COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Plange, 2019 ONCA 646

DATE: 20190807

DOCKET: C65230

Doherty, MacPherson and Benotto JJ.A.

BETWEEN

Her Majesty the Queen

Appellant

and

Kevin Ekow Plange

Respondent

David Quayat, for the appellant

Darren Sederoff, for the respondent

Heard: July 3, 2019

On appeal from the sentence
    imposed on March 20, 2018 by Justice Shaun S. Nakatsuru of the Superior Court
    of Justice.

Benotto J.A.:

[1]

The Crown appeals the sentence imposed following the respondents
    guilty plea to a $41 million fraud. The Crown submits that the sentencing judge
    erred: (i) in striking down the mandatory minimum; and (ii) by imposing a
    sentence that was demonstrably unfit.

overview

[2]

The respondent pleaded guilty to one charge of fraud over $5,000.
    The charge alleged:

THAT HE, the said KEVIN EKOW
    PLANGE, between August 13, 2013 and July 28, 2014, in the City of Toronto, in
    the Toronto Region, and elsewhere in the Province of Ontario, by deceit,
    falsehood or other fraudulent means unlawfully did defraud or attempt to
    defraud the Government of Canada of money in an amount greater than five
    thousand dollars ($5,000), by preparing and submitting false
RC366 E Direct
    Deposit Request  GST/HST, Payroll and/or Corporation Income Tax Forms
to
    the Canada Revenue Agency to change the direct deposit information of
    corporations, and as a result re-directed or attempted to re-direct Goods and
    Services Tax refunds and other payments properly payable to corporations, to
    bank accounts controlled by him, thereby committing an offence contrary to
    Section 380(1)(a) of the
Criminal Code of Canada
, as amended.

[3]

The guilty plea proceeded on an Agreed Statements of Facts. In the
    Agreed Facts, the respondent acknowledged that he had redirected GST refunds, properly
    payable by the Canada Revenue Agency (CRA) to various corporations, to bank
    accounts he controlled. In total, $41,831,073 were directed into his accounts
    by the CRA. The respondent managed to get only about $15,000 out of the
    accounts. Because the subject-matter of the fraud exceeded $1 million, the
    respondent was subject to the two-year mandatory minimum jail sentence provided
    for by s. 380(1.1).

[4]

The respondent argued that the mandatory minimum punishment was
    unconstitutional as applied to him and unconstitutional as applied in certain
    reasonable hypotheticals. The trial judge rejected the first submission but
    accepted the second. He declared the mandatory minimum unconstitutional and s.
    380(1.1) of no force and effect.

[5]

The trial judge went on to impose a sentence of 13 months, 18
    days (18 months reduced for credit for presentence custody and presentence bail
    conditions) to be followed by two years probation.

[6]

The Crown appealed. The Crown argued that the mandatory minimum
    did not constitute cruel and unusual punishment. The Crown further argued that
    regardless of the constitutionality of the mandatory minimum, the sentence
    imposed on the respondent was manifestly inadequate.

[7]

At the end of oral argument, the court advised the parties that the
    decision on the constitutional question would be reserved. However, the court
    indicated that the sentence imposed was manifestly inadequate. A sentence of
    three years should have been imposed. The court further advised the parties
    that it was not in the interests of justice to re-incarcerate the respondent at
    this time and that the court would not do so. Finally, the court advised the
    parties that written reasons would follow. These are the reasons.

the facts

[8]

Taxpayers, including corporations, who are entitled to refunds or
    rebates on various taxes can arrange to have the funds deposited directly into
    their bank accounts by the CRA. The user-friendly process established by the CRA
    requires only that the taxpayer file a form (Form RC366), directing that the
    funds be deposited into the specified bank account. The form is available on
    the CRA website.

[9]

Between August 2013 and July 2014, the respondent filed 28
    fraudulent RC366 Forms, purporting to change the direct deposit information for
    12 major corporations. He directed that the funds be deposited into his own
    account at the TD bank, or accounts at other banks he set up for the purpose of
    receiving the funds.

[10]

In completing the RC366 Forms, the respondent used information
    such as corporate addresses and business numbers. He also forged the signatures
    purporting to confirm the certification of a corporate officer or director
    authorizing the change in the bank account into which the funds were to be
    deposited.

[11]

The respondent filed his first group of fraudulent Forms in early
    August 2013. Those Forms directed the funds to his personal bank account at the
    TD Bank. Within a month, several deposits from the CRA, totalling almost $6
    million, had been made into his account. More deposits followed in October,
    totalling over $15 million. Another $15 million was deposited in December. The respondent
    could not, however, access these funds as the TD bank froze them.

[12]

In early 2014, the respondent filed another batch of fraudulent
    RC366 Forms. With this batch, however, he changed his process. By using different
    banks and multiple accounts he sought to circumvent the banks oversight. More
    than $5 million was deposited by the CRA. Despite ongoing and persistent
    efforts to free up funds, both by repeated calls to his banks and by many calls
    to the CRA seeking information that could facilitate access to the funds, the
    respondent only managed to get $15,290 out of the accounts. The scam ended in
    April 2014.

[13]

The respondent testified at the sentencing hearing. The trial
    judge also had the benefit of a lengthy and favourable presentence report. The
    respondent described his year-long effort to fraudulently divert funds from the
    CRA to his own bank accounts as an impulsive response to learning about a tax
    loophole. Despite this entirely self-serving and inaccurate description of his
    conduct, the trial judge accepted that the respondent was remorseful and had
    taken full responsibility for his actions.

[14]

In his evidence, the respondent attempted to explain his
    fraudulent conduct by referencing very large gambling debts he had accumulated.
    The respondent told the judge that he intended to pay off his gambling debt
    with the proceeds of his fraud. The trial judge found that the respondent did
    not commit the offence to pay off his debts, but, like most fraudsters, was
    motivated by greed.

ANALYSIS

[15]

I begin with a consideration of the mandatory minimum punishment
    for fraud over one million dollars and then turn to the fitness of the
    sentence.

Mandatory minimum
    punishment

[16]

Section 380(1.1) of the
Criminal Code
provides that a person convicted of fraud exceeding one million
    dollars is subject to a mandatory minimum punishment of two years.

[17]

The respondent submitted before the sentencing
    judge that this provision violated s. 12 of the
Canadian

Charter
    of Rights and Freedoms
because it constituted cruel and
    unusual punishment.

[18]

Section 12 of the
Charter
reads:

Everyone
    has the right not to be subjected to any cruel and unusual treatment or
    punishment.

[19]

The sentencing judge followed the two-step
    analytical approach to s. 12 claims:
R. v. Nur
,
    2015 SCC 15, [2015] 1 S.C.R. 773, at paras. 43-46;
R. v. Boudreault
, 2018 SCC 58, 429 D.L.R. (4th) 583, at para. 46; see also
R.
    v. J.L.M.
,
2017 BCCA 258,

353 C.C.C. (3d) 40 at para. 16;
R. v. Forcillo
, 2018 ONCA 402, 141 O.R. (3d) 752, at para. 124;
R. v.
    Morrison
, 2017 ONCA 582, 136 O.R. (3d) 545, at para. 117,
    revd on other grounds, 2019 SCC 15.

