. In re-examination, Ms. Nourdine was asked if there is any evidence to support $2 million in cash coming out of Vallon Variety or JV Variety to pay the wages of the temporary staff/employees of Jane General and Tri-Han. She responded that there is not, that she went through the bank accounts and tried to match up all the salaries. She gave Ms. Canlas credit for more than she reported on the filed T1 returns of Jane General and Tri-Han and there were no records of the extra $2 million anywhere. Furthermore, she did not find any paperwork with respect to any additional employees apart from those she used in her calculations.

[48] Mr. Kerbel put to Ms. Nourdine that when the clients paid Jane General and Tri-Han by cheque the money could not be withdrawn from the bank immediately after that cheque was deposited into the company bank account. Ms. Nourdine did not agree. She said that based on the bank slips she saw, the first transaction would be the deposit from the client and then there would be 30 transactions of payments for wages to the employees on the same day. The corporations at times had high balances, so withdrawals did not impact the cheques being deposited. Ms. Nourdine admitted that in her experience banks do put holds on cheques, but she was not aware of any holds on cheques with respect to any of the cheques in question and she had no recall of seeing any holds on any of the cheques.

[49] As set out in the Synopsis, there is additional evidence that Ms. Canlas used Jane General and Tri-Han for her own personal benefit without reporting it as a taxable benefit and further falsely lowering the income of her companies. Ms. Nordine testified that although there were some legitimate business expenses claimed by the corporations, most of the expenses paid by the corporations were personal expenses of Ms. Canlas that were put through as business expenses of the corporations and paid by the corporations. Tab 11 sets out the personal expenses Ms. Nourdine identified that were paid by Jane General and Tri-Han from the corporations’ bank accounts that for the four-year period of 2011 to 2014 total over $162,000. In addition, over $91,000 for personal expenses on Ms. Canlas’ credit cards were paid by the corporations in the same period. Finally, Tab 14 sets out cash receipts Ms. Nourdine located that were linked to Ms. Canlas from Costco, Shoppers Drug, No Frills, Petro Canada, etc., that total $120,000 but she acknowledged that there might be some overlap with the amounts set out at Tab 11. In any event it is clear that what appears to be Ms. Canlas’ personal expenses that were claimed as business expenses far exceeded the personal income that she reported, which for the three years from 2012 to 2014 totaled only $100,529. Nevertheless, for the purpose of her analysis, Ms. Nourdine accepted that all of these expenses were legitimate business expenses and did not include any of these expenses in the $2,213,000 that Ms. Canlas is alleged to have misappropriated.

[50] Although this evidence is not relevant to the quantification of the fraud, it is relevant to show how Ms. Canlas used the income of the corporations for her own purposes. The so-called business expenses include transfers of a total just in excess of $79,000 to Reliable in the period from 2012 to 2014, which was then sent to the Philippines for Ms. Canlas’ family and a payment of $30,000 for RESPs that first transferred to Ms. Canlas' personal account and then sent to Primerica, presumably for the education of her children. In addition, Ms. Canlas paid for groceries, various household expenses for furniture, bedding, home repairs and renovations and mortgage payments, through her business accounts. Hydro, utilities and property taxes were also paid by the corporations as well as other expenses that clearly appear to be personal expenses. For example, mortgage payments in the amount of $1,200 per month for the Bergen residence, starting in October 2011, were paid out of a bank account in the name of Sheila Marco. Jane General then transferred money a day or two before or after the mortgage payment was made to repay Ms. Marco for the mortgage payment. Ms. Nourdine testified that no mortgage payments were paid out of Ms. Canlas' personal bank account.

(c) Evidence of Ms. Canlas

[51] Ms. Canlas is 40 years old. She was born in the Philippines and has been a Canadian citizen since 2017. She is divorced and has two children, a daughter who is 20 and a son who is 18. Both are in college. Ms. Canlas testified that she supports her children. She pays their tuition and they live with her without paying any rent or money for groceries.

[52] Ms. Canlas testified that she was the person keeping track of the money coming into and out of her corporations. She put details on Excel spreadsheets for both Jane General and Tri-Han which she then gave to her accountant so that the corporate income tax returns could be prepared.

[53] Ms. Canlas admitted that the cash Vallon Variety or JV Variety received from clients who wanted to transfer money was not deposited into the Vallon Variety or JV Variety bank accounts. She testified that she used this cash to pay the salaries of the temporary staff, owed by Jane General and Tri-Han. She paid the staff supplied by Jane General by cash, cheque and money transfers directly into their bank accounts depending on the bank they used. Ms. Canlas admitted that cash would be left over which she kept. She gave no evidence as to how much cash was used to pay staff this way or what amount of cash might be left over that she kept.

[54] Ms. Canlas testified that some of the expenses at Tab 14 were in fact business expenses because she would shop sales at places like Walmart and Costco and then sell that product at JV Variety. She admitted that other expenses for items purchased at places like Costco were personal and that it was “all mixed up”. Ms. Canlas also testified that every month she sent money to her parents and other family members in the Philippines. As already stated, she used Reliable for this purpose and she testified that she either used a credit card or paid in cash. Ms. Canlas testified that she also used Money Gram and LDV Express for this purpose as well, and Tab 14 shows cash being used to make payments to those companies. She admitted that these were all personal expenses.

[55] Ms. Canlas testified that she has worked as a Personal Support Worker (“PSW”) for Extendicare, which is a long-term care facility in Oshawa, for the past two years. She works there six days per week, usually the night shift, from 11 p.m. to 7 a.m. although some days she works for 16 hours. Ms. Canlas testified that she grosses $2-3,000 or more every two weeks. In cross-examination Ms. Canlas admitted that her net income is $4,000 per month or less but then said that she gets extra pay for the pandemic and so nets about $2,200 bi-weekly. She advised that with a criminal record she will be fired from this job as one cannot work as a PSW if you have a criminal record. I accept that.

[56] Ms. Canlas testified that she owns her home with her sister-in-law, Sheila Marco and they share the expenses for the home. She has no idea what the home is worth now. She was not asked if Ms. Marco actually lives in the home. She testified that she sometimes works overtime and will save some of her earnings and that she currently has about $3,000 in the bank. She does not have cash in her home and was not asked what happened to the $10,000 she had in her bedroom at the time of the search. She also has $1,000 in an RRSP and a vehicle that she said is worth about $15-16,000, with $3,000 left owing on a loan that ends in December 2020. Ms. Canlas testified that she has no other assets and that she has no outstanding loans from banks, and only $300 owing on a credit card. With respect to a condo that she paid a deposit on, as reflected in the records, Ms. Canlas testified that she did not end up buying it as she was afraid that she could not afford it.

