COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Smith, 2014 ONCA 324

DATE: 20140425

DOCKET: C51732

Laskin, Rosenberg and Epstein JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Michael James Smith

Appellant

Mark Halfyard and Victoria Rivers, for the appellant

Andreea Baiasu, for the respondent

Heard: October 30, 2013

On appeal from the conviction entered on June 24, 2009 by
    Justice Peter B. Hockin of the Superior Court of Justice, sitting with a jury.

Laskin J.A.:

A.

Overview

[1]

The appellant Michael Smith was convicted of the first degree murder of
    his estranged wife Eugena Smith.

[2]

The appellant and his wife were married in 2000 and had a daughter who
    was born in 2003.  By early 2007, however, the marriage had broken down.  On
    June 3, 2007, Eugena asked for a legal separation.  Four days later, in the
    early morning of June 7, the appellant went to her house unannounced and
    strangled her to death while she lay sleeping in bed with their daughter.

[3]

The Crowns theory was that the appellant was obsessed with getting
    Eugena back and that if he could not be with her, then no one could.  He went
    to her house to have sex with her one last time and then to kill her.

[4]

The appellant testified that he went to see Eugena to talk to her about
    a Facebook message she had sent a few hours earlier.  She freaked out when he
    woke her up.  So, he put his hand on her mouth to quiet her while he rocked the
    bed to lull their daughter back to sleep.  Three or four minutes later, he
    realized his hand was on Eugenas throat and she was dead.  Distraught, he took
    their daughter to his parents house, returned to Eugenas house, and then
    after trying to commit suicide, had sex with her dead body.

[5]

The trial judge instructed the jury that they could find the appellant
    guilty of first-degree murder on any one of three bases: the appellants murder
    of his wife was planned and deliberate (s. 231(2) of the
Criminal Code
);
    the appellant murdered Eugena while committing the offence of criminal
    harassment (s. 231(6) of the
Criminal Code
); or the appellant murdered
    Eugena while sexually assaulting her (s. 231(5)(b) of the
Criminal Code
).

[6]

The appellant advances three grounds of appeal.  His first and principal
    ground is that a verdict of first degree murder under either s. 231(2) or s.
    231(6) of the
Code
would be unreasonable because the evidence does not
    support a finding of planning and deliberation or criminal harassment.
    Although a finding of first degree murder under s. 231(5)(b) was supportable,
    we do not know on which of the three bases the jury convicted the appellant.
    Accordingly, the verdict of first degree murder cannot stand.

[7]

Second, the appellant argues that the printed decision tree given to
    the jurors was misleading because it misstated the elements of criminal
    harassment.  Third, the trial judge erred by failing to give a proper
W.(D.)
instruction on the burden of proof and the assessment of the appellants
    evidence.  The appellant asks that we set aside his conviction and either order
    a new trial or substitute a verdict of second degree murder.

[8]

The Crown responds that the verdict of first degree murder was
    reasonable on any of the three bases left with the jury, but was especially
    compelling under s. 231(5)(b), as the evidence was overwhelming that the
    appellant murdered Eugena while committing a sexual assault.  The Crown further
    says that the decision tree did not mislead the jury because they were told
    that it did not state the elements of any offence, but was given to them merely
    as a flow chart to aid their deliberations.  Finally, the Crown says that the
    trial judge properly explained to the jury the Crowns burden of proof and how
    to assess the appellants evidence.  The Crown asks that the appeal be dismissed.
    If, however, the appellant succeeds on any of his grounds of appeal, the Crown
    seeks a new trial on first degree murder.

B.

Relevant Background Evidence

(a)

The parties marriage and its breakdown

[9]

The appellant and Eugena met in 1998, married in 2000, and had a
    daughter, Jaydn, in 2003.  In 2006 they bought a house at 9 Balaclava Street in
    St. Thomas.  However, soon after, the marriage began to unravel.  In January
    2007, Eugena asked the appellant to move out, which he did.  He blamed the
    separation on his co-worker Tim Veal, who he suspected was having an affair
    with Eugena.

[10]

One-and-a-half
    months later, Eugena asked the appellant to move back home, but soon asked him
    to leave again because she could no longer trust him.  On March 9, they signed
    a separation agreement.  The agreement named Eugena the primary caregiver for Jaydn.

[11]

Although
    the appellant rented an apartment, he spent a fair amount of time at 9
    Balaclava.  He described himself as Mr. Mom  he did household chores and
    prepared meals while Eugena worked.

(b)

The appellants Facebook profile

[12]

The
    appellant was increasingly anguished about the separation.  So, he created a
    Facebook profile under a pseudonym, Jeremy Spencer, whom the appellant
    portrayed as a recently divorced man, to find out what [Eugena] felt.  After
    Eugena accepted Spencers friend request he sent her a message asking for
    relationship advice.  They then exchanged several messages.  Through his profile
    on Facebook, the appellant could read Smiths comments about her intention to
    leave him.  Eugena figured out the Facebook ruse and told her friends that the
    appellant was using the name Jeremy Spencer to get information about her.

(c)

June 3-7, 2007

[13]

On
    June 3, Eugena told the appellant that she wanted a legal separation.  After
    she told him, he sent her several text messages.  In the last one he said
    Finally had a good cry.  Goodbye my love.

[14]

However,
    Eugena was not convinced the appellant had accepted that their marriage was
    over.  On June 4, she wrote Spencer a Facebook message saying, Told him last
    night the separation is what I need to do, make it official.  He is convinced
    he will wait for me to come around.

[15]

On
    June 6, the appellant was at 9 Balaclava all day.  He left around 10:00 p.m.
    Eugenas brother came over that day as well.  He was planning to move in with
    his sister to share expenses.

[16]

On
    June 7 at 2:32 a.m., Eugena posted her last message to Jeremy Spencer.  The
    message ended with some pointed advice: DONT PUSH her.  Step back  live YOUR
    life for a while.  U R trying too hard!!! Take charge of U and YOUR life Not
    HER LIFE!

[17]

The
    appellant read the message at 4:25 a.m. on June 7.  He then went to 9
    Balaclava, let himself in the back door and climbed into the bed where Eugena
    and Jaydn lay sleeping.  Eugena woke up and freaked out, so the appellant put
    one hand on Eugenas mouth and the other on her neck to prevent her from waking
    Jaydn.  However, he testified that Jaydn woke up and he told her, its okay I
    just want to talk to mommy  lay down, go back to sleep.  The appellant said
    that he rocked the bed with his hips to help Jaydn fall asleep.  Three or four
    minutes later he realized Eugena was dead.

[18]

The
    appellant took Jaydn out of the bedroom and drove her to his parents house.
    He testified that he then returned to 9 Balaclava and tried to commit suicide
    by ingesting Benadryl, Tylenol, Robaxisal, and Toradol tablets.  He said that
    he thought he was dying so he decided to make love to Eugena one last time.

(d)

The Crime Scene and the Forensic Evidence

[19]

At
    6:40 a.m. on June 7, two police officers entered 9 Balaclava.  They found
    Eugena and the appellant lying naked in bed.  Eugena did not have a pulse; the
    appellant was breathing, but appeared unresponsive.  He was holding a cell
    phone in his hand, later determined to be Eugenas cell phone, which he had used
    to make several phone calls.

[20]

The
    forensic examination of Eugena showed blood in her genital area and on her
    inner thighs.  Dr. Shkrum, the forensic pathologist who performed the autopsy,
    concluded that the cause of death was strangulation through pressure applied to
    the neck.  However, he could not identify the mechanism by which the neck was
    compressed.  He did say, though, that a scenario in which the perpetrator
    strangled the victim by placing one hand on her mouth and another hand just
    below her head would not account for the injuries on the neck.

[21]

Dr.
    Peck from the Centre of Forensic Sciences testified about his analysis of
    bodily fluids and DNA.  Swabs from Eugenas vagina and external genitalia contained
    both blood and semen.  The rectal swab also contained blood, and though it was
    not positive for semen, it was positive for the chemical P30, which is found in
    semen and only rarely in non-semen samples.