[20]

At the first step, the sentencing judge determined
    that the mandatory minimum sentence would not be grossly disproportionate for
    this offender. He then moved to the second stage to consider whether the
    sentence would be grossly disproportionate for other offenders. Here, he identified
    three reasonable hypotheticals:

·

A mortgage fraud involving a self-employed offender who
    overstates income or financial worth to obtain a $1 million mortgage. The
    overstatement is not significant. In the offenders eyes the financial
    statement was not dishonest because the self-employment income was based upon
    an aberrant year when income dipped from regular levels due to some unusual
    event such as illness. The sentencing judge found that to sentence this
    offender who had no prior criminal record to a penitentiary term would shock
    the conscience of the community.

·

A situation where a young college student impulsively submits one
    change of a corporations direct deposit information to the CRA. He does it for
    pure curiosity to see if it would work, or even out of altruism to uncover a
    defect in the system. The offender has no idea how much would be re-directed to
    his bank account if it does work. To his surprise, $1 million is deposited. He
    is shocked, remorseful, and immediately calls the bank to advise that this was
    a mistake. The sentencing judge found that a two-year sentence would be grossly
    disproportionate given the nature of the offence and the minimal moral
    blameworthiness of the offender.

·

A situation where the spouse of the accused, knowing what the
    accused was going to do, permitted the use of their joint bank account to
    receive any direct deposits from the CRA. As a party, the spouse too would be
    sentenced to a mandatory minimum sentence of two years.

[21]

The sentencing judge concluded that in these
    reasonable hypotheticals, the moral blameworthiness of the offender is significantly
    diminished, and, assuming the offender makes full restitution, no actual
    economic harm is caused. Consequently, it would outrage the standards of
    decency and shock the conscience of the community to impose a two-year
    sentence.

[22]

Having made this determination, the sentencing
    judge then determined that the impugned provision breached s. 12 of the
Charter
and was not saved by s. 1.

[23]

The appellant submits that the sentencing judge
    erred by considering these three hypotheticals. The first two do not amount to
    fraud and the third does not establish a reduced moral blameworthiness such
    that the mandatory minimum would shock the conscience of the community.

[24]

The offence of fraud requires the Crown to show
    that an accused has committed a dishonest act, by deceit, falsehood or other
    fraudulent means, and that a deprivation has been caused by the prohibited act.
    The deprivation may consist in actual loss or placing a victims pecuniary
    interests at risk:
R. v. Thé
roux,
[1993] 2 S.C.R. 5, at p. 20. The
mens rea
for
    fraud requires the specific intent to deceive, lie, or commit some other
    fraudulent act.

[25]

The
mens rea
for fraud excludes from its ambit negligent misrepresentation, misstatement or
    improvident business conduct. An act of deceit made carelessly or as a prank
    when the person has no knowledge that the property of others would be put at
    risk is not fraud. Fraud is a deliberately practiced fraudulent act which, in
    the knowledge of the accused, actually put the property of others at risk:
Thé
roux,
at p. 26.

[26]

The first hypothetical invoked by the sentencing
    judge involves a self-employed individual who fudges income to correct for an
    aberrant year so as to qualify for a million-dollar mortgage. This hypothetical
    does not amount to fraud and is not reasonable. Fraud involves intentional
    dishonesty. In constructing the hypothetical, the trial judge assumes the
    putative offender commits fraud, but goes on to state that the putative offender
    does not see the financial statement as being dishonest. This shift in the
    hypothetical removes the example from the ambit of criminal fraud. The accused
    in this hypothetical intended no dishonesty.

[27]

The second hypothetical is also problematic. The
    young college student who submits the same forms as the respondent out of
    curiosity or altruism has not intended to deceive or put the property of others
    at risk. This hypothetical lacks the
mens rea
to establish fraud. It is also, in my view, far-fetched.

[28]

The hypothetical involving the spouse of an
    accused such as the respondent who allows the accused to utilize their bank
    account to perpetrate the fraud is unconvincing. If, as the hypothetical
    suggests, the spouse has full knowledge of the fraud and agrees to provide a
    bank account to facilitate the scheme, there is no principled reason why the
    mandatory minimum should not apply. Party participation is not a reason to
    lower a sentence from that of the principal.

[29]

In my view, the judges use of these
    hypotheticals to declare the section unconstitutional was in error. Therefore, the
    mandatory minimum punishment  on this basis  cannot be struck down and the
    appeal must be allowed. The question then becomes whether this court should create
    a hypothetical of its own in order to declare the section unconstitutional. This
    is where I part company with my colleague Doherty J.A. He agrees that the
    hypotheticals used by the sentencing judge do not lead to a declaration of
    unconstitutionality. However, he would construct a different hypothetical. I
    would not.

[30]

I do not agree that it is this courts function
    in this case to construct a hypothetical in order to declare the mandatory
    minimum unconstitutional. I say this for three related reasons: (i) the onus is
    on the party challenging the validity of the legislation to establish the
    hypothetical; (ii) the parties, particularly the Crown, should have the
    opportunity to fully address the hypothetical; and (iii) there is no prejudice
    because the issue remains to be determined on a proper record in the future.

Onus

[31]

The onus is on the party challenging the validity of a
    legislative provision to establish a reasonable hypothetical. This was
    confirmed by the Supreme Court of Canada in
R. v. Goltz
,
    [1991] 3 S.C.R. 485, at p. 520:

On the second aspect of the s. 12
    analysis, the onus to demonstrate a reasonable hypothetical circumstance in
    which enforcement of the statute would violate s. 12 for imposing excessive or
    grossly disproportionate punishment remains with the party challenging the
    provision's validity. In the instant appeal, that onus was not discharged. Consequently,
    the challenge based on the second and hypothetical limb of the s. 12
    inquiry must also fail.

[32]

On this basis, the challenge with respect to the
    constitutionality of s. 380(1.1) must also fail.

[33]

By placing the onus on the party seeking to challenge a mandatory
    minimum provision, the law ensures that the Crown and the court have an
    opportunity to fully examine the reasonableness of the hypothetical.

[34]

I turn to my second reason: the importance of submissions.

Submissions required

[35]

When a legislative provision is challenged on
    the basis of its effect on a reasonable hypothetical offender, the parties, in
    particular the Attorney General, should have an opportunity to fully respond. As
    my colleague says, the hypothetical he relies on was put to the parties in oral
    submissions. However, the brief discussion did not relate to the reasonableness
    of the hypothetical but rather to the fact that the conduct would be captured
    by the mandatory minimum. The facts underlying the hypothetical were not
    vetted. This is significant since I  for one  am not convinced that the
    hypothetical discloses opportunistic or spontaneous conduct on the part of
    the hypothetical offender. Nor do I agree that it lacked sophistication. Quite
    the contrary. I do not accept, without submissions, that one could come
    across direct deposit instructions on the CRA website that could be used for a
    diversion of funds belonging to someone else. The fraud would involve multiple
    rather sophisticated and dishonest steps. A suitable corporation would have to
    be identified, the business number fraudulently obtained; a corporate search
    would be necessary to determine the proper name of the corporation and the
    names of the officers to be forged; the Form itself would have to be completed
    and filed. I raise these matters, not to conclude that the hypothetical is not
    reasonable, but rather to demonstrate why submissions would be necessary in
    order for this court to conclude that a two year prison sentence for this hypothetical
    offender would be grossly disproportionate.

[36]

I agree with my colleague that to test the law,
Nur
(para. 63) requires the court to look at the offender and others.
    The issue here is not whether the court can consider reasonable hypotheticals;
    clearly it can. The issue is whether, on the facts of this case, this court
    should construct a hypothetical not considered by the court below, and not
    fully argued, in order to declare a legislative provision unconstitutional.