[57] Ms. Canlas testified that she did not challenge the allegations and admitted that Jane General and Tri-Han underreported income, and that a very substantial amount of the money was cash. When Mr. Kerbel asked her what happened to the cash, Ms. Canlas testified that she used it to pay the temporary staff and that she would then have Jane General send money to JV Variety. She also used the cash to pay suppliers like Coca Cola and that she sent money to Reliable and Western Union. Ms. Canlas testified that she also used the cash left over to pay Mr. Vallon $1,000 or more per week. She claimed that he was the one behind Tri-Han. She testified that before Tri-Han was incorporated, her accountant and Mr. Vallon met her and Ms. Marco and asked then to incorporate Tri-Han in their names and that Mr. Vallon was the one behind the company. She claimed that since he was operating Tri-Han she paid him $1,000 per week in 2012 and 2013, which she said would have totalled $104,000 over 104 weeks. Later she added that she gave Mr. Vallon $200 each week for his daughter.

[58] As for the rest of the cash, Ms. Canlas testified that at times Mr. Vallon would buy something personal and she would give him cash to cover the cost including his mortgage, credit cards, car insurance, Rogers, and other personal bills. Ms. Canlas estimated that amounted to an additional $50,000 or more, but she did not keep track of the money that she gave him. In addition, if he needed more money he would ask and she would give it to him. When asked by Mr. Kerbel why she did this, Ms. Canlas testified that it was because Mr. Vallon was the owner of Tri-Han and he was just using her name and Ms. Marco’s name. She admitted that there was no agreement that she pay Mr. Vallon money. Ms. Canlas testified that there was a witness who worked in the variety store who “knows the story behind Tri-Han”. She was not asked who this person is and this witness was not called by Mr. Kerbel.

[59] Ms. Canlas admitted that she did all of the work for Tri-Han although she testified that Mr. Vallon would be in the office every day and he went to the bank with her. He therefore knew if she was withdrawing cash and that is when he would ask her for some. Ms. Canlas admitted that she knew Mr. Vallon was planning on applying to go bankrupt and that she was helping him hide his income so he could declare bankruptcy. She admitted that she was doing the same thing.

[60] Ms. Canlas testified that she worked for JV General Services, which was an employment agency run by Mr. Vallon, and that she had no idea if he was still in the business. This was the only evidence I received as to what her relationship with Mr. Vallon was.

[61] Ms. Canlas testified that she did not know how much money she kept due to the underreporting of income and not remitting GST/HST.

[62] In cross-examination, Ms. Canlas admitted that she underreported the income of Jane General in 2013 to 2014 of about $1 million and a little over $1 million for Tri-Han. She also admitted the failure to remit GST/HST as alleged by the Crown. With respect to her personal taxes, however, Ms. Canlas testified that she gave all of the documentation to her accountant. She admitted, however, that the numbers in her income tax returns matched the Excel spreadsheets she gave to her accountant and that she did not report the approximate $2 million she transferred to the Vallon Variety and JV Variety accounts from Jane General and Tri-Han that was used to pay transfers to Reliable and Western Union.

[63] Ms. Canlas also admitted that she was the sole person responsible for running Jane General, Tri-Han and JV Variety. Although she had an employee who kept track of the temporary staff/employees, she admitted she was still responsible for this. This employee and Ms. Canlas were the only two people who kept track of the time sheets for the temporary staff/employees. Ms. Canlas also admitted that all of the payments for the invoices she sent to the clients came to her. As for paying the salaries of the temporary staff/employees, Ms. Canlas testified that the invoices to the client gave the breakdown of what was owing and that she was able to determine what to charge the client automatically on the computer. I took it from this evidence that the breakdown on the invoices showed the number of hours worked by each of the temporary staff employees she supplied to the clients. Most of the employees were regulars and Ms. Canlas testified that she had an Excel spreadsheet with the name of the employee and her hourly rate and so all she had to do was insert the hours worked. Her reporting to WSIB was also done automatically on the computer. Ms. Canlas denied that the cash she paid employees was not recorded anywhere and said it was on the invoice to the clients which broke down each employee who worked for the client and the amount they would receive. Ms. Levant then put to her that this was all captured in the CRA payroll account and asked Ms. Canlas if she was suggesting there were additional workers. Ms. Canlas said no – that it was the same workers.

[64] With respect to the Statement of Affairs, Ms. Canlas swore in support of her bankruptcy application, she admitted that she made no mention of the cash she alleges that she gave to Mr. Vallon or anyone else. As for the reason for the bankruptcy application, Ms. Canlas admitted that at the time she applied, she had six credit cards that were all being paid for by the corporations.

[65] As for what happened to the cash, in cross-examination Ms. Canlas testified that she did not have “all the money” and then denied that she had some of it.

[66] Ms. Canlas addressed this Court briefly at the conclusion of the sentencing hearing. She was very emotional and clearly concerned about the impact her incarceration will have on her children.

Circumstances of Ms. Canlas

[67] In summarizing the evidence of Ms. Canlas, I have set out the information that I have as to her circumstances. In addition, Mr. Kerbel filed various letters, including character reference letters on her behalf which I have reviewed. A letter from her employer confirms that Ms. Canlas has been employed as a permanent employee of Extendicare Oshawa in the capacity of a PSW since August 30, 2018 and that as of May 2020 she was earning $20.99 per hour. As for the letters from friends, all but one refer to the charges and express surprise that Ms. Canlas committed such an offence. Ms. Canlas is described as a good friend, a reliable, hard worker, and despite the charges, Ms. Canlas is believed to be an honourable and trustworthy person, and a kind-hearted person caring for seniors.

Positions of Crown and Defence

[68] The maximum sentence for the frauds over $5,000, contrary to s. 380(1)(a) of the Criminal Code, is 14 years. Section 380(1.1) imposes a minimum sentence of two years if the total value of the subject matter of the fraud exceeds one million dollars, as is the case before me.

[69] Counsel jointly submitted that a two- and one-half-year penitentiary sentence be imposed on Ms. Canlas. Ms. Levant, counsel for the Crown, submitted that this sentence be imposed on each count and that the sentences on Counts 2-5 run concurrently to the sentence on Count 1.

[70] Ms. Levant submitted that in almost all cases of this nature a fine is imposed as well as a period of incarceration. She asked that in light of the guilty pleas that a fine representing 50% of the amount the Crown alleges that Ms. Canlas defrauded; $833,238.00, which she broke down over the five counts, also be imposed.

[71] Mr. Kerbel, counsel for Ms. Canlas, takes the position that there should be no fine. However, he had no objection to the imposition of a restitution order. For that ability to pay is not in issue. It stands as a judgement against Ms. Canlas foreve,r but she cannot be sent to prison for a default in payment. He also submitted that the Crown be given tools for collection of a restitution order which would survive bankruptcy.

Analysis

Is the proposed sentence of two and one-half years a fit period of incarceration for these offences?