[22]

The
    appellants DNA was found on the oral swab taken from inside Eugenas mouth.
    Eugenas DNA was found in the blood on the appellants penis and on the inside
    fly of his jeans.

(e)

The Hospital Examination of the Appellant

[23]

As
    the appellant appeared unconscious when the police arrived at 9 Balaclava, he
    was taken to the emergency room of the local hospital.  The doctor who first
    examined him said that though the appellant was initially unresponsive, within
    minutes he became fully conscious.

[24]

Throughout
    the morning, three doctors examined the appellant.  None believed his life was
    ever at risk.  His blood tests showed only modestly elevated levels of Tylenol,
    and there was no evidence of an overdose on any other medication.

C.

Analysis

First Issue
: Does the evidence
    support a finding of planning and deliberation or criminal harassment?

[25]

The
    appellant submits that a finding of first degree murder under s. 231(2) or s.
    231(6) of the
Criminal Code
would be unreasonable because there was no
    evidence to support a finding of planning and deliberation or criminal
    harassment.  The Crown submits that there was ample evidence to support either
    finding.

[26]

The
    test for an unreasonable verdict is well established.  Here, the appellant must
    show that a properly instructed jury, acting judicially, could not reasonably have
    rendered a verdict of a planned and deliberate murder or a murder while
    committing the offence of criminal harassment.

[27]

Two
    points relevant to this appeal flow from this test.  First, the reasonableness
    of the verdict has to be assessed on the evidence as a whole.  And, second,
    though the appellant can point to innocent explanations for individual pieces
    of evidence, he cannot succeed on this ground of appeal if competing
    explanations are available from which one can reasonably infer planning and
    deliberation or criminal harassment.

[28]

I
    now turn to the two specific questions raised under this ground of appeal.

(1)

Does the evidence reasonably
    support a finding of planning and deliberation?

[29]

Under
    s. 231(2) of the
Criminal Code
, a murder that is planned and deliberate
    is a first degree murder.  Planned means that the accused must have a
    previously formulated scheme; deliberate means slow in deciding, cautious, not
    impulsive.  The accuseds plan need not be complicated but if the murder is
    committed on sudden impulse without consideration, it will not be a planned and
    deliberate murder, even though it is an intentional killing.

[30]

The
    appellant submits that the evidence does not reasonably support a finding that his
    killing of Eugena was planned and deliberate.  Far from planning to kill his
    wife, he wanted to get back together with her.  When he read her Facebook
    message in the early morning hours of June 7, he wanted to go over and discuss
    it with her, hoping that their discussion would lead to reconciliation.

[31]

That
    is perhaps one view of the evidence.  However, a far more reasonable view is
    that the appellants murder of Eugena was indeed planned and deliberate.  After
    Eugena asked for a separation, the appellant became obsessed with getting her
    back.  He was also sexually obsessed with her.  And he was tormented by her
    suspected affair with his co-worker Tim Veal.  His torment escalated when
    Eugena asked for a final separation.  The appellant then realized that the
    marriage he desperately wanted to save was over.  He could not bear losing
    Eugena.  He decided that if he could not be with her, no one could.  He drove
    over to her house in the early morning of June 7 to have sex with her one final
    time and then to murder her.

[32]

The
    following list of considerations and supporting evidence, viewed cumulatively,
    reasonably support the inference that the appellants murder of his wife was
    planned and deliberate.

(a)

After Eugena asked for a separation in January 2007, the appellant was
    obsessed with getting her back.  He called Eugenas father and aunt, with
    increasing frequency, to talk about his marriage and how to make it work.  As
    late as June 2, he asked Eugenas friend Deanna Mizon if she had any ideas
    about how to get Eugena back.

The appellant also went on
    Facebook using a pseudonym, Jeremy Spencer, to see if he could secretly find
    out how Eugena felt about him.  After she accepted his friend request, they
    exchanged Facebook messages in which, under the guise of seeking relationship
    advice, the appellant tried to find out Eugenas feelings about their
    separation.

(b)

The appellant was sexually obsessed with Eugena.  He admitted to Deanna
    Mizon that after he separated from Eugena he went back to the house and peeked
    under the covers as she was sleeping.  He kept photos of Eugena, semi-naked.  And
    he made remarks to an acquaintance that showed his obsession with Eugenas
    appearance.

(c)

The appellant was tormented by Eugenas suspected affair with Tim Veal.
    He told Eugenas father that he had access to phone records and could tell
    whether Eugena had called Tim or he had called her.  He tried to install a key
    logger on her Mac computer so he could monitor her emails.  And he exchanged
    several MSN messages with Tim Veal about his interference in the marriage.  In
    one of the messages, the appellant lamented that he could not trust Eugena
    anymore.

(d)

The appellant became increasingly depressed and desperate about his
    situation after Eugena told him on June 3 that she wanted a final separation.
    In addition, Eugenas brother testified that he told the appellant that he was
    moving in with her  a development about which the appellant was unhappy.  On
    June 6, the appellant told Eugenas father that he could not take it anymore
    and was driving around feeling very down.  He phoned Eugenas aunt to tell her
    how depressed he was because Eugena had made a final decision and there was no
    hope for their marriage. He did not know how he could live without her.

(e)

The appellant made several statements in the days leading up to June 7,
    probative of both planning and deliberation.  He told Eugena that he could murder
    someone using a lethal, yet untraceable, mixture of nicotine and caffeine.  Eugena
    told her friend that she interpreted this as a threat that the appellant could
    kill himself, or her. When she told the appellant on June 3 that she wanted a
    final separation, he texted her that he wished they could be together one more
    time.

He told Deanna Mizon,
    Eugena wants her life private and I dont want to lose Jaydn.  I dont know
    what I would do to her.  On the morning of June 6, he sent Ms. Mizon a Facebook
    message from Jeremy Spencer, I dont want to be doing this but dont want to
    just make a person disappear.  What do you suggest?  And on the morning of
    June 7, he called Eugenas father and said simply, this is goodbye.

(f)

Although Eugenas Facebook message sent in the early morning of June 7
    in substance told the appellant to back off, he nonetheless went over to her
    house after he read it.  He did so unannounced, climbed into Eugenas bed while
    she was sleeping, and put one hand on her mouth and the other on her throat.

(g)

The appellant made two statements around the time of Eugenas death that
    were also probative of planning and deliberation.  Right after killing Eugena,
    he called her aunt and said I wish I could have been stronger. I listened to
    my mind.  Eugena is dead.  He used Eugenas cell phone to unsubscribe her from
    Tim Veals status updates on Facebook, and drafted a text message saying,
    dont count on hearing from either of us again.  Although the appellant
    contends that conduct after a killing cannot support an inference of planning
    and deliberation, common sense and case law suggest otherwise: see
R. v.
    Poitras
(2002), 57 O.R. (3d) 538 (C.A.); and
R. v. Penney
, [2004]
    O.J. No. 5914 (S.C.).

(h)

Months after the killing, while in custody at the Royal Ottawa Hospital,
    the appellant made a statement to nurses, suggestive of a planned and
    deliberate murder. He said, I know I probably shouldnt say this, but like the
    thought of choking someone and having sex with them makes me horny, but I feel
    like Im betraying my wifes memory.

[33]

From
    all of this evidence, a jury could reasonably infer that the appellants murder
    of his wife was planned and deliberate.  Therefore, a verdict of first degree
    murder on the basis of planning and deliberation would not be unreasonable.

(2)

Does
    the evidence reasonably support a finding of criminal harassment?

[34]

To
    obtain a conviction for first degree murder under s. 231(6) of the
Code
,
    the Crown had to prove beyond a reasonable doubt the underlying offence of
    criminal harassment under s. 264, and the added mental element under s.
    231(6).  Section 264 has two branches: the Crown had to show that the appellant
    engaged in harassing conduct by repeatedly following or communicating with
    Eugena, or watching her or engaging in threatening conduct towards her; and
    that this harassing conduct caused her to fear for her safety.  Section 231(6)
    required the Crown to show that the appellant intended to cause Eugena to fear
    for her safety.