No impediment to a future consideration

[37]

Finally, I note that the issue of whether s.
    380(1.1) breaches s. 12 of the
Charter
may be
    considered in a different context. As the Supreme Court said in
Nur,
at para. 71:

A courts conclusion based on its
    review of the provisions reasonably foreseeable applications does not
    foreclose consideration in future of different reasonable applications. [Citations
    omitted.]

[38]

Consequently, I would allow the appeal of the constitutional ruling
    and set aside the trial judges declaration that s. 380(1.1) of the
Criminal
    Code
is of no force and effect.

Fitness of sentence

[39]

The sentence imposed by the trial judge was
    demonstrably unfit when compared to other large-scale frauds.

[40]

In
R. v. Koval
,
    [2001] O.J. No 1205 (S. C.), Watt J. (as he then was) found that large-scale
    commercial frauds attract sentences of 5-8 years where large sums of money are
    put at risk. In
R. v. Watts
, 2016 ONSC 4843, [2018]
    D.T.C. 5024, the court set a sentencing range of 4-8 years in a case involving
    a large-scale fraud where $10 million was put at risk and the accused obtained
    $150,000 from the fraud. The fraudulent scheme involved the filing of false tax
    documents. Other large-scale frauds implicating loss or risk of approximately
    $2-40 million dollars have attracted sentences of 3.5-8 years. More recently,
    this court confirmed that in cases of large-scale fraud the range is generally 3-5
    years:
R. v. Davatgar-Jafarpour,
2019 ONCA 353,
    at para 34.

[41]

The sentencing judge also erred by
    characterizing the fraud in a manner that was not supported by the evidence,
    and mitigating the respondents sentence on that basis. He reasoned that
    because the respondents fraudulent scheme was unique and unsophisticated,
    this mitigated in favour of a lower sentence being imposed. The unique aspects
    of the fraud, according to the sentencing judge, are that it was accomplished
    simply by downloading a form available from the internet and filing it with the
    Canada Revenue Agency.

[42]

This characterization is incomplete and
    understates the sustained effort made by the respondent to execute the fraud.
    The form itself reveals that there was significant research involved in
    completing it. It ignores the multiple attempts he made to access the money and
    the attempt to reconfigure his scheme to avoid detection. The sentencing judge
    understated the moral blameworthiness of the respondent.

[43]

While the sentencing judge noted the importance
    of general and specific deterrence, the substance of his approach betrays the
    reference to deterrence. Instead of focusing on the efforts made by the
    respondent to advance the fraud, he focused on the lack of sophistication and
    the inevitable detection of the fraud.

[44]

For these reasons, a sentence of 18 months was
    demonstrably unfit. I conclude that a fit sentence is three years.

[45]

The respondent has served the sentence
    previously imposed so we turn to the issue of re-incarceration.

[46]

This court has stated that when a fit sentence
    is determined to be higher than that already served, denunciation and general
    deterrence may be achieved without re-incarceration: see
R. v.
    Dufour,
2015 ONCA 426, 326 C.C.C. (3d) 52.

[47]

The respondents rehabilitation demonstrates
    that this case does not require re-incarceration to uphold the sentencing
    principles. For this reason, as stated at the outset of these reasons, the
    court advised the parties that it would stay the remainder of the sentence.

CONCLUSION

[48]

I would allow the appeal, impose
a
    sentence of three years with the proviso that it is not in the interests of
    justice to re-incarcerate the respondent at this time and I would stay the
    remainder of the sentence.

M.L. Benotto J.A.

I agree J.C.
    MacPherson J.A.

Doherty J.A. (Concurring):

[49]

I have read the reasons of my
    colleague, Benotto J.A. I agree entirely with her analysis of the fitness of
    the sentence (paras. 38-46) and her proposed disposition of the appeal (para.47).
    I would add only that, absent the impressive array of mitigating factors which
    included a guilty plea, the small loss suffered by the CRA, full restitution,
    the respondents youth, and his first offender status, a significantly longer
    sentence would have been necessary.

[50]

I part company with my colleague,
    however, on the constitutional question. In my view, this court should address
    the merits of the constitutional argument. I agree with the trial judge that
    the two-year mandatory minimum in s. 380(1.1) does amount to cruel and unusual
    punishment, and that the section should be declared of no force or effect.

The Section 12 Analysis

[51]

The Supreme Court has repeatedly stressed that the requirement
    that the sentence be grossly disproportionate sets a high constitutional bar.
    Sentences that are merely excessive or disproportionate so as to warrant
    appellate intervention on a sentence appeal do not necessarily rise to the
    level of cruel and unusual punishment:
Nur
, at para. 39;
R. v.
    Lloyd
, 2016 SCC 13, [2016] 1 S.C.R. 130, at para. 24;
R. v. Morrisey
,
    2000 SCC 39, [2000] 2 S.C.R. 90, at para. 26;
R. v. Serov
, 2017 BCCA
    456, at para. 24. For example, the trial judge correctly acknowledged that an
    18-month sentence, the sentence he regarded as fit for the respondent, would
    not render the two-year mandatory minimum sentence grossly disproportionate as
    applied to the respondent.

[52]

In addition to reaffirming the two-step approach to the analysis
    of a s. 12 claim,
Nur
reiterates that the analysis must be applied first
    to the offender and, if the mandatory minimum as applied to the offender does
    not offend s. 12, to other putative offenders, referred to as reasonable
    hypotheticals, who might reasonably be caught by the provision:
Nur
,
    at paras. 47-65;
Forcillo
, at para. 125.

[53]

Constitutional review that extends beyond the
    circumstances of the specific case and the specific offender is not unique to
    s. 12. A person who is subject to a law can challenge the constitutionality of
    that law, even if the law does not infringe that persons constitutional rights:
    see
R. v. Big M Drug Mart
, [1985]
    1 S.C.R. 295, at p. 314. McLachlin C.J.,
in
Nu
r
, offers an eloquent explanation for the need to go beyond the circumstances
    of the individual case when assessing the constitutionality of a law:

[63] Not only is looking at the laws impact on persons whom it
    is reasonably foreseeable the law may catch workable  it is essential to
    effective constitutional review. Refusing to consider reasonably foreseeable
    impacts of an impugned law would dramatically curtail the reach of the
Charter
and the ability of the courts to discharge their duty to scrutinize the
    constitutionality of legislation and maintain the integrity of the
    constitutional order. The protection of individuals rights demands
    constitutional review that looks not only to the situation of the offender
    before the court, but beyond that to the reasonably foreseeable reach of the
    law.
Testing the law against reasonably
    foreseeable applications will prevent people from suffering cruel and unusual
    punishment in the interim until the mandatory minimum is found to be
    unconstitutional in a particular case.

[64] Refusing to consider an
    impugned laws impact on third parties would also undermine the prospect of
    bringing certainty to the constitutionality of legislation, condemning
    constitutional jurisprudence to a wilderness of single instances.
Citizens, the police and government are entitled  and
    indeed obliged  to know what the criminal law is and whether it is
    constitutional. Looking at whether the mandatory minimum has an
    unconstitutional impact on others avoids the chilling effect of
    unconstitutional laws remaining on the statute books.
[Emphasis
    added.]

[54]

With respect to the contrary view, I do not accept an approach that
    limits a s. 12 claim to the circumstances of the specific offender and any reasonable
    hypotheticals advanced by the parties, or considered by the trial judge. While
    procedural fairness demands that the parties have a full opportunity to address
    any reasonable hypothetical on which the outcome of the constitutional
    challenge may turn, this court is obliged to consider any hypothetical it views
    as a reasonably foreseeable application of the mandatory minimum. The court
    cannot decline to consider reasonable hypotheticals on the basis that those
    same hypotheticals can be raised and considered in some future proceeding.