[72] The first issue I must deal with is to decide whether or not the proposed sentence of two and one-half years is a fit period of incarceration for these offences. R. v. Anthony-Cook, 2016 SCC 43 is the leading case on accepting joint submissions on sentence from counsel. Although the law is clear that I am not bound by the proposed sentence, this case establishes a high threshold for departing from a joint submission. As the Supreme Court set out at para. 5, a trial judge should not depart from a joint submission on sentence unless the proposed sentence would bring the administration of justice into disrepute or is otherwise contrary to the public interest. The court further noted at para. 34 that “[r]ejection denotes a submission so unhinged from the circumstances of the offence and the offender that its acceptance would lead reasonable and informed persons, aware of all the relevant circumstances, including the importance of promoting certainty in resolution discussions, to believe that the proper functioning of the justice system had broken down”. Clearly it is a very high standard if a court is to reject or vary a joint submission.

[73] I must consider the principles of sentencing set out in ss. 718, 718.1 and 718.2 of the Criminal Code. In addition, in this case, I must have regard to s. 380.1 of the Criminal Code which sets out various aggravating circumstances. Most relevant to the case at bar is the fact that these frauds were premeditated, sophisticated in that they involved three businesses and they required a significant amount of planning, and the fact that the frauds took place over a period of four years. Ms. Canlas had ample time to realize that what she was doing was wrong and to stop.

[74] Section 380(1.1) of the Criminal Code provides that the fact that the total fraud exceeds one million dollars is an aggravating factor. That is the case here even without considering Count 1. It is also clear that there were no extenuating circumstances that motivated these offences; the driving factor was simple greed. Ms. Canlas did not need to resort to criminality to properly look after herself or her children, as her businesses were financially successful, although I accept that she was using some of this money to send to her parents and family in the Philippines.

[75] It is clear from R. v. Onkar Travels Inc., [2005] O.J. No. 1452 (C.A.) at para. 2, that although this is not a classic breach of trust case, the GST/HST funds Ms. Canlas failed to remit are deemed by law to be trust funds. As such, Ms. Canlas breached the public trust in that she was in a position of trust with respect to the GST/HST funds that she collected from clients and then deliberately failed to remit all of the funds collected.

[76] Also significant to the case at bar is the conclusion by the Court of Appeal, in R. v. Bogart, 2002 41073 (ON CA), [2002] O.J. No. 3039 at para. 44, leave to appeal refused, [2002] S.C.C.A. No. 398, that the fact the principal victim of these frauds was the government does not diminish the seriousness of the crime. A fraud on government is not a victimless crime because it “takes money from the public purse and, therefore, from all those who rely on it: see Bogart, at para. 23. As the court stated in Knox Contracting Ltd. v. Canada 1990 71 (SCC), 1990 2 S.C.R. 338 at paras. 17 and 18, the entire system of levying and collecting income tax is dependent upon the integrity of the taxpayer in reporting and assessing income. If the system is to work, the returns must be honestly completed, which Ms. Canlas failed to do. Those who evade the payment of income tax not only cheat the government of what is owing to it, but inevitably increase the burden placed upon the honest taxpayers. It is ironic that those who evade payment of taxes think nothing of availing themselves of the innumerable services which the government provides by means of taxes collected from others, as I am sure Ms. Canlas has done for her own and her children’s benefit.

[77] As for the mitigating circumstances relevant to sentence, Ms. Canlas is a first-time offender – she has no criminal record. Furthermore, she pleaded guilty to the five charges although she did not admit the amount of the fraud alleged by the Crown on Count 1. The pleas and sentencing were to take one day and instead took almost three. Nevertheless, trial time was saved. Ms. Levant advised that Ms. Canlas stated at the first Judicial Pre-trial in this Court that she would plead guilty and that she admitted the accounting done by the CRA was correct. In light of the admission with respect to the accounting, the trial was scheduled to proceed for five days on May 28, 2020. Ms. Levant advised that the trial would have been three weeks long if there had no admission. Ms. Levant agrees some trial time was saved in light of the guilty pleas, but advised that the Crown spent months to prepare admissions to shorten the court time. Ms. Levant advised that it was because of the guilty pleas that she was only asking for a fine of 50% of the total fraud.

[78] In Bogart, a case where a doctor defrauded OHIP, the Court of Appeal stated at para. 36 that large-scale frauds committed by persons in a position of trust usually attract penitentiary sentences that are three to five years long. The court concluded at para. 21 that the need for general deterrence was one factor that warranted a jail term sentence, that deterrence is the “most important sentencing principle in major frauds”. The court also stated at para. 30 that mitigating factors are secondary to the principle of deterrence, referencing R. v. Bertram (1990), 40 O.A.C. 317 (Ont. C.A.), where the Court observed that “most frauds are committed by well-educated persons of previous good character”.

[79] In R. v. Davatgar-Jafarpour, 2019 ONCA 353, [2019] O.J. No. 2264 (C.A.) there were multiple fraud convictions with respect to a fraud committed over several years. The trial judge did not quantify the fraud, but the offender defrauded Citizenship and Immigration Canada in an amount well in excess of one million dollars. The trial judge imposed a two-year sentence. The Crown appealed and the court substituted a four-year sentence, after reaffirming that in cases of large-scale fraud, the range of sentences imposed is generally three to five years, which reflects the substantial weight that courts must give to the principles of general deterrence and denunciation, at para. 34.

[80] The proposed sentence is below the range suggested by the Court of Appeal for this large-scale fraud and there are no exceptional circumstances apart from the fact Ms. Canlas is a first offender, but that too is common in these cases. However, given the guilty pleas and the fact that this is a joint submission from experienced counsel, I am prepared to accept the proposed sentence that Ms. Canlas serve two and one-half years in the penitentiary.

Should there be a fine in addition to incarceration?

(d) The Law with respect to the imposition of a Fine

[81] Section 734 of the Criminal Code sets out the court’s jurisdiction to impose a fine. Subsection 734(1) (b) provides that subject to ss. (2), given the offence of fraud includes a minimum term of imprisonment, I “may” fine Ms. Canlas by making an order under s. 734.1. Subsection (2) provides that I may only impose a fine if I am “satisfied that the offender is able to pay the fine or discharge it under section 736”. Section 736 provides that an offender may discharge the fine in whole or in part by earning credits for work performed during a period not greater than two years in a provincial program established for that purpose. Unfortunately, Ontario has not established such a program. Accordingly, unless I am satisfied that Ms. Canlas is able to pay the fine, no fine can be legally imposed.

[82] Section 734(4) provides that if a fine is imposed, a term of imprisonment in accordance with ss. (5) shall be deemed to be imposed in default of payment of the fine. Section 734 (5)(a) sets out a complicated formula for calculating the term of imprisonment depending on the amount of the fine outstanding. In this case, counsel agreed that if I impose the fine requested by the Crown, should Ms. Canlas default in paying all of that fine, she would face a term of imprisonment of 14 years, the maximum term of imprisonment for fraud, pursuant to s. 734(5)(b). Section 734.1 provides that if a fine is imposed I must determine the amount of the fine, the manner in which the fine is to be paid and set out any other terms I deem to be appropriate. Section 734.1 provides that any term of the order imposing a fine can be changed save for the amount of the fine.