[35]

The
    first branch of s. 264 is not contentious.  The appellant monitored Eugenas
    phone calls, tried to install tracking devices on her computer, tried to break
    into her email and MSN accounts, used a pseudonym on Facebook to communicate
    with her, and even went to her house at night to look at her under the covers
    while she was sleeping.  This was unquestionably harassing conduct.

[36]

However,
    the appellant submits that there was no evidence to support a finding under the
    second branch of s. 264 because Eugena was unaware of most of his harassing
    conduct.  Moreover, he argues that his conduct did not cause her to fear for
    her safety because she allowed him to work at the house, did not ask for his
    house key back, and continued to exchange messages with him on Facebook,
    knowing that he was Jeremy Spencer.

[37]

I
    do not agree with this submission.  The evidence of Eugenas girlfriends shows
    that Eugena was well aware of much of the appellants harassing conduct and
    that this conduct worried, upset, and scared her.  That she did nothing about
    it, continued to communicate with the appellant, let him come to the house, and
    even let him work there, is, as the appellant argues, open to the inference
    that she did not fear for her safety.  But this evidence is open to the
    competing inference that though Eugena feared for her safety, she was even more
    fearful the appellant would do something drastic if she pushed him further away.

[38]

A
    most telling piece of evidence is her conversation with her friend Amanda
    Harding just days before she was killed.  She told Ms. Harding of the
    appellants threat he could kill someone with a lethal mixture of caffeine and
    nicotine.  Eugena was crying and upset when she related the appellants threat
    to Ms. Harding.  She was afraid that if she left the appellant, he would kill
    himself, or her.

[39]

I
    am satisfied that the jury could reasonably infer from the evidence that the
    appellants harassing conduct caused Eugena to fear for her safety.

[40]

That
    leaves the added mental element under s. 231(6).  The appellant contends that
    there was no evidence from which the jury could infer he intended to cause
    Eugena to fear for her safety.  I do not agree with the appellants contention.

[41]

The
    case law shows that a single act can amount to criminal harassment: see
R. v.
    Kosikar
(1999), 138 C.C.C. (3d) 217 (Ont. C.A.), at para. 26, leave to
    appeal to S.C.C. refused, [1999] S.C.C.A. No. 549.  By extension, the added
    mental element in s. 231(6) of the
Code
can also be inferred from a
    single act.  That single act occurred in the early morning of June 7, 2007.
    Eugenas Facebook message to Jeremy Spencer told the appellant not to push her;
    to step back; to take charge of his life, not hers.  Yet on reading this
    message, the appellant went to Eugenas house in the middle of the night, did
    not tell her he was coming, and climbed into her bed while she was sleeping.
    From this evidence, the jury could reasonably infer that the appellant intended
    to cause his wife to fear for her safety and that he realized his actions would
    do so.  That she did fear for her safety is borne out by his testimony that
    she freaked out.  That she was right to be afraid is borne out by the
    appellants response to her reaction: he put one hand on her mouth and the
    other on her throat.

[42]

I
    would not give effect to this ground of appeal.

Second Issue
: Did the decision
    tree mislead the jury?

[43]

The
    trial judge gave the jurors a printed decision tree to take with them to the
    jury room during their deliberations.  The decision tree specified that to
    decide whether the appellant was guilty of first degree murder under s. 231(6),
    the jury had to answer two questions. First, did the appellant commit the
    offence of criminal harassment?  If the answer to this question was yes, did
    the appellant murder Eugena Smith while committing the offence of criminal
    harassment?

[44]

The
    appellant submits that what was missing from the decision tree was the added
    element the Crown must prove to convict him under s. 231(6) of the
Code
:
    that he intended to cause Eugena to fear for her safety.  The appellant argues
    that the trial judges instructions in his charge did not compensate for this
    shortcoming in the decision tree, especially as the charge was given orally,
    while the decision tree was printed and available to the jurors during their
    deliberations.  The appellant points out defence counsel at trial objected to
    the omission in the decision tree of a question on the mental element under s.
    231(6), but the trial judge refused to add this question.

[45]

I
    would not give effect to the appellants submission.  Twice, the trial judge
    told the jury that the decision tree was merely a flow chart to aid their
    deliberations, that it did not contain the elements of the offences, and that
    he would instruct them on those elements.  He said:

Now this is sort of a flowchart and it may be an assist for you
    when you go back to your room.  Now, I am going to come in a moment to discuss
    the essential elements of the definition of murder and first degree murder.
    What this document does not do is define that for you.  So, do not think that,
    in these questions, is what this case is all about, it is simply a flow.  Do
    you understand that?  I will discuss, in a moment, unlawful act, the intention
    for murder, sexual assault and harassment and so forth in some detail.  You can
    see looking at the document the detail is not there but you must incorporate
    completely the definitions as I give them to you.  Life in this case is not so
    simple as to think you can simply answer these questions.  It helps you go
    through it but it does not give you the essential elements, the meaning of the
    essential elements of murder, planning and deliberation, sexual assault, series
    of events and so on and so forth.  Understood? Okay.

[46]

And
    then later in this charge he returned to the decision tree:

Now the decision tree, to go back to it, is a helpful guide and
    will provide a framework for the step-by-step process which I tell you you
    should follow at arriving at a verdict in relation to Mr. Smith.  To repeat,
    however, it does not contain the essential elements.  I have defined those for
    you.  That is what I have been talking about for the last hour-and-a-half or
    so.  To repeat, this is not meant to be, this charge, in any sense a test of
    your memory.  If you wish that I repeat something later then you can ask that
    in the form of a question or instruction on a piece of paper, written and
    handed to Madam Constable and I am happy to oblige.

[47]

In
    addition, at least three times in his charge, the trial judge instructed the
    jury on the mental element the Crown must prove under s. 231(6).  For example,
    he told them:

And finally, it must be established beyond a reasonable doubt
    that the accused knew that Eugena Smith was harassed and he intended or meant
    her to fear for her safety.  All of these elements of the offence must be
    established beyond a reasonable doubt.

[48]

Finally,
    in a brief recharge on criminal harassment, at the defences request, the trial
    judge reminded the jury that the appellant testified he went to see his wife in
    the early morning of June 7 to discuss her Facebook message.  This recharge reinforced
    the appellants position that he had no intention of harming or scaring Eugena.

[49]

For
    these reasons, I conclude that the decision tree did not mislead the jury.
    Accordingly, I would not give effect to this ground of appeal.

Third Issue
: Did the trial judge
    err by failing to give a proper
W.(D.)
instruction?

[50]

The
    Supreme Court of Canadas judgment in
R. v. W.(D.)
, [1991] 1 S.C.R. 742,
    has likely been cited more often than any other case in Canadian criminal law.
    In that judgment, at p. 758, Cory J. proposed a three-step formula for
    assessing credibility:

First, if you believe the evidence of the accused, obviously
    you must acquit.

Second, if you do not believe the testimony of the accused but
    you are left in reasonable doubt by it, you must acquit.

Third, even if you are not left in doubt by the evidence of the
    accused, you must ask yourself whether, on the basis of the evidence which you
    do accept, you are convinced beyond a reasonable doubt by that evidence of the
    guilt of the accused.

[51]

The
    purpose of this formula is to ensure that triers of fact  judges and juries
    apply the reasonable doubt standard and do not find an accused guilty because
    they prefer the evidence of the Crown to that of the accused.

[52]

Many
    judges recite the
W.(D.)
formula word for word in their jury charges.
    However, as recent case law has shown, a precise incantation of the
W.(D.)
formula is not required.  What is required is that, in their charges, judges
    explain the substance of
W.(D.)
to the jury.

[53]

The
    trial judge in this case did not give a standard
W.(D.)
instruction to
    the jury.  Although acknowledging that a standard instruction was not
    necessary, the appellant nonetheless submits that the instructions the trial
    judge did give did not convey the substance of
W.(D.)
to the jury.
    They did not, the appellant contends, explain the second and third steps in
W.(D.)
,
    and in particular, did not explain how the jury should assess his evidence.