[55]

The s. 12 analysis in this case focuses on the application of the
    mandatory minimum to reasonable hypotheticals. The respondent does not argue
    that a sentence of two years would be grossly disproportionate in the
    circumstances of his case.

[56]

I will return to the reasonable hypothetical inquiry later in my
    reasons. Before doing so, however, it is necessary to address the elements of
    the crime of fraud and the relevance of the value of the subject-matter of the
    fraud to the gravity of the offence and the moral culpability of the offender.

The Elements of Fraud

[57]

Fraud, as described in s. 380 of the
Criminal Code
,
    consists of voluntarily performing an act that is in the nature of a deceit,
    falsehood or other fraudulent means. The prohibited act must result in actual
    pecuniary loss to the victim, or it must place the victims pecuniary interests
    at risk:
R. v. Thé
roux
, [1993] 2 S.C.R. 5, at p. 20. The
actus reus
of the crime of fraud is captured by the phrase dishonest
    detriment.

[58]

The fault or
mens rea
component of the crime of fraud
    has two parts. The Crown must prove subjective knowledge of the prohibited act.
    Thus, in cases like this one, involving an allegation of a false representation,
    the Crown must prove that the respondent knew that the representation in the
    Forms to the effect that the identified corporations were redirecting the
    deposits to a different account was false. In addition to knowledge of the
    falsity of the representation, the Crown had to prove that the respondent knew
    that in doing the prohibited act he could cause actual pecuniary loss to the CRA,
    or could put the CRAs pecuniary interests at risk:
Thé
roux
, at p. 26
. In other words, the Crown had
    to prove that the respondent knew that, by falsely redirecting the refunds into
    bank accounts he controlled, the CRA could lose those funds or, at a minimum,
    be put at risk of losing those funds. The Crown did not have to prove an
    intention to cause loss or risk of loss. It was sufficient if the Crown proved
    that the respondent was reckless as to that consequence:
Thé
roux
, at pp. 25-26.

[59]

There is no doubt that the crime of fraud, first introduced into
    the
Criminal Code
in 1954 (S.C. 1953-54, c. 51, s. 323), captures
    a very broad range of activity and is designed to encompass the entire panoply
    of dishonest commercial dealings:
Thé
roux
, at p. 24. Fraud,
    as defined in s. 380, creates a broad honesty-based criminal offence freed from
    the limitations and qualifications that had grown up over centuries around common
    law-based property crimes such as obtaining property by false pretenses. The
    courts have given the crime of fraud the very broad reading intended by the
    language of the section: see e.g.
R. v. Olan
, [1978] 2 S.C.R. 1175; see
    also J. Douglas Ewart,
Criminal Fraud
(Toronto: Carswell, 1986), at
    pp. 5-10.

[60]

The long reach of the crime of fraud is important to the s. 12
    analysis. Mandatory minimums that apply to offences that can be committed in
    many ways, in many different circumstances, and by a wide range of people are
    constitutionally vulnerable under s. 12 because, by virtue of their broad
    scope, they run the very real risk of capturing offenders for whom the
    mandatory minimum will be grossly disproportionate punishment:
Lloyd
,
    at para. 3;
Forcillo
, at paras. 126-27;
Morrison
, at
    paras. 117-19.

[61]

If the two-year mandatory minimum applied to all crimes of fraud
    over $5,000, it could not survive s. 12 scrutiny. First offenders who plead
    guilty to fraud over $5,000 quite often do not go to jail at all, much less to
    the penitentiary for two years. It takes no imagination to envision reasonably
    foreseeable circumstances in which a sentence of two years for fraud over
    $5,000 would constitute a grossly disproportionate sentence. One need only read
    the reported cases.

The Reach of the Mandatory Minimum

[62]

The mandatory minimum in issue does not apply to all frauds over
    $5,000. Subsection 380(1.1) provides that when a person is convicted of fraud,
    the court shall impose a minimum punishment of imprisonment for a term of two
    years if the total value of the subject-matter of the offences exceeds one
    million dollars. The value of the subject-matter of the offences refers to
    the amount of the loss or risk of loss suffered by the victim.

[63]

The question becomes  does limiting the mandatory minimum to
    frauds in which the loss or risk of loss is over $1 million adequately
    distinguish those frauds for which two-year sentences would not be grossly
    disproportionate from those frauds for which two years would be grossly
    disproportionate? Put somewhat differently, is the fact that the value of the subject-matter
    of the fraud exceeds $1 million a sufficiently aggravating factor on sentence
    that it overrides mitigating factors that could arise in reasonably foreseeable
    situations, to the extent that a two-year sentence in reasonably foreseeable
    cases of fraud over $1 million will never be grossly disproportionate.

[64]

In examining proportionality, one looks to the relationship
    between the mandatory minimum and the penalty that would be imposed using the
    generally applicable principles of sentencing. Those principles focus on the gravity
    of the offence, the harm caused by the offence, and the blameworthiness of the
    offenders conduct. If the sentence commanded by the mandatory minimum is
    grossly disproportionate to the sentence that would be imposed using the
    generally applicable principles of sentencing, the mandatory minimum violates
    s. 12:
Nur
, at para. 44.

[65]

The value of the subject-matter of the fraud has always been an
    important consideration in determining the gravity of the crime of fraud. Not
    only does s. 380 distinguish between the two levels of fraud based on the value
    of the subject-matter of the fraud (above or below $5,000), s. 380.1(1)(a)
    specifically provides that the magnitude of a fraud must be treated as an aggravating
    circumstance on sentence. The amount of the loss or risk of loss speaks
    directly to the magnitude of the fraud. By tying the mandatory minimum penalty to
    frauds that involve a very substantial loss or risk of loss, Parliament has connected
    the mandatory minimum to a factor that clearly identifies potentially serious
    frauds.

[66]

The value of the loss or risk of loss can also reflect the harm
    caused by the offence. In cases in which the victim suffers an actual loss,
    there is a direct and strong correlation between the value of the loss and the
    harm caused. The greater the loss, the greater the harm. That connection is
    weaker when there is no actual loss, but rather a risk of loss. The level of
    risk sufficient to satisfy the detriment component of the
actus reus
of fraud runs along a continuum. Sometimes, the risk of actual pecuniary loss
    may be small: see e.g.
R. v. Knowles
(1979), 51 C.C.C. (2d) 237 (Ont.
    C.A.), at p. 241; see also Ewart, at pp. 121-33. In some reasonably foreseeable
    circumstances, the amount of the fraud will be over $1 million, but the actual
    risk of loss will be low and there will be no actual loss. In those cases, the
    harm flowing from the fraud will be minimal.

[67]

The third factor relevant to proportionality in sentencing, the
    blameworthiness of the offender, may or may not have some correlation to the
    value of the subject-matter of the fraud. In most frauds, the offender will know,
    at least in general terms, the amount of the victims loss or risk of loss. The
    offenders gain is often a reflection of the victims loss. In those typical cases,
    the offenders understanding that the subject-matter of the fraud involves a
    large amount of money increases the blameworthiness of the conduct.

[68]

There are, however, situations in which the value of the fraud
    does not contribute to the blameworthiness of the offenders conduct. Two
    points should be made. First, fraud does not require an intention to cause loss
    or risk of loss to anyone. Recklessness will suffice. Some fraudsters firmly
    believe that everyone will be better off financially after the fraud is
    perpetrated.