[83] If a fine is imposed and Ms. Canlas fails to pay all or some of that fine in the time allowed, the Crown may bring an application for a Warrant of Committal pursuant to s. 734.7 of the Criminal Code. At that time the judge hearing the application would have to decide that s. 734.5, which refers to withholding licences or permits (federal in this instance) and s. 734.6, which permits the Crown to have the outstanding fine filed as a judgment and enforce the judgment as you would any other judgment, are not viable options. That would likely depend on whether or not the Crown had found assets that could be seized or garnished. These sections are viable options if there is actually property to seize, place a lien upon or bank accounts are known and have not been depleted. Otherwise the judge “shall not” issue the Warrant unless the offender has “without reasonable excuse, refused to pay the fine”, (emphasis added). As stated in R. v. Wu, [2003] 3 S.C.R. 530, 2003 SCC 73, at para. 23, Parliament did not intend to send the impoverished to jail by reason only of their inability to pay.

(i) R. v. Topp, [2011 SCC 43](https://www.canlii.org/en/ca/scc/doc/2011/2011scc43/2011scc43.html), [2011] 3 S.C.R. 119

[84] The Topp decision provides guidance on the issue of whether or not to impose a fine in this case. Ms. Levant conceded that in light of this authority, the Crown bears the onus to satisfy this Court, on a balance of probabilities, that Ms. Canlas has the ability to pay the requested fine.

[85] The Topp decision is factually similar to the case at bar. In that case the trial judge sentenced the offender to five years imprisonment but declined to impose a $4.7 million fine requested by the Crown because she was not satisfied that the offender was able to pay the fine. Defence counsel had asserted that Mr. Topp was unable to pay a fine, but adduced little evidence to support his assertion and offered no explanation of where the $4.7 million had gone. The Crown, unable to trace or locate the funds, urged the court to infer that the funds were still in Mr. Topp’s possession. The sole issue on appeal was described, at para. 11 as whether the trial judge was bound to impose a fine in light of Mr. Topp’s failure to explain what had happened to the $4.7 million he was found by the judge to have misappropriated. For the reasons I will come to, the Supreme Court agreed with the Court of Appeal that this was a "close call" and that while another judge might well have decided differently, it was open to the trial judge, on the evidence and the information placed before her, to decline to impose a fine.

[86] The court in Topp held as follows:

[7] Past receipt of illegally obtained funds does not impose an evidential burden on offenders to prove they no longer possess their ill-gotten gains. In the absence of a credible explanation, however, it will often be open to the court to infer that the offender is able to pay a fine. But the court is not legally bound to do so. The probative weight of the inference will depend on the circumstances, and therefore vary from case to case.

[18] The legislative purpose behind s. 734(2) is to prevent offenders from being fined amounts that they are truly unable to pay, and to correspondingly reduce the number of offenders who are incarcerated in default of payment. …

[19] And the effect of the provision was thus described by this Court in R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530, at para. 47:

. . . Parliament rejected in general the notion that a fine should be set without regard to an offender’s ability to pay. A means inquiry is now a condition precedent to the imposition of a fine except where otherwise provided by law.

[20] An affirmative finding that an offender is able to pay is therefore required before a fine can be imposed. In the absence of evidence capable of supporting that finding, the party seeking a fine cannot succeed.

[21] Section 734(2) does not impose a formal burden of proof on the party seeking a fine. As a practical matter, however, it does so to this extent. As a matter of law, the court cannot impose a fine unless it is satisfied that the offender is able to pay. This necessarily involves an affirmative finding based on the evidence and information properly before the court pursuant to ss. 720 to 724 of the Criminal Code. Absent a sufficient basis for that finding, the party seeking the fine cannot legally succeed.

[22] In this sense, s. 734(2) imposes a burden on the party seeking the fine to satisfy the court that the offender is able to pay. To discharge that burden, the proponent of the fine may rely on all the relevant material before the court on sentencing ― including evidence or information provided by any other party, or otherwise properly elicited by the judge pursuant, for example, to s. 723(3) of the Criminal Code.

[23] The party opposing a fine ― often, but not always, the offender ― is entitled, of course, to present any evidence or information admissible on sentence and tending to show that the offender is unable to pay. But that party, in opposing the fine, does not assume a formal burden of proof ― evidential or persuasive. He or she remains free to argue that the evidence relied on by the proponent of the fine should not satisfy the court that the offender is able to pay.

[24] In determining whether the record contains sufficient evidence to “satisfy” the court that the offender can afford to pay the contemplated fine, the trial judge must be satisfied, on a balance of probabilities, of the offender’s ability to pay. …

[27] In the absence of a reasonable explanation to the contrary, past receipt of illegally obtained funds will often ― but not always ― support an inference that the offender still possesses sufficient funds to pay a fine at the time of sentencing: R. v. Grimberg (2002), 2002 10640 (ON CA), 155 O.A.C. 296, at paras. 17-20; R. v. Desjardins (1996), 1996 4709 (NB CA), 182 N.B.R. (2d) 321 (C.A.), at para. 29; R. v. Dow (1976), 1 C.R. (3d) S.‑9 (B.C.C.A.), at pp. S.‑14 to S.‑15; R. v. Noseworthy, 2000 NFCA 45, 192 Nfld. & P.E.I.R. 120, at para. 21; R. v. Guppy (1995), 16 Cr. App. R. (S.) 25 (C.A.). See also R. v. Johnson, 2010 ABCA 392, 493 A.R. 74, at para. 23; R. v. Castro, 2010 ONCA 718, 102 O.R. (3d) 609, at para. 34, which deal with restitution orders, a related but different matter.

[28] As stated earlier, the strength of that inference will depend on the circumstances and vary from case to case. None of the cases mentioned have addressed the issue in the precise circumstances of this case. Nor have they fully canvassed the legal issue before us on this appeal: Is a trial judge not only permitted, but bound as a matter of law, to find that an offender still possesses the fruits of his crime, unless the offender explains what happened to the funds?

[29] I would answer that question in the negative, essentially for two reasons.

[30] First, in my view, the weight reasonably attributable to the past receipt of funds will vary with at least two factors: the length of time that has passed between the acquisition of the funds and the imposition of sentence, and the amount of funds acquired. The more time that has passed since the acquisition of the funds, the less likely it is that the offender still possesses the full amount. And the lower the amount of funds acquired, the less likely it is that the offender still possesses much or all of the funds. A small sum is more likely than a large sum to be gone in its entirety.

[31] Sentencing courts must retain their accepted measure of discretion in determining how much weight they should assign to proof of past possession, bearing in mind the variables I have mentioned and other factors they find relevant in the particular circumstances of the case. For example, where much time has passed and little money was stolen, past possession alone may not satisfy the court ― even in the absence of an explanation by the offender ― that the offender can still pay the fine. On the other hand, recent possession of a large sum will generally suffice, in the absence of a credible explanation, to satisfy the court that the offender still controls a significant chunk of the stash. In both cases, the past acquisition of fraudulently obtained funds will have the same probative effect as past possession of legally acquired assets.