[54]

I
    do not agree with the appellants submission.  This case did not lend itself to
    a standard
W.(D.)
instruction, because even if the appellants
    evidence raised a reasonable doubt, he was not entitled to an acquittal.  In
    his evidence, he acknowledged that he strangled his wife.  Thus, at the very
    least, even on his own evidence that he did not do so intentionally, he was
    guilty of manslaughter.

[55]

The
    trial judge recognized the inapplicability of a standard
W.(D.)
instruction and therefore appropriately decided the substance of
W.(D.)
had to be explained differently to the jury.  The trial judge did this in two
    ways.

[56]

First,
    he instructed the jury on the presumption of innocence and the Crowns burden
    to prove the case against the appellant beyond a reasonable doubt.  In doing
    so, he expressly told the jury that rejection of the accuseds evidence is not
    evidence of guilt:

In this case Mr. Smith gave evidence and so I have this
    instruction for you with respect to his evidence from the witness box.  When he
    gave evidence he was under no obligation to do so.  However, when a person charged
    with a crime gives evidence he is no different from any other witness.  My
    earlier instruction on how you may approach the assessment of a witness on
    credibility and reliability applies with equal force to the evidence of the
    accused from the witness box.  Like other witnesses, you may believe some, none
    or all of what he said.  In other words, you will consider the evidence of Mr.
    Smith by applying the same approach to his credibility as you will with the
    other witnesses.  I remind you, however, that there is no obligation on the
    accused to prove anything whether the accused gives evidence or not.  Rejection
    of the accuseds evidence is not evidence of guilt.  The obligation is always
    on the Crown to prove its case beyond a reasonable doubt.

[57]

The
    trial judge then elaborated on how to assess the appellants evidence and on
    the Crowns burden of proof:

Issues of credibility and the proper inferences to be drawn
    arise between the Crown and the accused in this case.  In arriving at your
    verdict you should know that your obligation does not include having to make
    the choice of accepting the Crown evidence or the defence evidence.  The reason
    for that is this.  An either or approach might exclude the possibility that you
    may not accept as true the defence but from that evidence be left, nonetheless,
    with a reasonable doubt.  The either or approach may exclude the legitimate
    possibility that the events of June 6
th
and 7
th
occurred
    in a different way [than] has been suggested by the Crown or by the defence.
    The issue is not which version is true but whether, on all the evidence
    including the evidence of the accused and Dr. Booth, the Crown has proved
    beyond a reasonable doubt the offence charged.

[58]

This
    passage captures the purpose and substance of
W.(D.)
: the jury is not
    to reach a verdict by deciding whether they prefer the Crowns evidence or the
    appellants evidence; rather, the Crown must prove on all of the evidence that
    the appellant is guilty beyond a reasonable doubt.

[59]

Second,
    the trial judge instructed the jury on the substance of the first two steps in
W.(D.)
as he instructed them on the specific counts in the indictment.  For example,
    on whether the murder was planned and deliberate, the trial judge told the jury
    that if they accepted the appellants evidence that there was no planning or
    deliberation, or were left with a reasonable doubt by that evidence, they must
    find the appellant not guilty of a planned and deliberate first degree murder:

If you are satisfied beyond a reasonable doubt that the murder
    of Eugena Smith was both planned and deliberate you will have found the accused
    guilty of first degree murder and your deliberations will be at an end.  You
    will have answered the question in box 3, yes.  If you find planning and
    deliberation, as I have instructed, you answer yes, then you have found the
    accused guilty of first degree murder, in that event your deliberations are at
    an end.

However, if you accept the accuseds evidence of no plan and
    deliberation or it leaves you with a reasonable doubt or, on all the evidence
    including of course his evidence and Dr. Booths evidence, you are not
    satisfied beyond a reasonable doubt that the Crown has established planning and
    deliberation, you will have answered the question at box 3, no, that is in the
    negative and you will then continue to box 4, to the next step in other words,
    to the Crowns allegation of murder in the course of or while committing a
    sexual assault upon Eugena Smith.  Are you with me?

[60]

Similarly,
    the trial judge instructed the jury that if they accepted the appellants
    evidence that he did not kill his wife while sexually assaulting her or were
    left with a reasonable doubt by that evidence, they must find him not guilty of
    first degree murder on that basis:

I would have thought that if you should find as a fact that
    either the accused strangled Eugena Smith while having sex with her or that he
    killed her with the idea or intention that he would return to have sex with her
    [then] you will have answered questions 4 (a) and (b) in the affirmative and
    found the accused guilty of first degree murder.  It goes without saying that
    if you find that there was no sexual assault then he is not guilty of first
    degree murder.  I spent most of the time in this charge talking about whether a
    sexual assault occurred during the course of, or while committing, or was part
    of a series of events.

However, if you accept as true, the accuseds evidence that the
    sex occurred only once and the decision to have sex was made after he realized
    he might die or this evidence leaves you with a reasonable doubt that the
    killing and sexual assault were one transaction, then you will have answered
    box 4 in the negative and you will then move onto  the final two questions in
    box 5.  Let me repeat that.  I will go through those two statements again so
    that you have them straight.

[61]

The
    trial judge omitted  I expect inadvertently  to give a similar instruction on
    the charge of first degree murder by criminal harassment.  However I am
    satisfied that from the instructions I have outlined in this section of my
    reasons, the jury would have understood that if the appellants evidence left
    them in a reasonable doubt about whether he criminally harassed Eugena or
    intended to cause her to fear for her safety, they must find him not guilty of
    murdering his wife while committing the offence of criminal harassment.

[62]

I
    conclude that the trial judge adequately explained the substance of
W.(D.)
to the jury.  He correctly instructed them on the assessment of the appellants
    evidence and on the Crowns burden of proof.  Therefore, I would not give
    effect to this ground of appeal.

D.

Conclusion

[63]

I
    would dismiss the appeal.  The evidence reasonably supported a finding of first
    degree murder on the basis of a planned and deliberate murder or a murder while
    committing criminal harassment, as well as murder while committing sexual
    assault.  Further, the decision tree given to the jurors was not misleading.
    Finally, the trial judge properly instructed the jury on the burden of proof
    and the assessment of the appellants evidence.

Released: April 25, 2014 (M.R.)

John Laskin J.A.

I agree. M. Rosenberg J.A.

I agree. Gloria Epstein J.A.


WARNING

The President of the panel hearing this appeal directs
    that the following should be attached to the file:

An order restricting publication in this proceeding
    under ss. 486.4(1), (2), (3) or (4) or 486.6(1) or (2) of the
Criminal Code
shall continue.  These sections of
the Criminal Code
provide:

486.4     (1)
Subject to subsection (2), the presiding judge
    or justice may make an order directing that any information that could identify
    the complainant or a witness shall not be published in any document or
    broadcast or transmitted in any way, in proceedings in respect of

(a)     any of the following offences;

(i)   an offence under section 151, 152,
    153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 172, 172.1, 173, 210, 211,
    212, 213, 271, 272, 273, 279.01, 279.02, 279.03, 346 or 347,

(ii)  an offence under section 144
    (rape), 145 (attempt to commit rape), 149 (indecent assault on female), 156
    (indecent assault on male) or 245 (common assault) or subsection 246(1)
    (assault with intent) of the
Criminal Code
, chapter C-34 of the Revised
    Statutes of Canada, 1970, as it read immediately before January 4, 1983, or

(iii) an offence under subsection 146(1)
    (sexual intercourse with a female under 14) or (2) (sexual intercourse with a
    female between 14 and 16) or section 151 (seduction of a female between 16 and
    18), 153 (sexual intercourse with step-daughter), 155 (buggery or bestiality),
    157 (gross indecency), 166 (parent or guardian procuring defilement) or 167
    (householder permitting defilement) of the
Criminal Code
, chapter C-34
    of the Revised Statutes of Canada, 1970, as it read immediately before January
    1, 1988; or

(b)     two or more offences
    being dealt with in the same proceeding, at least one of which is an offence
    referred to in any of subparagraphs (a)(i) to (iii).