[69]

Second, and this is particularly significant in assessing
    blameworthiness, the amount of the fraud plays no role in determining liability
    for the offence. The Crown is not required to prove that an accused was aware
    of, or even turned her mind to, the amount of the fraud or the amount put at
    risk by the fraud. Consequently, the value of the subject-matter of the fraud
    will, in some cases, say nothing about the blameworthiness of the offenders
    conduct. Indeed, on the agreed facts of this case, when the respondent filed
    the first batch of false RC366 Forms, he did not turn his mind to the amount of
    any deposits that might be redirected into his account.

The Reasonable Hypothetical

[70]

Nur
, at para. 62, describes reasonable hypotheticals as
    grounded in judicial experience and common sense. Reasonable hypotheticals do
    not include far-fetched examples that marshal every conceivable mitigating
    factor in a combination that will never realistically arise in the real world.
    Reasonable hypotheticals do, however, include, not only circumstances that are
    likely to arise in the general application of the law, but also situations that
    may reasonably arise:
Nur
, at
    para. 68. Reasonable hypotheticals include personal characteristics of an
    offender such as age, or the absence of a criminal record, but again not
    constellations of mitigating personal circumstances that defy human experience:
Nur
, at para. 75.

[71]

The trial judge referred to three hypotheticals. My colleague has
    examined each of them. I agree with much of what she says. The first two
    hypotheticals are cluttered with details that tend to render the criminality of
    the conduct questionable. Reasonable hypotheticals must present facts that
    clearly establish liability for the offence. I also agree with my colleague
    that on the limited facts offered by the trial judge in the third hypothetical,
    there is no basis to conclude that the mandatory minimum would be grossly
    disproportionate.

[72]

I test the constitutionality of the mandatory minimum against a reasonable
    hypothetical that is a variation of the trial judges second hypothetical. This
    variation is very close to the agreed facts in this case, as they apply to the
    first batch of fraudulent RC366 Forms filed by the respondent in August 2013.
    This hypothetical was put to counsel in the course of oral argument.

[73]

Assume A comes across the CRA website and the instructions
    about direct-deposit banking. Although it seems too easy to be true, A
    decides to try to make some quick money by sending in one fraudulent RC366
    Form, directing payment of certain tax rebates owed to a corporation into his
    account. He picks a company at random and sends in a fraudulent Form. A never
    turns his mind to the amount of any payment he might receive from the CRA. In
    fact, he assumes that the CRA must have some way of checking the information in
    the Forms and he doubts that his scheme will be successful.

[74]

A few days later, A is shocked to see that the CRA has
    deposited $3 million into his bank account. At the same time, he learns that
    his bank has frozen the account pending inquiries.

[75]

A quickly assesses his situation. He realizes, given the very
    large amount that has been deposited into his account, that he is potentially
    in very serious trouble. A also appreciates that, because of the actions of his
    bank, he will not be able to get any of the money out of the account, and the
    CRA will learn of his deception very soon. A decides to make the best of a
    bad situation. He goes to his bank and tells them that the money does not
    belong in his account and asks that they return it to the CRA. A also
    notifies the CRA. The police become involved. A pleads guilty to fraud and cooperates
    fully. He is a young first offender with strong community support and solid
    prospects.

[76]

On the facts of the hypothetical, there is no question that A is
    guilty of defrauding the CRA. He knowingly made false representations, redirecting
    public funds from taxpayers to whom they were owed, to his account. He knew he
    was creating the risk that the CRA would suffer a pecuniary loss, even though
    he never turned his mind to the amount of that potential loss, and certainly
    did not anticipate anything like the amount that was deposited into his account.
    The CRA suffered no loss and, because of banking policies, any risk of
    pecuniary loss as a consequence of As actions was minimal.

[77]

In terms of As blameworthiness, the conduct was deliberate and
    dishonest under any definition. However, it was, to a large extent, spontaneous
    and opportunistic. This was not a carefully, planned out, or sophisticated
    scheme. It was in fact bound to fail and when A realized that inevitability
    and the amount of money involved, he moved quickly to acknowledge his wrong and
    take responsibility for it.

[78]

In my view, a trial judge sentencing A might reasonably
    conclude that, despite the many mitigating factors, the value of the
    subject-matter of the fraud, combined with the public nature of the funds,
    required a denunciatory sentence that included a jail sentence in the range of
    six to twelve months. Other sentencing judges might conclude that a jail term
    was unnecessary. However, a sentence of two years in the penitentiary is far
    beyond what is reasonably necessary to deliver that denunciatory message. A sentence
    of two years also grossly overstates the blameworthiness of As conduct and
    the loss caused by his conduct. A jail sentence which is at least double the
    sentence at the outer limits of proportionality is properly characterized as
    grossly disproportionate.

[79]

Mandatory minimum sentences alter the sentencing dynamic. That
    dynamic generally relies on sentencing judges to balance all relevant factors
    and impose a sentence within the very broad range set by Parliament that is tailored
    to the specific circumstances of the offence and the offender. Subject to
    constitutional restraints, Parliament is entitled to dictate sentencing policy
    by, for example, imposing mandatory minimums that favour general deterrence and
    denunciation over the individualization of the sentence. Section 12 of the
Charter
,
    however, limits Parliaments authority to sacrifice other sentencing principles
    in the name of deterrence and denunciation. Deterrence and denunciation cannot
    be achieved by the imposition of grossly disproportionate sentences. That
    strategy is constitutionally unacceptable:
Nur
, at paras. 44-45.

[80]

In most cases, and this is certainly one of them, frauds involving
    over $1 million will attract sentences of two years or more. However, in some
    reasonably foreseeable circumstances, and I outlined one above, the two-year mandatory
    minimum will be grossly disproportionate. It follows that the mandatory minimum
    of two years set down in s. 380(1.1) is unconstitutional and should be declared
    of no force or effect.

conclusion

[81]

Like my colleague, I think a sentence of three years should have
    been imposed. However, having regard to all of the circumstances, and in
    particular, the fact that the Crown is not pressing for re-incarceration, I agree
    with my colleague that re-incarceration is not in the public interest.

Doherty J.A.

Released: August 7, 2019

D.D.


COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Tsigirlash, 2019 ONCA 650

DATE: 20190809

DOCKET: C61139

Feldman, Paciocco and Zarnett JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

George Tsigirlash

Appellant

J. Randall Barrs and Richard Litkowski, for the
    appellant

Jill Cameron, for the respondent

Heard: February 11, 2019

On appeal from the conviction entered by Justice James A.
    Ramsay of the Superior Court of Justice on June 19, 2015, with reasons reported
    at 2015 ONSC 4011.

Zarnett J.A.:

A.

Introduction

[1]

The appellant was the principal of Auto Enterprises Inc., a salvage
    yard, repair shop and seller of car parts operating in the Niagara Region.

[2]

After a June 2011 police investigation, the appellant was charged with 47
    offences. Forty-four of the charges alleged possession of stolen property, and
    three alleged fraud over $5000. Fourteen of the stolen property charges
    involved possession of stolen vehicles; the balance alleged possession of stolen
    car parts. The fraud charges alleged the appellant had defrauded three
    different individuals by selling them automobiles that contained stolen parts.

[3]

The offences were alleged to have occurred at three locations: the Auto
    Enterprises premises on Lincoln Avenue and two other Niagara Region properties
    where the appellant was alleged to have stored inventory (the Kucan and the Seneca
    Steel properties).

[4]

The charges proceeded to trial on a multi-count (47-count) indictment
    before a judge alone.

[5]

Neither before trial, during trial, nor in closing argument was there
    any request by the Crown for the admission or use of evidence on any individual
    count as similar fact evidence on the other counts.