[40] In declining to impose a fine, the trial judge in this case considered counsels’ submissions and all of the information and evidence before her. She expressly took into account Mr. Topp’s failure to explain what had happened to the money he was found beyond a reasonable doubt to have misappropriated. Nothing in the record indicates that she failed to consider anything relevant to her decision. In the end, the judge plainly declared that she was not satisfied that Mr. Topp was able to pay the fine requested by the Crown. She could reasonably have concluded otherwise, but she was not legally bound to do so.

[42] Nor did the trial judge commit a reviewable error in deciding not to impose a fine. She was simply not satisfied, as required by s. 734(2), that Mr. Topp was able to pay. This conclusion was open to her, as a matter of law, on the facts as she found them. On the evidence and information before her, the judge was not bound to infer, on the balance of probabilities, that Mr. Topp was able to pay the fine sought by the Crown. Seven years had passed between Mr. Topp’s acquisition of the fraudulently obtained funds and the hearing on sentence. Mr. Topp was by then 64 years old, had lost his licence to work as a customs broker, was unlikely to find future employment, and had “few tangible assets” (A.R., at p. 32). [Emphasis added]

[87] Mr. Kerbel included R. v. Castro (2010) 12 O.R. (3d) 609, which is a restitution case, in his Book of Authorities. It does, at para. 26, refer to the prospect of rehabilitation, which was reaffirmed in the case of restitution orders in R. v. Robertson, [2020] O.J. No. 2558, 2020 ONCA, 367, which I will come to. At paras. 33 to 40 the court deals with how to consider an offender’s bald assertion that he has no ability to make restitution because the money is gone when no evidence is proffered in support of this assertion. The case seems to put an onus on the offender to explain what happened to the money, which in my view is not the case where the Crown seeks a fine, as set out above in Topp.

[88] The other cases that I found of assistance are as follows:

(ii) R. v. Wu, [2003] 3 S.C.R. 530, [2003 SCC 73](https://www.canlii.org/en/ca/scc/doc/2003/2003scc73/2003scc73.html)

[89] If I conclude that Ms. Canlas does not have the ability to pay a fine now, I must still consider whether or not her inability to do so will continue into the future and consider giving her time to pay a fine. As the court stated in Wu, at para. 31, it is wrong to assume that the circumstances of the offender at the date of the sentencing will necessarily continue into the future. At para. 33 the court stated:

An offender’s inability to pay is precisely the reason why time is allowed, not a reason why it should be altogether denied. … It is often difficult to predict with certainty whether an offender will in future acquire the means to pay the fine, whether through his or her own labour, or perhaps a windfall.

(iii) R. v. Benlolo, (2006) [2006 19284 (ON CA)](https://www.canlii.org/en/on/onca/doc/2006/2006canlii19284/2006canlii19284.html), 81 O.R. (3d) 440 (C.A.)

[90] Benlolo was decided before Topp but does speak to the purpose of imposing a fine, as follows:

[41] One purpose of a fine as part of a sentence for an economic crime is to ensure that the offender does not retain the proceeds from the crime once the sentence is served. Also, a fine must be significant enough that it constitutes more than an effective licence fee or part of the cost of doing business.

[91] In addition to these general principles, there are a couple of additional points to make from the cases counsel referred me to.

[92] As I will come to Ms. Canlas is an undischarged bankrupt. I have concluded that this fact alone does not allow her to avoid imposition of a fine. Although the case Ms. Levant relied upon for this purpose was R. v. Fitzgibbon, 1990 102 (SCC), [1990] 1 S.C.R. 1005, which dealt with a lawyer who had defrauded his own clients and whether or not a compensation/restitution order could be made, I see no reason the same principles should not apply in the case of a fine. As the court in Fitzgibbon stated at para. 20, the claims of the victims of fraudulent acts should be paramount:

This seems to be recognized by s. 148 (now s. 178) of the Bankruptcy Act. That section provides that the discharge of a bankrupt does not release him from any debt or liability arising out of a fraudulent act committed by him while acting in a fiduciary capacity. The Bankruptcy Act itself, therefore, permits claims of fraud to survive the discharge of a bankrupt, and the fact that Fitzgibbon is an undischarged bankrupt should not allow him to avoid the imposition of this compensation order as part of his sentence.

[93] I recognize that save for the GST/HST refunds, it is not clear that Ms. Canlas was in a fiduciary relationship with the government, but s. 178(1) (a) of the Bankruptcy Act provides that an order of discharge does not release the bankrupt from “any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence…” and so clearly any fine imposed by this court would survive a discharge, should Ms. Canlas be discharged.

[94] The court in Fitzgibbon also went on to consider, starting at para. 21, whether or not a compensation/restitution order could validly be made in light of the stay provisions in s. 49(1) (now s. 69.1) of the Bankruptcy Act and concluded that it could be imposed. Applying the principles set out by the court to a fine, I conclude that should I impose a fine it will be an order made against the person of the offender, imposing upon Ms. Canlas an obligation to pay the amount ordered.

[95] Fitzgibbon goes on to state at paras. 23 and 24, that it is only if the Crown files the compensation order with the Superior Court that it becomes an order enforceable against the person and property of the offender, and that the Bankruptcy Act would then preclude enforcement. The court concluded at para. 24 that:

Until the order is filed with the Superior Court, it simply imposes a future obligation upon the offender to pay. It is neither a remedy nor an order for recovery against the property of the bankrupt offender within the meaning of s. 49(1). Thus s. 49(1) does not prohibit the making of a compensation order.

[96] Whether or not in light of Ms. Canlas’ proposal in bankruptcy, the Crown could proceed pursuant to s. 734.6 (1) (d) of the Criminal Code, by filing the order and enter as a judgment the amount of the fine and costs, if any, in any civil court in Canada that has jurisdiction to enter a judgment for that amount, and proceed to enforce that judgment in civil proceedings is not an issue before me.

(iv) R. v. Robertson, [2020] O.J. No. 2558, [2020 ONCA 367](https://www.canlii.org/en/on/onca/doc/2020/2020onca367/2020onca367.html)

[97] The Robertson decision dealt with a restitution order, but Mr. Kerbel relied upon it for the proposition that any fine I impose should not undermine Ms. Canlas’ rehabilitation. The court stated at para. 8 that while the offender’s ability to make restitution is not a precondition to the making of a restitution order, it is an important factor that must be considered before a restitution order is imposed as it survives any bankruptcy of the offender, which means it is there for life. The court went on to state, at para. 8 that: “[a] restitution order is not intended to undermine the offender’s prospects for rehabilitation. This is why courts must consider ability to pay before imposing such an order”. At para. 11, the court stated that the trial judge “did not conduct a meaningful inquiry into the appellant’s ability to pay and the impact of the restitution orders on the appellant’s prospects for rehabilitation. In failing to do so, she erred in principle”.