(2)
In proceedings in respect of the offences referred
    to in paragraph (1)(a) or (b), the presiding judge or justice shall

(a)  at the first reasonable
    opportunity, inform any witness under the age of eighteen years and the
    complainant of the right to make an application for the order; and

(b)  on application made by the
    complainant, the prosecutor or any such witness, make the order.

(3)
In proceedings in respect of an offence under
    section 163.1, a judge or justice shall make an order directing that any
    information that could identify a witness who is under the age of eighteen
    years, or any person who is the subject of a representation, written material
    or a recording that constitutes child pornography within the meaning of that
    section, shall not be published in any document or broadcast or transmitted in
    any way.

(4)
An order made under this section does not apply in respect
    of the disclosure of information in the course of the administration of justice
    when it is not the purpose of the disclosure to make the information known in
    the community. 2005, c. 32, s. 15; 2005, c. 43, s. 8(3)(b).

486.6     (1)
Every person who fails to comply with an order
    made under subsection 486.4(1), (2) or (3) or 486.5(1) or (2) is guilty of an
    offence punishable on summary conviction.

(2)
For greater certainty, an order referred to in
    subsection (1) applies to prohibit, in relation to proceedings taken against
    any person who fails to comply with the order, the publication in any document
    or the broadcasting or transmission in any way of information that could
    identify a victim, witness or justice system participant whose identity is
    protected by the order. 2005, c. 32, s. 15.

COURT OF APPEAL FOR ONTARIO

CITATION: R. v. T.J., 2014 ONCA 321

DATE: 20140425

DOCKET: C54747

Laskin, Rosenberg & Epstein JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

T.J.

Appellant

Michael Dineen, for the appellant

Katie Doherty, for the respondent

Heard: October 29, 2013

On appeal from the conviction entered on November 22,
    2010 by Justice Wendy L. MacPherson of the Superior Court of Justice, sitting
    without a jury.

Laskin J.A.:

A.

Overview

[1]

The appellant was convicted of sexual abuse of M.C., the daughter of his
    former common law spouse, S.C.  M.C. alleged that she had a sexual relationship
    with the appellant for several years, beginning when she was ten or eleven and
    asked to touch the appellants penis, and ending when she was 14 and made a
    complaint to the police.  The appellant denied that he had engaged in any
    sexual activity with M.C.

[2]

The case thus turned on the credibility of the complainants allegations
    and the appellants denial.  The trial judge rejected the appellants evidence
    and accepted the complainants evidence.  She convicted the appellant of all
    four counts on the indictment
[1]
and sentenced him to four years imprisonment.

[3]

The appellants appeal against his conviction focuses on the trial
    judges reasons for rejecting his evidence.  The trial judge gave several
    reasons.  The appellant challenges two of them:

1. The appellant submits that the trial judge erred
    by finding that he spoke to no one and took no steps in response to the
    complainants request to touch his penis.  He argues that this finding is
    unfair and unsupported by the record because he was never asked what he did
    after the incident.

2. The appellant submits that the trial judge erred
    by relying on an out-of-court statement by S.C.  Why dont you just fuck
    Dad?  as evidence that she was aware of an inappropriate relationship between
    her daughter and the appellant.  The appellant argues that the trial judges
    use of the statement in this way was unjustified because S.C. was never called
    to testify, though she was available to do so.

[4]

I agree with the appellants submissions.  Although the trial judges
    other reasons for rejecting the appellants evidence are supportable, they
    cannot be disentangled from her flawed reasons.  Accordingly I would allow the
    appeal, set aside the appellants convictions and order a new trial.

B.

Background

(a)

The Parties

[5]

At the time of trial in May 2010, the complainant was 16 and the
    appellant was 44.

[6]

When the complainant was seven or eight, she was taken from her mother
    and placed in foster care.  Her mother visited her weekly.  When the appellant
    began a relationship with S.C., he came to these weekly visits.

[7]

In 2004, when the complainant was ten, she left foster care and went to
    live with her mother and the appellant at his house.  She testified that she
    had a close relationship with the appellant: she saw him as a father figure.
    At the time, the appellant also had joint custody of his two teenaged sons.

(b)

The Complainant Asks to
    Touch the Appellants Penis

[8]

At bedtime, the appellant routinely went to the complainants room to
    give her a hug and kiss and to say goodnight to her.  One evening when she was
    ten or eleven, the appellant came to say goodnight, and she asked to see and
    touch his penis.  The complainant and the appellant gave different accounts of
    what then occurred.

[9]

The complainant testified that the appellant removed his pants and
    allowed her to touch his penis.  He did not appear shocked by her request.  In
    contrast, the appellant testified that he was shocked and that he told the
    complainant that she should not ask that again.  However, he did not interpret
    the incident as a sexual advance.  The appellant was not asked whether he spoke
    about the incident to the complainants mother or to anyone else.

(c)

The Complainants Allegations of a Sexual Relationship, and the        Appellants
    Denial

[10]

The
    complainant testified that after this incident, she and the appellant became
    physically intimate.  They began by cuddling when he came to say goodnight,
    they progressed to taking each others clothes off, and eventually they had
    intercourse.  The complainant said that they had sex once or twice a week.  The
    appellant either used a condom or pulled out before ejaculating.  The
    complainant also said that the appellant never forced her to do anything and
    that she liked what they did, though she knew it was wrong.

[11]

The
    appellant testified that he never engaged in sexual activity with the
    complainant.  The defences position was that the complainant fabricated her
    allegations following the appellants acrimonious separation from her mother.

(d)

S.C.s Out-of-Court Statement

[12]

One
    summer day in 2007, the appellant was sitting by his backyard pool while the
    complainant and his two sons were swimming.  He had a badly sunburned back.
    The children got out of the pool and started a contest to see who could peel
    the biggest piece of skin off his back.  While the contest was taking place, S.C.
    arrived home.  When she saw the complainant peeling the appellants skin she
    said: Why dont you just fuck Dad and get it over with?

[13]

The
    complainant ignored her mothers comment.  However, the appellant followed S.C.
    into the house and confronted her about it.  According to the appellant, she
    would not answer.  Neither the Crown nor the defence called S.C. as a witness
    at the trial.

(e)

The Appellant and S.C. Separate; the Complainant Comes to Stay with the Appellant

[14]

In
    October 2007, the relationship between the appellant and S.C. deteriorated, and
    they soon separated.  They argued about money.  When the appellant claimed that
    S.C. had taken $80,000 from their joint bank account without his permission,
    she left abruptly and took the complainant with her.

[15]

For
    eight months, from October 2007 to May 2008, the complainant and the appellant
    had no contact with each other.  Then the complainant called him.  She had been
    fighting with her mother, and asked to stay with him.  He said yes, and she
    stayed overnight.  S.C. called the police that evening and they went to the
    appellants house around 11:00 p.m.  The complainant said that she was fine,
    and the police took no action.  In her trial testimony, the complainant said
    that she had no sexual contact with the appellant that night.

[16]

However,
    the complainant continued to stay with the appellant, and testified that their
    sexual relationship resumed a few nights later.  Again, the appellant denied
    any sexual contact with the complainant.

(f)

May 20, 2008: The
    Appellant is Arrested

[17]

In
    the early morning hours on May 20, 2008, in response to another complaint from
    S.C., two police officers went to the appellants house.  They testified that the
    house was dark, but an upstairs light illuminated the hallway.  After the
    officers knocked on the door, they saw a man coming from the left side of the
    house  where the master bedroom was located  walk into the bathroom, and
    emerge with a housecoat on.  They also saw a smaller person run from the left
    side of the house to the right side, where another bedroom was located.

[18]

The
    appellant answered the door.  The police asked whether M.C. was there; he
    answered, let me go see if she is awake.  The officers said that they knew
    she was awake and went upstairs.  They testified that the complainant was in
    the other bedroom but that from the master bedrooms appearance, it appeared
    that two people had been sleeping in it.  The police arrested the appellant for
    sexual exploitation.