[6]

The trial judge gave oral reasons at the conclusion of trial on June 19,
    2015, indicating that more extensive written reasons would follow. In his oral
    reasons he acquitted the appellant on two stolen property charges and one fraud
    charge, stayed one charge
[1]
and convicted the appellant on the balance of the counts other than one that
    had been withdrawn at the opening of trial.

[7]

The trial judge delivered written reasons on June 22, 2015, more fully
    explaining the result he had reached. In those written reasons, the trial judge
    stated that he would use evidence across counts as similar fact evidence. His
    written reasons indicate that he did so.

[8]

The appellant appeals against conviction
[2]
,
    raising the following four grounds:

a)

The trial judge erred
    in his use of evidence across counts as similar fact evidence.

b)

The trial judge
    misapprehended evidence and failed to give weight to exculpatory evidence.

c)

The trial judge
    erred in his approach to circumstantial evidence and treated the case as a
    credibility contest.

d)

The trial judge did
    not properly instruct himself on exculpatory evidence independent from the
    appellants testimony.

[9]

In my view, the trial judge erred in his approach to similar fact
    evidence. I would therefore allow the appeal. Because of that conclusion, it is
    not necessary to deal with the other grounds the appellant raises.

B.

THE TRIAL AND THE TRIAL JUDGES REASONS

[10]

A
    major issue at trial was whether the appellant knew that the vehicles and
    vehicle parts identified in each of the stolen property counts had been stolen,
    and whether he knew that the vehicles that were the subject of the fraud
    charges contained stolen parts and therefore were not what the purchasers of
    the vehicles thought they were getting. The appellants position was that he
    did not know that any of the items were stolen. The defence attributed the
    presence of any stolen property to a dishonest former business associate. Further,
    the appellant denied a connection to the Kucan and Seneca Steel properties. As
    the trial judge put it, [t]he position of the defence is that [the appellant]
    did not know that any of the items in question had been stolen and that he had
    no measure of control over the items at the Kucan property and the Seneca Steel
    property.

[11]

The
    Crown did not refer to similar fact evidence in its opening statement. The
    evidence led at trial was not accompanied by, and we were not pointed in
    argument to, any request on the record for evidence of one count to be used as
    similar fact evidence on the others. Nor did the Crown so request in its closing
    argument; instead, the Crown at trial essentially argued the case by going through
    the evidence count by count.

[12]

Nonetheless,
    the trial judge stated early in his written reasons that he would apply
    evidence across counts as similar fact evidence:

I propose to use evidence across counts as similar fact
    evidence on the issue of whether the accused knew that an item in his
    possession was stolen. It is easier to possess a small amount of stolen
    property unknowingly than a large amount. Evidence of possession of large
    amounts of stolen property could make it more probable that the accused knew
    that the inventory he had consisted of stolen property. Using the evidence
    across counts for that purpose would provide evidence that is sufficiently
    probative to outweigh its prejudicial effect. It is relevant and probative
    without resort to propensity reasoning. The acts that are the subject matter of
    the evidence are sufficiently similar to be probative of knowledge. In
    possession of stolen property cases, other acts of possession of stolen
    property are a classic use of similar fact evidence on the issue of knowledge.

[13]

After
    making that statement, the trial judge proceeded to summarize the evidence on the
    counts and to describe evidence that linked the Auto Enterprises property to the
    Kucan and Seneca Steel properties. As part of his summary of the evidence, he
    referred to the vehicles that were the subject of Counts 3, 4, 5, 6, 7, 8, 9, 10,
    11, 12, 13, 14, 15 and 16 as having missing Vehicle Identification Numbers (VINs)
    or at least one VIN belonging to a different vehicle.

[14]

In
    his summary of the evidence on the counts, the trial judge dealt with some
    counts individually and grouped other counts together.

[15]

The
    trial judge then provided an analysis of the evidence and an explanation of his
    conclusions. He began by stating that the evidence of the defence witnesses did
    not raise a reasonable doubt on any count. He disbelieved the evidence of the
    appellant and his witnesses that the appellant had withdrawn from the day-to-day
    operations of Auto Enterprises in 2010 (before the time relevant to most of the
    counts), had nothing relevant to do with the Kucan property or the Seneca Steel
    property, and did not know of any stolen property at any location.

[16]

The
    trial judge then identified the question as whether the evidence that he did
    accept proved the guilt of the appellant beyond a reasonable doubt.

[17]

The
    trial judge proceeded to make a number of findings specific to some counts, and
    a number findings drawn from a use of the evidence across counts. These
    included findings that the appellant was running a stolen car and parts
    operation, that [p]rocuring stolen vehicles and procuring wrecks to provide
    false VINs to disguise the stolen vehicles was a key part of the business and
    that the absolute number [of stolen parts] present, among other things, made
    the case that [the appellant] was deliberately dealing in stolen goods. I
    address those findings and the way in which they were used in the Analysis
    portion of these reasons.

[18]

The
    trial judge convicted the appellant on 42 counts. He acquitted the appellant on
    three counts (Counts 3, 4 and 12). On one count, the evidence did not show that
    the stolen vehicle had been on any premises linked to the accused; it was not found
    on the Auto Enterprises, Kucan, or Seneca Steel property by the police. On
    another, the evidence did not show that the vehicle in question was in fact
    stolen or ever on the Auto Enterprises premises. On the third, the trial judge
    was not satisfied that the purchaser of a vehicle with stolen parts been
    deceived by the appellant; the purchaser may have known that the car contained
    stolen parts. The trial judge stayed one count (Count 17).

C.

THE POSITIONS OF THE PARTIES

[19]

The
    appellant, in oral argument but not in his factum, pointed out that the Crown
    had not applied for the use of evidence across counts as similar fact evidence
    the first time the concept appeared was in the trial judges reasons. The
    appellant characterizes this not as an independent ground of appeal, but as providing
    important context for what he says was the trial judges erroneous approach to
    the similar fact evidence issue. The appellant argues that the trial judges single-paragraph
    consideration of why he could use evidence across counts as similar fact
    evidence, and his use of it, contained the following flaws:

(a)
    The idea that the issue of knowledge was one to which similar fact evidence
    should apply was the result of circular reasoning. It assumes the very
    conclusion that the evidence was ostensibly being used for, namely that the
    appellant possessed the items (which includes knowing that they were stolen).
    Without that assumption, the number of stolen items in question could not
    assist on the knowledge issue.

(b)
    The trial judge elided the issue that others were responsible for the presence
    of the stolen property, which was the defence position at trial. He used
    evidence across counts without adverting to its relationship to this issue.

(c)
    There was no meaningful analysis of the probative value and prejudicial effect
    of the similar fact evidence, which is necessary to decide whether similar fact
    evidence can be used across counts.

[20]

The
    Crown conceded on appeal that there had been no request by trial counsel for
    the use of evidence across counts as similar fact evidence. But Crown counsel
    argues that this courts decision in
R. v. T.B.L.
(2003),

173 O.A.C. 159 (C.A.),
    stands for the proposition that, where the defence should have known of the
    possibility of the use of evidence as similar fact evidence, there is no
    prejudice when such use occurs. And she argues that the trial judge did not err
    in treating evidence across counts as admissible similar fact evidence because
    the possession of each stolen vehicle or part was highly probative to whether
    the appellant was running an illegal chop shop business, therefore rebutting
    any innocent explanation for the presence of stolen vehicles or parts on the
    properties. The Crown submits that the trial judge linked the appellant to the
    stolen vehicles and parts in each count, and that in a multi-count, judge-alone
    trial there is a minimal risk of prejudice arising from the use of evidence
    across counts.