[98] I accept that rehabilitation is still a factor to consider, but general and specific deterrence remain the primary objectives.

(e) Did Ms. Canlas underreport her personal income in the amount of $2,213,000?

[99] Ms. Levant submitted that there is no dispute that the total amount of the fraud in this case is $1,666,476 as set out in the chart in the Synopsis. That is not correct because Ms. Canlas has challenged the Crown’s position with respect to Count 1 and in particular that she misappropriated $2,213,000 received from Jane General and Tri-Han and that by not reporting this amount as personal income she defrauded the government in the amount of $624,198 in personal income tax evaded as a result.

[100] Ms. Canlas did not dispute the fact that $2,213,000 was transferred from Jane General and Tri-Han to the Vallon Variety and JV Variety store bank accounts. She also admitted that this sum was not included in her income. I presume that from a tax perspective, the position of the Crown is that this sum should have first been shown as income of JV Variety and then paid out to Ms. Canlas as income although this aspect was not explored in the evidence.

[101] The theory of the Crown is that the $2,213,000 transferred by Jane General and Tri-Han to the Vallon Variety and JV Variety store bank accounts was misappropriated by Ms. Canlas, or as the Synopsis states, “kept by Ms. Canlas”. The evidence of Ms. Nourdine, however, is of that amount, $1,570,000 was paid to Western Union and Reliable for customer transfers. It seems to me that since this money was used to pay for those transfers, it did not all end up as cash misappropriated personally by Ms. Canlas. Furthermore, the fact that those payments were made by Jane General and Tri-Han to the Vallon Variety or JV Variety bank accounts and thus resulted in the underreporting of income by Jane General and Tri-Han has already been accounted for by my findings of guilt with respect to Counts 3 and 4.

[102] What we do know from the accounting performed by Ms. Nourdine, based on Tab 7, is that for the years 2012 to 2014, Vallon Variety and JV Variety received a total of $2,375,214.64 from customers who purchased transfers to Reliable and Western Union and paid for those transfers in cash or debit. JV Variety also received $518,187.76 in cash for a total of $2,893,402.40 and yet only $59,289.40 was deposited into the Vallon Variety and JV Variety bank accounts. That leaves $2,834,113 unaccounted for. In addition, Ms. Nourdine testified that of the $2,213,000 transferred by Jane General and Tri-Han into the Vallon Variety and JV Variety bank accounts, only $1,570,000 was paid to Western Union and Reliable for customer transfers. That leaves another $643,000 unaccounted for. The total amount of money unaccounted for exceeds $3 million.

[103] Setting aside for a moment the precise amount of money misappropriated by Ms. Canlas, I had concluded that two of her explanations for how she used the cash received from the customers of JV Variety for transfers are not true. My reasons are as follows.

[104] With respect to Ms. Canlas’ position that she used some of the cash received from customers at JV Variety to pay cash to the employees of Jane General and Tri-Han, for their salary, and that those corporations then reimbursed JV Variety for that, that in my view is clearly not the case given the careful accounting that was done by Ms. Nourdine. Ms. Canlas did not challenge Ms. Nourdine’s evidence that there were about 430 temporary staff offered by Jane General and Tri-Han over the four years she investigated. In fact, Ms. Canlas admitted in cross-examination that she was talking about the same temporary staff sent out by Jane General and Tri-Han that Ms. Nourdine reviewed. Furthermore, there is no evidence to support the suggestion that Ms. Canlas had to use cash from JV Variety to pay employees of Jane General and Tri-Han because the bank put holds on the cheques from clients.

[105] Furthermore, Ms. Nourdine testified that she relied on records, including time sheets, invoices to the clients and bank account records to calculate how much was paid to the employees. Ms. Canlas confirmed in her evidence that she used time sheets and Excel sheets that had the names of the employees, many of whom were regulars, and their hourly rates, and that the invoices to the clients had this breakdown. Ms. Nourdine was clear that there was no evidence to support any cash payments to employees beyond what she recorded in Tabs 1 and 3 and I note that Ms. Canlas admitted the accuracy of these schedules when she pleaded guilty to Counts 3 and 4. If Ms. Nourdine missed any cash paid to employees of Jane General or Tri-Han, in my view it would have been minimal.

[106] As for the evidence Ms. Canlas gave with respect to payments to Mr. Vallon, that evidence was simply incredible. She was doing all the work for Tri-Han and there would be no reason for her to simply give Mr. Vallon substantial sums of money on a weekly basis and when he simply asked her for money. That makes absolutely no sense and I find it to be false. In addition to the credibility concerns I have about Ms. Canlas’ evidence, that I will come to, her evidence on this point defies belief. Had Mr. Vallon actually been doing the work, it might have been believable, but she testified that was not the case. Ms. Canlas testified that Mr. Vallon was at the store but did not say he did any work – certainly she admitted she was the one who operated the business and did all of the work. There is no reason for her to have done this if she was not in fact the owner of Tri-Han. In any event, if Mr. Vallon did some work at JV Variety, that was reflected in the records Ms. Nourdine reviewed, as already set out. In addition, Ms. Canlas did not say that this money was paid as part of her purchase price of the Vallon Variety store. Again, had there been evidence of that, that might have made sense. In any event, even if any of this evidence were true, the payments Ms. Canlas alleges were made to Mr. Vallon on her own evidence amounted to about $200,000 – nothing close to the cash that is unaccounted for.

[107] My conclusion in this regard is reinforced by my assessment generally of the credibility of Ms. Canlas. It is of course relevant that she has admitted to the facts in support of Counts 2-5. These facts alone establish that she was willing to understate the income of Jane General and Tri-Han and evade the payment of a substantial amount of taxes and even more significantly collect GST/HST from clients and then not remit all of the amount owing to the Government. Ms. Canlas was also prepared to put a considerable amount of personal expenses through the corporations which is further is proof she was prepared to commit fraud. In addition, Ms. Canlas clearly lied in her Statement of Affairs filed in support of her personal bankruptcy application. Last but not least, is her evidence that she was willing to help Mr. Vallon hide a business and assets when he filed for bankruptcy.

[108] I do accept, however, that some of the cash received at JV Variety was used for some of the cash purchases identified by Ms. Nourdine at Walmart, Costco, etc. and possibly others where no cash receipts were found. Ms. Canlas could buy product at these stores at a price that would still allow her to mark it up somewhat and make a profit by selling that product at JV Variety.

[109] In light of these significant lies, it is very difficult to believe anything Ms. Canlas has testified to. Furthermore, despite a very exhaustive review of all of the records available, Ms. Nourdine found no evidence to support Ms. Canlas’ position that she used some of the $2,213,000 in cash or other cash received by JV Variety to pay the wages of the temporary staff/employees. Furthermore, Ms. Nourdine’s accounting establishes that the employees of Jane General and Tri-Han were paid by those corporations.