[19]

The
    appellant and the complainant also testified about what occurred that evening.
    The appellant said that the complainant came into his room to wake him up
    because someone was at the door.  He looked out the bedroom window and saw two
    police cruisers.  He put his housecoat on, told the complainant to go back to
    bed, and went downstairs to answer the door.

[20]

The
    officers barged past the appellant and demanded to know where M.C. was.  They
    went upstairs and the appellant followed them.  They wanted to know what a 14
    year-old girl was doing in his room at 2:30 a.m.  He explained that she had
    come in to wake him up.  The complainant also tried to explain this but was
    told by one of the officers to keep quiet and get dressed.  The appellant was
    then arrested.

[21]

The
    complainant said that she was asleep in the appellants bed, but was awoken around
    2:30 a.m. by the sound of the doorbell.  She looked outside and saw two police
    cruisers.  The appellant told her to go to her room and act like she was sleeping.

[22]

At
    first, the complainant denied any sexual relationship with the appellant.
    Eventually, however, she told the police that she had been in a sexual
    relationship with the appellant from the time she was ten or eleven years old.

C.

analysis

[23]

The
    trial judge gave lengthy oral reasons, in which she described the evidence in
    detail.  Toward the end of her reasons, she assessed the credibility of the
    appellants denial.  She gave four reasons for rejecting his evidence that he
    never engaged in any sexual activity with the complainant: first, he spoke to
    no one and did nothing after the incident in which the complainant asked to
    touch his penis; second, his testimony concerning his relationship with M.C.
    was evasive; third, he exhibited jealousy when he discovered that the
    complainant had a boyfriend; and fourth, S.C.s statement, why dont you just
    fuck Dad, showed that she knew that something improper was going on between her
    daughter and Mr. [T.J.].

[24]

Mr.
    Dineen, on behalf of the appellant, does not challenge the second and third
    reasons given by the trial judge, though he submits that they reflect an
    uncharitable reading of the appellants evidence.  He takes issue with the
    first and fourth reasons.

(1)

The Appellants Response to the Complainants Request to Touch His         Penis

[25]

The
    trial judge found that after the complainant asked to touch the appellants penis,
    the appellant spoke to no one about the incident, took no steps to make sure it
    did not happen again, indeed, did not even alter his bedtime routine.  The
    trial judge said:

If I were to accept Mr. [T.J.]s evidence that he did not allow
    her to touch his penis and that nothing of a sexual nature occurred after that,
    as a step-father to his girlfriends daughter and knowing that [M.C.] had been
    in foster care for two to three years prior to moving in with him, I would have
    expected that Mr. [T.J.]s reaction to the request would have been not only one
    of shock but that he would have taken immediate steps to make sure that someone
    else knew about this behaviour and to have it addressed.

There was no evidence before me that he ever spoke to the
    childs mother, [S.C.], about his particular exchange with [M.C.].  After such
    an incident, one would have expected that a very serious and urgent discussion
    would have taken place with the childs mother.  There was also no evidence
    that he spoke with anyone else about the incident.  The obvious person that
    comes to mind would have been the Childrens Aid worker, who [M.C.] confirmed
    came to the home regularly after she began living there every two to three
    months.

I would also have expected that such an incident would have
    prompted some steps to be taken to ensure that nothing like that happened
    again; those steps being to alter the regular bedtime routine and to make a
    point of not being alone with [M.C.].  That would have been the type of action that
    a reasonable adult would take in the circumstances but the defendant took none
    of those steps.

On the defendants own evidence, he continued with the usual
    ritual of saying goodnight to his own two children first when they were there
    and then going in to say goodnight to [M.C.] on his own without the childs
    mother.  He admitted in direct and in cross-examination that, in fact, on
    occasions [S.C.] did comment on the amount of time that he was spending in [M.C.]s
    room saying goodnight to her.

[26]

The
    trial judges finding on the appellants response to the incident was an
    important basis for her rejection of his evidence.  Yet, the basis for this
    finding is not made out for the following two related reasons.

[27]

First,
    her finding is not supported by the evidence.  To the contrary, the record is
    silent on whether the appellant spoke to anyone or took any steps after the
    incident because he was not asked if he did so, either by his own counsel or by
    the Crown.  Without evidence, the trial judge could not assume that the
    appellant did nothing and then use that assumption to reject his testimony.  As
    this court said in
R. v. R.C.
, 2008 ONCA 98, [2008] O.J. No. 480, at
    para. 9:

He answered the questions that were put to him.  His
    failure to offer detail not sought by the questions asked cannot provide a
    reasonable basis for disbelieving the appellants evidence.

[28]

Second,
    parents react in many different ways to the unexpected actions of their
    children.  Even if the appellant spoke to no one and did nothing about the
    incident, including not changing his bedtime routine, he may have had a good
    reason for his own inaction.  Or, as the Crown maintains, his inaction could be
    seen as inconsistent with his denial of a sexual relationship with the
    complainant.  Either inference was available to the trial judge, but only if
    the appellant was given an opportunity to explain why he did nothing.  As he
    was not given that opportunity because neither counsel asked him about it,
    rejecting his evidence for his supposed inaction was unfair.

[29]

I
    therefore conclude that the trial judge erred by relying on the appellants
    response to the complainants request to touch his penis as a basis for
    rejecting his evidence.

(2)

S.C.s Out-of-Court Statement

[30]

The
    defence elicited S.C.s statement at the backyard pool, why dont you just
    fuck Dad.  It sought to show that the appellants reaction  shock  was
    consistent with his innocence.  The trial judge, however, fastened on S.C.s
    statement as another basis to reject the appellants evidence and conclude that
    he and the complainant had a sexual relationship:

A finding that there was a relationship between Mr. [T.J.] and [M.C.]
    makes sense when put in the context of an event that took place in the summer
    of 2007.  This event was confirmed by both [M.C.] and Mr. [T.J.] as happening.
    [S.C.] had returned home from being out and observed the three children peeling
    Mr. [T.J.]s sunburned back and she said to [M.C.], Why dont you just fuck
    him?  While Mr. [T.J.] testified that [M.C.] was shocked by this statement and
    that he called [S.C.] on it, the only logical inference that one can draw was
    that [S.C.] knew that something improper was going on between her daughter and
    Mr. [T.J.].

[31]

The
    trial judge was not entitled to use S.C.s statement in this way.  The trial
    judge implied from S.C.s words that she knew that something improper was
    going on between her daughter and Mr. [T.J.].   Used in this way, the statement
    was hearsay because the trial judge used the implied meaning of the words for
    the truth of their contents: see
R. v. Baldree
, 2013 SCC 35, [2013] 2
    S.C.R. 520. Even more problematic, the trial judge went further and used S.C.s
    statement as one piece of evidence supporting her finding of a sexual
    relationship between the appellant and M.C.

[32]

The
    Crown submits that S.C.s statement was admissible under the state of mind
    exception to the hearsay rule. I disagree. Even if the trial judge had relied on
    S.C.s statement merely to determine her state of mind  instead of relying on
    the statement as evidence of an improper relationship  it would be inadmissible.
    It does not satisfy the requirements of the state of mind exception to the
    hearsay rule.

[33]

To
    be admissible under the state of mind exception, S.C.s state of mind must be
    relevant and the statement must be made in a natural manner and not under
    circumstances of suspicion:
R. v. Starr
, 2000 SCC 40, [2000] 2 S.C.R.
    144, at para. 168. Although S.C.s knowledge of the alleged relationship
    between M.C. and the appellant may have been relevant,
[2]
her statement was not made in circumstances free of suspicion. We do not know
    the foundation for her statement. It was made just a few months before S.C. and
    the appellant separated, at a time when their relationship was already
    strained. S.C. could have misperceived the relationship between her daughter
    and the appellant, or could even have impliedly lied about the relationship. In
    these circumstances, her statement was made under circumstances of suspicion
    and was not admissible under the state of mind exception.