[21]

The
    Crown also argues that the trial judges principal conclusions on most counts were
    reached not on the basis of evidence applied across counts, but based on
    evidence relating to those individual counts.

D.

Analysis

(1)

The Relevant Principles Relating to the Use of Evidence Across Counts

[22]

In
    order to explain why, in my view, the trial judges use of evidence across
    counts as similar fact evidence constituted a reversible error, I begin by
    outlining some of the applicable principles.

(a)

The General Rule: Presumptive Inadmissibility

[23]

The
    general rule is that evidence of the accuseds discreditable conduct is inadmissible,
    unless that conduct is the subject-matter of the charge in question: Sidney N.
    Lederman, Alan W. Bryant & Michelle K. Fuerst,
Sopinka, Lederman
    & Bryant: The Law of Evidence in Canada
, 5th
    ed. (Toronto: LexisNexis Canada, 2018), at §11.1. This general rule operates
    both as a pure rule of admissibility and as a rule of restricted admissibility.
    When the proposed evidence relates to extrinsic misconduct  discreditable
    conduct for which the accused is not charged  the rule determines whether that
    evidence will be heard. When the request is to use evidence already admissible
    on one count to prove a separate count, the rule operates as a rule of restricted
    admissibility: the already-admitted evidence can be used only on the count to
    which it relates. In other words, evidence against an accused on one count of
    an indictment may not be used to prove the guilt of the accused on another
    count, unless the counts arise out of the same events: David M. Paciocco &
    Lee Stuesser,
The Law of Evidence
, 7th ed. (Toronto: Irwin Law, 2015),
    at p. 88.
[3]

[24]

The
    general inadmissibility rule will not apply where the evidence of discreditable
    conduct meets the test for similar fact evidence. But, importantly, there are a
    number of steps that must occur, and a number of factors that must be considered,
    before the similar fact evidence test is met and evidence on one count can be applied
    to others or evidence of extrinsic misconduct can be admitted at all.

[25]

These
    steps and factors are critical because similar fact evidence is presumptively
    inadmissible, whether the evidence of similar acts is evidence of other counts
    in the indictment or is evidence of extrinsic misconduct:
R. v. MacCormack
,
    2009 ONCA 72, at para. 48.

(b)

A Crown Request and an Admissibility Inquiry are Required

[26]

There
    are certain consequences to this presumptive inadmissibility. The first is that
    when the Crown wishes that presumptive inadmissibility to be displaced, it bears
    the onus of satisfying the trial judge that, on a balance of probabilities, the
    probative value of the evidence on a particular issue outweighs its prejudicial
    effect in the context of the case, and thus justifies its reception:
MacCormack
,
    at para. 48;
R. v. Handy
, 2002 SCC 56, [2002] 2 S.C.R. 908, at
    para. 55. The second consequence is that, to determine whether the Crown has
    met its onus to admit similar fact evidence, the court is to conduct an
    inquiry, often termed an admissibility inquiry
[4]
,
    focusing on the acts themselves:
MacCormack
, at paras. 52, 57.
[5]

[27]

It
    follows from the existence of an onus on the Crown to displace presumptive inadmissibility,
    and from the very notion of an admissibility inquiry, that a request by the
    Crown for similar fact treatment is a precondition to that treatment being
    given to evidence. The presumption and onus would lose their meaning, and an
    admissibility inquiry informed by the submissions of Crown and defence would
    not be possible, if a Crown request in some form were not made. The
Criminal
    Proceedings Rules for the Superior Court of Justice (Ontario)
,
    S.I./2012-7, for instance, require that an application be made where a party
    seeks to have evidence of similar acts, whether included as other counts or
    not, admitted: rr. 30.01-30.05. And where this court has excused the
    absence of a formal application to admit similar fact evidence, it has done so
    on the basis that there was an informal or implicit Crown request to admit the
    evidence, which was sufficient in the circumstances: see
T.B.L.
and
R. v. Graham
, 2015 ONCA 113, both discussed below
. When
    the Crown attempts to lead extrinsic evidence of similar acts or argues for
    certain uses of evidence across counts, the clear inference from that conduct may
    be that a request is being made for similar fact evidence treatment. When this
    inference is clear, the defence has a meaningful opportunity to respond, and
    the trial judge is in a position to properly assess the Crowns request, the
    lack of a formal application may be excused because no prejudice will have
    occurred. But a request must have been made in some form so as to give the
    defence this opportunity and to lay the groundwork for a proper admissibility
    inquiry.

(c)

An Identification of the Similar Acts and the Purpose for Which Evidence
    is to be Used is Required

[28]

Certain
    aspects of the admissibility inquiry, elaborated below, are also germane to a
    consideration of the trial judges approach here. They pertain in particular to
    the necessity of precisely identifying, at the outset of any consideration of similar
    fact evidence admissibility, what the similar acts are, the issue on which
    evidence of the similar acts is to be used, and the inferences the evidence is
    tendered to support.

[29]

The probative
    value part of the inquiry has two aspects. The first aspect addresses the
    logical
nexus
established between the evidence of similar acts and
    the offence that the evidence is offered to prove:
MacCormack
, at para. 49
. Where the logical nexus
    depends on the similarity of the similar acts to the act charged, the probative
    value of the evidence will increase with the degree of similarity, because the
    probability that the similarity is a result of coincidence will decrease. The
    court must be satisfied that the objective improbability of coincidence has
    been established:
R. v. Arp
, [1998] 3 S.C.R. 339, at para. 48. This
    analysis cannot be done in the abstract, but only on the basis of specifically-identified
    similar acts.

[30]

Buttressing
    the requirement to specifically identify the similar acts is that the
    similarity analysis is conducted taking into account the specifics of the case
    and of the offence to which the evidence is sought to be applied. Factors such
    as proximity in time and place, similarity in detail and circumstances, number
    of occurrences, and distinctive features unifying the occurrences will all be
    considered in determining whether the evidence has the requisite degree of
    similarity to the offence charged under the circumstances:
MacCormack
,
    at para. 53;
Handy
, at para. 82.

[31]

The
    degree of similarity required for admission in a particular case will be
    determined by the issues in the case, the purpose for which the similar fact
    evidence is being tendered, and the other evidence tendered in the case:
Handy
,
    at paras. 76-80. For example, if similar fact evidence is tendered to help
    prove the identity of the person responsible for committing a crime, the court
    will demand a high degree of similarity between the acts and the offence
    charged:
MacCormack
, at para. 50. If similar fact evidence is tendered
    to help prove the accuseds intent, on the other hand, acts that may be less
    similar could still support a sufficiently compelling inference on that issue:
Handy
,
    at para. 80.

[32]

As
    the purpose the proposed similar fact evidence is intended to serve plays an
    important role in the courts admissibility analysis, it must be clearly
    defined as a prerequisite to that analysis:
Handy
, at para. 73. As
    stated by Binnie J. in
Handy
, at para. 82, judges must consider
    the cogency of the proffered similar fact evidence
in
    relation to the inferences sought to be drawn
, as well as the strength
    of the proof of the similar facts themselves (emphasis added). In assessing
    the probative value of the proposed similar fact evidence, it is necessary to
    determine the precise
issue in question
 for which the Crown has sought
    to tender the evidence: at para. 99.

[33]

The
    balance of the considerations in the admissibility inquiry is also premised on the
    similar acts and the purpose for the use of evidence of those acts having been
    precisely identified.