[110] The question then is what amount of cash did Ms. Canlas misappropriate to herself and fail to report as income?

[111] I have already set out my reasons for why I do not accept that the full amount of $2,213,000 transferred by Jane General and Tri-Han to the Vallon Variety and JV Variety store bank accounts was misappropriated by Ms. Canlas personally or as the Synopsis states, “kept by Ms. Canlas”, given the evidence of Ms. Nourdine that $1,570,000 of that amount was paid to Western Union and Reliable for customer transfers. It seems to me that since a significant amount of this money was used to pay for those transfers, it did not all end up as cash misappropriated personally by Ms. Canlas. However, as I have already reviewed, based on Tab 7 and the evidence of Ms. Nourdine, there is well over $3 million unaccounted for. Even accepting that some of that money was used to purchase product to sell in JV Variety, it is clear that Ms. Canlas personally misappropriated a significant sum received by JV Variety, easily in excess of the $2,213,000 alleged by the Crown. As Ms. Levant submitted, Ms. Canlas used the cash received as her own money – she had the mindset of entitlement. In effect, she used a significant amount of the money paid to JV Variety for her own personal purposes and then used income from Jane General and Tri-Han to fill that hole and pay for the transfers to Reliable and Western Union.

[112] In light of this conclusion, I am satisfied beyond a reasonable doubt that Ms. Canlas did underreport her personal income in at least the amount of $2,213,000 and that she profited in the amount of $624,198 in tax evaded as a result. As the court said in R. v. Mahmood, [2016] O.J. No. 3259, 2016 ONCA 75, at para. 20, evasion of the payment of an amount in taxes is the same as wrongly obtaining that amount from the public purse.

(f) Has the Crown proven that Ms. Canlas has the ability to pay a fine?

[113] Having found that the total tax defrauded was $1,666,476 and that Ms. Canlas personally profited from this fraud, the question that remains is whether or not the Crown has proven, on a balance of probabilities, that she has the ability to pay a fine and if so what amount should she be ordered to pay.

[114] Ms. Levant argued that approximately $1.6 million was stolen by Ms. Canlas. Given my findings, that is the case although I note that the before-tax amounts that were not accounted for are much larger. Ms. Canlas did not have an obligation to explain what she did with the money and the onus is on the Crown to satisfy me, on a balance of probabilities, that she has the ability to pay a fine, but the fact I have rejected the explanations made by Ms. Canlas means that she did have the unaccounted-for cash around the time it was received - namely in the period from 2012 to 2014.

[115] Considering the factors set out in Topp, Ms. Levant submitted that not much time has passed since the fraud was committed. I disagree, as it has been between six to eight years. However, there is no evidence that Ms. Canlas was living a lavish lifestyle or that she has dissipated the cash versus hidden it somewhere. Given that she received a very large sum of cash that has not accounted for, given there is no evidence that it was spent or transferred to anyone and there is no credible explanation for what happened to it, the only reasonable inference in my view is that Ms. Canlas still has the money hidden somewhere – possibly in the Philippines where she can access it later.

[116] This is also consistent with the fact that when Jane General was audited by the CRA in 2015, Ms. Canlas chose to simply shut it down even though it was a profitable business bringing in a great deal of income. Instead she chose to work at a low hourly rate as a PSW. It seems that she would rather do this than pay income taxes owing and turn over all GST/HST collected from clients to the Government.

[117] Mr. Kerbel submitted that the fact that Ms. Canlas is working as a PSW and put herself at risk by working during COVID-19 proves she does not have the money to pay a fine. He queried why she would do such a risky job, in light of the pandemic, if she has the money. In my view, the fact that Ms. Canlas has chosen to work as a PSW is also consistent with the fact that she wants to hide the fact that she has the money. If she were living a lavish lifestyle and not working, the fact she misappropriated money would be obvious. She is far too astute to make that mistake.

[118] Ms. Canlas’ companies no longer have a corporate debt to the CRA, which Ms. Canlas was never responsible for personally in any event, although she would have personally benefited from the taxes and GST/HST not paid. Ms. Canlas has also tried to have her personal debts wiped clean by seeking to go bankrupt. That has been opposed by the trustee in bankruptcy. In any event, given she was never liable for the corporate debts to the CRA, Ms. Canlas has no personal debt to speak of, beyond the mortgage on her home, and no reason to declare bankruptcy.

[119] Ms. Canlas does have a house with equity, and it could be sold to generate some money that could be used to pay part of a fine. I expect that the home is worth more than it was in 2016 and I agree with Ms. Levant that Ms. Canlas is likely the beneficial owner of the other 50% interest in the home – something I am sure the Crown will pursue as a civil remedy.

[120] As Ms. Canlas has no other personal debt, I agree with Ms. Levant that she will be able to prioritize paying a criminal fine. Her children are grown, and she has no legal obligation to support them financially, although I appreciate she may wish to do so. If as I expect Ms. Canlas has hidden cash, then of course she could pay a fine, likely all at once given the amount of money she misappropriated. Furthermore, looking ahead over a period of time, Ms. Canlas is still relatively young – she has at least another 25 years of her working life. She has shown in the past that she is capable of running three businesses with over 400 employees. She only shut down her businesses because she was caught. There is no reason to think that she could not generate significant income as she demonstrated in the past. I appreciate that a criminal record would be a hindrance, but I expect Ms. Canlas could start another business and given her willingness to work hard, she would be able to earn money to be used to pay down a fine. In addition, she could use the money that I believe she has hidden somewhere to do so.

[121] As for Mr. Kerbel’s suggestion that I impose a restitution order instead of a fine, given my belief that Ms. Canlas is hiding a significant amount of cash and given the Crown does not know what she has done with the cash she misappropriated or where to find it, that in my view would be a non-starter as there is no reason to believe the Crown would have any better chance of finding her assets with a restitution order.

[122] For these reasons I find that, on a balance of probabilities, that Ms. Canlas has the ability to pay a fine in the amount requested by the Crown. That leaves the question of whether or not a fine should be imposed, given that it is a matter of discretion and if so, in what amount and on what terms.

(g) Conclusion

[123] Mr. Kerbel submitted that a two and one-half year penitentiary sentence is sufficient in this case to meet the goals of general deterrence and denunciation and that I must consider the need to ensure that Ms. Canlas can be rehabilitated. Given the cases I have reviewed in considering whether or not the proposed sentence is fit and recognizing that it was jointly proposed in light of the guilty pleas, I would not say that this sentence alone meets these goals. As Ms. Levant submitted, a significant penitentiary term is not enough to satisfy all of the principles relevant to sentence in the circumstances of this case and it does not prevent Ms. Canlas from benefiting from her fraud. People who are willing to commit fraud for profit should not be permitted to keep that profit. This was made clear by the Court of Appeal in Benlolo. One purpose of a fine is to ensure that the offender does not retain the proceeds from the crime once the sentence is served. The court also stated that a fine must be significant enough that it constitutes more than an effective licence fee or part of the cost of doing business.