[34]

However,
    as I have said, the trial judge used S.C.s statement to support her finding of
    a sexual relationship between M.C. and the appellant. Used in this way, the
    statement was hearsay and presumptively inadmissible. To be admissible, it had
    to meet the twin requirements for admissibility: necessity and reliability.  It
    met neither.  It did not meet the necessity requirement because S.C. was
    available to testify but was not called as a witness by either the defence or
    the Crown. As no explanation was provided for the parties failure to call her,
    necessity is not made out.

[35]

The
    statement did not meet the reliability requirement because, as already discussed,
    it is unclear what S.C. intended by it. Reading an implied assertion into
    S.C.s statement that she knew something improper was going on is no more
    tenable a reading of her statement than one implying that she made a misleading
    innuendo because she was angry with the appellant or had misperceived events.
    The ambiguity in her statement does not allow any reliable conclusion about the
    implied assertion, if any, contained in it.   As she was not called as a
    witness and therefore not cross-examined on her statement, any determination of
    what, if anything, could be implied by it is too unreliable to be admissible:
R.
    v. Esrabian
, 2013 ONCA 761, 313 O.A.C. 273, at para. 46.

[36]

In
    the light of these reliability concerns, the trial judges use of S.C.s
    statement was highly prejudicial to the appellant. As the Supreme Court
    emphasized in
Starr
, at para. 199, by excluding unreliable
    out-of-court statements, the hearsay rule plays an important role in ensuring
    trial fairness:

[A] fundamental concern with reliability lies at the heart of
    the hearsay rule. By excluding evidence that might produce unfair verdicts, and
    by ensuring that litigants will generally have the opportunity to confront
    adverse witnesses, the hearsay rule serves as a cornerstone of a fair justice
    system.

[37]

S.C.s
    statement raises all of these reliability concerns. I therefore conclude that
    the trial judge improperly relied on S.C.s out-of-court statement as a basis
    to reject the appellants evidence.

D.

conclusion

[38]

These
    two erroneous bases for rejecting the appellants evidence tainted the trial
    judges credibility finding.  Accordingly the appellants convictions cannot
    stand.  I would allow the appeal, set aside the convictions and order a new
    trial.

Released: April 25, 2014 (M.R.)

John Laskin J.A.

I agree. M. Rosenberg J.A.

I agree. Gloria Epstein J.A.

[1]
Sexual exploitation, sexual interference, sexual assault, and invitation to
    sexual touching

[2]
S.C.s statement may have been relevant because the defence relied on the
    appellants shocked reaction as evidence that there was no improper
    relationship.


COURT OF APPEAL FOR ONTARIO

CITATION:  R. v. Waxman, 2014 ONCA 256

DATE: 20140403

DOCKET: C54368

Watt, Hourigan and Pardu JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Robert Karey Waxman

Appellant

Brian H. Greenspan and Naomi M. Lutes, for the appellant

Alexander Hrybinsky and Randy Schwartz, for the
    respondent

Heard: March 24, 25 and 26, 2014

On appeal from the conviction entered on March 11, 2011 by
    Justice Thomas R. Lofchik of the Superior Court of Justice, sitting with a
    jury, and the sentence imposed on October 20, 2011, with reasons reported at
    2011 ONSC 6207.

ENDORSEMENT

[1]

Robert Waxman appeals his convictions on
    four counts of
fraud
    over $5,000. His convictions on two counts of theft over $5,000 were stayed
    pursuant to
Kienapple
    v. The Queen
,
    [1975] 1 S.C.R. 729. He was sentenced to eight years incarceration and was
    subject to a US $17,990,740.98 restitution order, and a fine in lieu of
    forfeiture of US $15,514,643.61, to be paid within three years of release from
    custody, failing which an additional six years imprisonment would be imposed.
    The appellant also seeks leave to appeal his sentence.

[2]

The charges stem from
    the appellants concurrent service as a director and senior officer of Philip
    Services Corporation (Philip), a publicly held waste management firm, and as
    a director and senior officer of Philip Enterprises Inc., a wholly-owned
    subsidiary of Philip. Philip Enterprises Inc. operated as part of Philips
    Metals Recovery Group division, of which the appellant was president. As
    described below, the appellant was convicted for having wrongly profited at the
    expense of his employer from his undisclosed involvement in copper trading.

[3]

During the period 1994 to
    1997, Philip was experiencing cash shortages. The Metals Recovery Group helped
    alleviate these cash shortages through ring out transactions whereby the
    Metals Recovery Group would enter into legitimate two way transactions with an
    independent party for the sale and immediate repurchase of copper cathode.
    These transactions did not result in a change of ownership in the underlying
    copper, but their payment terms generated cash flow for Philip.

[4]

Between April 1996 and
    April 1997, the Metals Recovery Group, under the appellants direction, carried
    out 69 three way ring out copper transactions involving Philip, an independent
    company, Pechiney World Trade (U.S.A.), Inc. (Pechiney), and a company in which
    the appellant held a 75 per cent ownership interest in, Parametal Trading Inc.
    (Parametal).  During this period he also carried out one two way transaction
    involving only Parametal and Philip. Parametal's total profit on these
    transactions was $7,352,543.70. The appellant personally received payment
    through a company he owned, Monopol Commodities LLC (Monopol), of over $4.9
    million from these transactions.

[5]

The appellant also
    arranged ring out transactions involving MIT International (MIT), a company
    owned by his friend, Mark Schmidt-Fellner. Between November 1996 and April of
    1997, there were seven three way ring outs involving MIT. In each of these
    transactions MIT would purchase copper from Philip and sell it to Pechiney. MIT
    made a profit on each of these transactions. The appellant held no ownership
    interest in MIT, however, he would instruct Mr. Schmidt-Fellner to wire money
    to Oracle International LLC (Oracle), a company he owned. MIT made a profit
    of $623,104.36 on these seven ring outs and most of these funds were forwarded
    to Oracles bank account.

[6]

In addition to the ring out
    transactions, the appellant used his position at Philip to arrange for the transfer
    of copper from Philip to other parties with no payment being received by
    Philip. For example, Philip transferred copper to Parametal in a series of
    transactions, but never billed Parametal for the copper that was transferred.
    Parametal made a profit of $8,866,822.98 on these transactions and the
    appellant received approximately $8,571,060 through Oracle. Similarly, Philip
    bought copper from Pechiney and forwarded the copper to MIT but never sent MIT
    an invoice. MIT then sold the copper to Pechiney. Pechiney then paid MIT for
    the copper by depositing the money into MIT's bank account. Each time Pechiney
    paid MIT, a few days later MIT made a payment to Oracle's bank account. MIT's
    profit on these three transactions was $1,148,270, of which $1,092,700 was
    transferred to Oracle's bank account.

[7]

At trial the appellant
    conceded, among other things, that the funds diverted to Monopol, Oracle and
    another company he controlled, Elohs SA, were used for his own personal
    purposes. The appellant called no evidence at trial, but argued that the jury
    should have a reasonable doubt as to his guilt.

[8]

There are three grounds
    of appeal on the conviction appeal: (i) the trial judge erred in instructing
    the jury as to how the appellants duty to disclose his interest in the third
    party companies related to his
mens rea
for fraud; (ii) the trial judge
    erred in response to a question from the jury about the use of the terms
    unbilled or unpaid to describe some of the transactions; and (iii) the jury
    charge was unfair and unbalanced.

[9]

For the reasons that
    follow, we see no merit in any of the grounds of appeal advanced and dismiss
    the appeal.

The
    Duty to Disclose

[10]

The appellant asserts that the trial
    judge erred in instructing the jury that he had a duty to disclose his personal
    involvement in the impugned transactions to Philip because Philip Enterprises
    Inc. and not Philip was the party to the transactions.