[124] Mr. Kerbel submitted that imposition of a fine would amount to an automatic crushing penitentiary sentence but that of course ignores my finding that the Crown has persuaded me, on a balance of probabilities, that Ms. Canlas has hidden a substantial amount of cash that she has defrauded the Government of. In addition, she has over 20 years left to work after she is released from custody and earn money to pay a fine. Although I believe Ms. Canlas has hidden sufficient funds to pay the fine requested by the Crown, I am prepared to give her time to pay the fine imposed.

[125] On reflection of the submissions of counsel and consideration of the cases I have referred to, I have concluded that in addition to a two and one-half year penitentiary sentence, a fine should also be imposed, in the amount requested by the Crown, which reflects a 50% reduction of the total amount of the fraud, given Ms. Canlas’ guilty pleas. This is a fit sentence in my view, given the need for general and specific deterrence and sentences in like cases involving consideration of large-scale fraud. It is appropriate in light of the significant aggravating circumstances of these offences including the seriousness of the offences, the amount of the money defrauded, the duration of the frauds, the sophistication required to carry them out, the degree of Ms. Canlas’ moral blameworthiness, and the absence of any appreciable mitigating circumstances apart from the fact that Ms. Canlas is a first offender. To not require Ms. Canlas to pay a substantial fine in the circumstances of this case would in my view send the wrong message to Ms. Canlas and likeminded individuals.

[126] I have heard submissions from counsel as to the time I should permit Ms. Canlas to pay the fine in light of the penitentiary sentence imposed and the findings of fact I have made. Ms. Levant referred to Mahmood and submitted that in that case the Court of Appeal found that the trial judge had erred in giving the offender 10 years to pay the fine, substituting a period of two years from the date of the appeal decision, given the finding of the trial judge that the offender had the ability to pay immediately. Given that there had been a delay in the hearing of the appeal, by the time it was heard the offender had served his one year jail sentence and the effect of the court’s order was that he would have in the range of four years to pay the fine from the time of his release, given that he would likely only have served part of his sentence before being paroled.

[127] Using this timeline by analogy, given Ms. Canlas will likely be paroled in 18-20 months, giving her 5 ½ months to pay the fine from today would bring it in line with Mahmood. Ms. Levant was agreeable to this, but Mr. Kerbel argued that given the fine in the case at bar is greater, Ms. Canlas should have 10 years to pay it.

[128] Having considered Mahmood, it seems that the ratio of the decision, as set out at paras. 24-25, was based on the trial judge’s finding, on a balance of probabilities, that the offender had the ability to pay the fine immediately, not the amount of the fine. The only reason the court gave additional time was that the Crown did not seek to have the fine paid immediately. I have found that Ms. Canlas has probably hidden sufficient cash to pay the full amount of the fine requested by the Crown immediately. Ms. Levant has not objected to giving her time, but I accept her submission that given my findings, 10 years is too long. Accordingly, I will give Ms. Canlas 5 ½ years from now to pay the fine.

Final Disposition

[129] Ms. Canlas for these reasons I impose sentence as follows:

[130] With respect to your conviction on Count 1, I sentence you to a period of incarceration of two and one-half years;

[131] With respect to your conviction on Count 2, I sentence you to a period of incarceration of two and one-half years, to be served concurrently to your sentence on Count 1;

[132] With respect to your conviction on Count 3, I sentence you to a period of incarceration of two and one-half years, to be served concurrently to your sentence on Count 1;

[133] With respect to your conviction on Count 4, I sentence you to a period of incarceration of two and one-half years, to be served concurrently to your sentence on Count 1;

[134] With respect to your conviction on Count 5, I sentence you to a period of incarceration of two and one-half years, to be served concurrently to your sentence on Count 1.

[135] In addition, pursuant to s. 734(1)(b) of the Criminal Code I order that you pay a fine in the amount of $833,238 broken down over the five Counts as follows:

(a) Count 1 - $312,099;

(b) Count 2 - $262,524;

(c) Count 3 - $65,302.50;

(d) Count 4 - $69,226;

(e) Count 5 - $124,086.50.

[136] Pursuant to s. 734.4(1) of the Criminal Code, the fine shall be made payable to the Minister of Finance and paid at the Court House at 361 University Ave. Toronto, along with a copy of the order setting out the fine.

[137] Pursuant to s. 734.1 of the Criminal Code, I order that provided that you pay one third of the total fine of $833,238 before October 1, 2024, that you have until April 1, 2026 to pay the total amount of the fine.

[138] Ms. Levant will provide Mr. Kerbel with a copy of this order once it is signed, which he in turn will provide to you. It is my duty, pursuant to s. 734.2(1) of the Criminal Code to take reasonable measures to ensure that you, Ms. Canlas, understand my order and the substance of ss. 734 to 734.8 and 736 of the Criminal Code. I have summarized those sections in this decision under the heading: “The Law with respect to the imposition of a Fine” and you have experienced counsel to assist you if you have any questions.

[139] Finally, as you are not currently in custody and this sentencing decision is being provided to you by video conference, I order that you turn yourself in to the Officer in Charge of the cells at the Court House at 361 University Ave. Toronto, on Friday, October 2, 2020 at 11:00 a.m. so that you be taken into custody. I will issue a Warrant for your Committal with discretion, to ensure that you comply with this order.

Spies J.

Released: September 30, 2020

Edited Reasons Released: October 7, 2020

COURT FILE NO.: CR -19-90000362-0000

DATE: 2020/09/30

ONTARIO

SUPERIOR COURT OF JUSTICE

HER MAJESTY THE QUEEN

– and –

VANESSA JANE CANLAS, VANESSA JANE CANLAS, O/A OFFICER, DIRECTOR OR AGENT OF JANE GENERAL SERVICES LTD. AND JANE GENERAL SERVICES LTD., VANESSA JANE CANLAS, O/A OFFICER, DIRECTOR, OR AGENT OF 2322944 ONTARIO LTD. O/A TRI-HAN STAFFING SOLUTION, AND 2322944 ONTARIO LTD. O/A TRI HAN STAFFING SOLUTION

Defendants

REASONS FOR sentence

Spies J.

Released: September 30, 2020

[^1] CRA Records list Canlas as 50% shareholder and director and Sheila Marco as 50% shareholder and director.

[^2] CRA Records list Canlas as 50% shareholder, and director as of May 16, 2012 and Sheila Marco as 50% shareholder, and director from April 4, 2012 - March 25, 2013

[^3] The actual amount is $1,572,452.60. For purposes of sentencing the Crown relies on the lower amount. The correction does not alter the calculation of taxes of which the Government was defrauded

[^4] The amount should read $2,192,951. For purposes of sentencing the Crown relies on the lower amount of $2,192,951. The correction does not alter the calculation of taxes of which the Government was defrauded.

[^5] Note as stated in Tab 7 the actual amount was $1,572,452.59 but for the purpose of sentencing the lower amount is being used.