[11]

There was no error by the trial judge.
    There can be no serious contention that, as a senior officer and director of
    Philip, the appellant owed a fiduciary duty to his employer, Philip, which
    included, among other things, a duty of disclosure, a duty of good faith and
    the avoidance of conflicts of interest:
Canadian Aero Service Ltd. v.
    OMalley
, [1974] S.C.R. 592, at p. 606-07. The appellants duty of
    disclosure was particularly pronounced in this case, given that the purpose of
    the ring out transactions was to generate much needed cash flow for the parent
    company, Philip.

[12]

We note as well that the trial judge
    cautioned the jury that failure to disclose was not criminal in itself, but
    that the failure to disclose might form part of the basis for a finding of
    intent to defraud. The trial judge also fairly set out in his charge to the
    jury the circumstantial evidence relied upon by the appellant to support his
    submission that his supervisor might have been aware of his actions.

[13]

We conclude that the trial judge properly
    instructed the jury with respect to the
mens rea
associated with
    non-disclosure. Accordingly, we see no merit in the first ground of appeal.

Unpaid
    and Unbilled

[14]

Turning to the second ground of
    appeal, during its deliberations the jury asked a question related to count 2, a
    count which involved transfers of copper to MIT. They asked whether they only had
    to be satisfied that fraud was committed beyond a reasonable doubt, or whether
    they also needed to separately be satisfied that the transactions were unbilled
    and/or unpaid. After hearing submissions from counsel, the trial judge told
    the jury that the terms unbilled and/or unpaid were merely labels used during the
    trial to refer to certain transactions. He instructed the jury that they must
    be satisfied that the elements of fraud were proven beyond a reasonable doubt
    and referred them to the guideline he had given them to assist with their
    deliberations in deciding whether the elements of fraud had been made out.

[15]

The appellant asserts that the
    judges response to the jurys question failed to recognize the central
    importance of the issue of whether the amounts in issue were simply unpaid or
    were unpaid and unbilled.  He also argues that the question indicates that the
    jury was struggling with the issue of whether the transfers were unbilled.

[16]

We disagree. The trial judge
    correctly instructed the jury that their task was to consider whether the
    elements of the fraud alleged had been proven beyond a reasonable doubt, and
    that unbilled/unpaid was a convenient way to refer to those transactions
    during the trial. The notion that these charges were unbilled and unpaid was
    not particularized in the indictment and the Crown was under no obligation to
    prove that fact.

[17]

We also do not view the jurys question
    as evidence that it was struggling to decide whether the transactions were in
    fact unbilled. There was no need for the trial judge to have further instructed
    them on this issue. Moreover, we reject the submission that the trial judge
    ignored the defence asserted by the appellant in response to this charge. The
    trial judge fairly put the defence position to the jury, much of which called
    for inferences based on circumstantial evidence.

Unbalanced
    Charge

[18]

The final ground of appeal on the
    conviction appeal is the assertion that the jury charge was unfair and
    unbalanced. We disagree. This case was extremely complex. The trial judge did
    an admirable job in summarizing the arguments of the parties and the evidence
    in a careful and measured manner.

[19]

The trial judge raised, at the
    request of the defence, the issue of hedging notwithstanding that the defence
    never conveyed a coherent submission on how a hedging strategy would have
    either prevented the siphoning of funds to the appellant or would have
    alleviated any concerns that the board of directors might have had, if they had
    in fact been advised of the appellants profit taking activities.

[20]

We also find no fault with the trial
    judges legal instructions, which meticulously took the jury through the
    elements of each offence. Further, his responses to the jury questions were
    accurate and appropriate. Contrary to the submission of the appellant, we do not
    believe that when the jury asked for a replay of evidence that it was necessary
    for the trial judge to go beyond that request and further instruct the jury on
    the legal issues raised in the evidence that was the subject of the request.

[21]

In summary, we see no merit in the
    grounds of appeal asserted by the appellant and do not find any basis for
    appellant intervention.

The
    Sentence Appeal

[22]

The appellant asserts on his application
    for leave to appeal sentence that the trial judge
misapprehend
ed
evidence which was critical to a proper determination of
    sentence, failed to consider mitigating factors, and found certain factors to
    be aggravating in the absence of evidence.
He further submits that the
trial judge err
ed
in
    imposing a restitution order and a fine in lieu of forfeiture
.

[23]

We note that the appellant conceded on
    the hearing of the appeal that the sentence was within the appropriate range
    for a major commercial fraud. This was a sensible concession given recent
    sentences in similar cases (e.g.
R v. Drabinsky
, 2011 ONCA 582,
R v.
    Koval
, [2001] O.J. No. 1205 (S.C.), and
R v. Bjellebo
, (2003), 177
    O.A.C. 378 (C.A.)).

[24]

We are not satisfied that the trial
    judge misapprehended any evidence in imposing his sentence. In any event, even
    if the appellant could establish some errors regarding the relatively minor
    factual references complained of, he has failed to demonstrate how such alleged
    errors rendered the term of imprisonment unfit. Similarly, we do not see how
    the failure to credit the appellant for paying back approximately ten percent
    of the missing funds, when the trial judge found that the appellant had, at
    least at one point, the ability to pay back more, rendered the sentence unfit.

[25]

This was an entirely appropriate case
    for a restitution order, as counsel for the appellant appeared to concede to
    the trial judge in making his sentencing submissions. The appellant diverted
    millions of dollars to his personal use at the expense of the shareholders of a
    public company. That he should be obliged to disgorge his ill-gotten profits is
    hardly inequitable. Depriving an offender of the proceeds of crime is one of
    the fundamental purposes of restitution orders.

[26]

We also do not see any error in the
    quantum of restitution ordered. The figure utilized was taken from expert
    forensic accounting evidence provided at trial and on the sentencing hearing.
    The appellant submitted that the quantum was overstated but provided no
    competing figure and raised no serious issue regarding the accuracy of the amount
    ordered.

[27]

In imposing the restitution order,
    the trial judge did not explicitly indicate that he was considering the
    appellants ability to pay, but he did so implicitly by reviewing the lack of
    evidence of the appellants finances. It hardly lies in the mouth of the
    appellant to complain that his ability to pay was not considered given his
    decision not to provide any evidence during sentencing regarding his financial
    position. In any event, the ability to pay is but one consideration in deciding
    whether to impose a restitution order, it is not determinative:
R. v. Eizenga
,
    2011 ONCA 113, at paras. 99-103.

[28]

The complaint raised by the appellant
    regarding the fine in lieu of forfeiture is that the trial judge failed to
    consider his ability to pay in determining the length of time for the payment
    of the fine. The trial judge ordered that the appellant has three years from
    the time he is released on parole to pay the fine. The appellant submits that
    the time to pay should not commence until an order in an unrelated civil
    proceeding freezing his assets is lifted.

[29]

We see no basis to interfere with the
    time for payment ordered by the trial judge, especially given the failure of
    the appellant to provide the court with evidence regarding his financial
    position. The appellant has been granted a significant period to pay the fine. The
    trial judge contemplated that, if he was unable to meet this deadline, further
    incarceration was not automatic, as he would be permitted to make submissions
    to the court regarding his inability to pay.

[30]

An issue arises concerning the interplay
    between the restitution order and the fine in lieu of forfeiture order. On the
    current wording of the courts orders, it is theoretically possible that
    payment of restitution would not be credited against the fine in lieu of
    forfeiture, thus exposing the appellant to the risk of double collection of the
    same amount. The parties have assured us that this is not their understanding
    of the orders and that any payment made would be credited to both orders
    equally.

[31]

For greater certainty, we would amend
    the order of the trial judge to state: the restitution order shall take
    priority over payment of the fine in lieu of forfeiture ordered herein, and the
    fine in lieu of forfeiture shall be reduced by any amount paid pursuant to the
    restitution order.

[32]

The appeal from conviction is
    dismissed. Leave to appeal sentence is granted but the sentence appeal is
    dismissed save for the clarification noted in the preceding paragraph to ensure
    that payment of restitution is also credited against the fine in lieu of forfeiture
    imposed by the trial judge.

David Watt J.A.

C. W. Hourigan J.A.

G. Pardu J.A.