[34]

The
    second aspect of the courts probative value analysis is the linkage inquiry.
    There must be a demonstrated link between the accused and the alleged similar
    acts as a precondition to admissibility:
MacCormack
, at para. 59. There
    must be some evidence that links the accused to the acts:
Arp
, at
    paras. 54, 56.

[35]

In
    the next part of the admissibility inquiry, the court assesses the proposed
    evidences prejudicial effect. It must do so in light of the proposed similar
    acts and the purpose of introducing evidence of them. The defined acts and
    purpose inform the courts consideration of the two types of prejudice that
    evidence of similar acts tends to carry: moral prejudice and reasoning
    prejudice. Moral prejudice refers to the risk that the accused will be stigmatized
    as a bad person and convicted on that basis. Reasoning prejudice includes the
    risk that the trier of fact will be distracted from their proper focus on the
    offence(s) charged, including because they may be confused by evidence of multiple
    incidents or may put more weight than is logically justified on the similar
    fact evidence, and the risk that unwarranted trial time will be consumed:
MacCormack
,
    at para. 55;
R. v. T.B.
, 2009 ONCA 177, 95 O.R. (3d) 21, at
    para. 26. The specific acts, the purpose of introducing evidence of them
    and the inferences sought to be drawn from that evidence are fundamental to
    this assessment.

[36]

For
    the same reasons, specifying the acts and their purpose is also fundamental to the
    final part of the inquiry, in which the court weighs the evidences probative
    value against its prejudicial effect to determine whether the former outweighs
    the latter on a balance of probabilities:
Handy
, at para. 55.

[37]

In
    summary, the admissibility inquiry itself requires the proposed similar acts to
    be clearly identified. It also requires the purpose of using similar acts, that
    is, the issue to which evidence of the acts is to be applied and the inferences
    sought to be drawn from that evidence, to be clearly identified. The analysis
    of probative value (including similarity and linkage) and prejudice takes place
    through that lens.

(d)

The Test Applies in Judge-Alone, Multi-Count Cases

[38]

These
    principles are not affected by the fact that a case is being tried without a
    jury, nor by the fact that in a multi-count situation, the issue is not whether
    evidence will be heard at all, but to what use it will be put. In
MacCormack
,
    Watt J.A. noted that the test for the admissibility of similar fact
    evidence offered to prove identity is the same whether the alleged similar acts
    are extrinsic to counts in the indictment or contained in other counts of the
    same indictment: at para. 56. To be sure, some of the factors in the analysis
    relevant to an assessment of prejudice may have an attenuated influence in
    cases where the similar acts are restricted to other counts in a multi-count
    indictment, especially where the case is tried by a judge sitting alone. In
    such cases, the risks of moral prejudice and reasoning prejudice are significantly
    diminished:
MacCormack
, at paras. 56, 68-69;
T.B.
, at paras.
    26-28, 31. Excluding the similar fact evidence will not prevent the judge from
    hearing it, and the concern that a judge will convict on the basis of the
    accuseds bad character is much less significant than the concern that a jury
    will do so:
T.B.
, at para. 33. Further, the only time added to the
    trial is that needed for the argument on admissibility at the end:
MacCormack
,
    at para. 69.

[39]

Nonetheless,
    even in a judge-alone, multi-count indictment case, the test applies and must
    be met. Even though some of the factors in the test may be attenuated, they are
    still to be considered.

[40]

In
    my view, these comments extend to cases where similar fact evidence is offered
    on issues other than identity. Indeed, this court applied parts of the
Handy
analysis in
T.B.
, a case in which the alleged similar acts were
    contained in other counts of the same indictment and the evidence went to supporting
    the complainants allegations (not to identity).

[41]

I
    now turn to the application of those principles.

(2)

The Trial Judge Erred by Using Similar Fact Evidence Without a Crown Request
    for Such Use

[42]

In
    my view, it was an error for the trial judge in this case to use evidence
    across counts as similar fact evidence without a request of any kind for that
    use having been made by the Crown. As the preceding discussion shows, such
    evidence was presumptively inadmissible and there was an onus on the prosecutor
    to satisfy the trial judge that it could be used across counts. The Crown made
    no request for similar fact treatment in any form and thus did not attempt to meet
    the onus it would have had; the defence had no opportunity to respond.

[43]

The
    fact that the similar fact evidence related to other counts in the indictment and
    the trial was by judge alone  matters that attenuated any prejudice arising
    from the admission of the similar fact evidence  is not determinative when the
    Crown has not asked for similar fact treatment. To hold otherwise would be to
    do away with the presumptive inadmissibility of such evidence and the onus on
    the prosecutor to overcome it, and to replace it with a rule that such evidence
    is admissible in a judge-alone, multi-count case. The law does not permit that
    conclusion:
R. v. Handy
, at para. 55,
MacCormack
, at para. 48,
R. v. Arp
, at para. 40.

[44]

I do
    not agree with the proposition of the Crown on appeal that the use of similar
    fact evidence without any request by the Crown is authorized by this Courts
    decision in
T.B.L.
In
T.B.L.
, a multi-count indictment case,
    the Crown did make a request: it asked for a jury instruction about the use the
    jury could make of evidence on other counts as similar facts at the pre-charge
    conference. The defence contention in that case was that the request should
    have been made before the evidence was led. It was in that context that this court
    held that the defence had not been prejudiced by the timing of the Crowns request.
    The defence should have expected such a request to have been made, and since
    the evidence was of other counts, a separate admissibility hearing when the
    evidence was led had not been required. All that was required was a
    determination by the trial judge at the time of the pre-charge conference that
    it would be appropriate for the jury to consider certain evidence from certain counts
    on others: at paras. 7-8.

[45]

T.B.L.
does not assist the Crown here. This case does not involve an issue of the timing
    of a request by the Crown that the defence should have anticipated, or of any
    prejudice arising from that timing. Here, unlike in
T.B.L.
, no request
    was ever made; the defence had no opportunity to respond to any proposed use of
    evidence across counts as similar fact evidence, as the defence in
T.B.L.
did when it was raised at the pre-charge conference.

[46]

Nor
    is this case like
Graham
. In
Graham
, this court upheld a
    conviction where the trial judge had used extrinsic evidence and count-to-count
    evidence of specific acts without the Crown having sought a formal ruling on
    the use of this evidence. However, the defence at trial did not object to the
    introduction of the extrinsic evidence, and defence counsel had been alerted
    and given the opportunity to respond to the use of evidence across counts
    because the Crown specifically relied on propensity reasoning in closing
    submissions: at para. 32. Despite that opportunity the defence did not object
    to the Crowns reliance on evidence across counts. Although the court stated
    that it would have been better for the trial judge to have held a
voir dire
and heard submissions concerning the admissibility and use of the evidence,
    there had been no procedural unfairness and the similar fact evidence was
    admissible and properly used. The failure of the defence to object when it was
    alerted and given the opportunity to respond was critical to the courts
    decision.

[47]

In
    this case, we have not been pointed to anything that would have alerted the
    defence to the cross-count use the trial judge proposed to make of the
    evidence, nor of anything that would have given the defence an opportunity to
    respond. There cannot have been a meaningful failure to object in such
    circumstances. And, as I explain below, the brief consideration the trial judge
    gave to the issue was flawed.

(3)

The Trial Judge Erred in the Way He Considered and Used Evidence Across
    Counts as Similar Fact Evidence

[48]

I
    agree with the appellant that the absence of a Crown request provides important
    context for a consideration of the trial judges decision to admit similar fact
    evidence. Normally, a decision to admit such evidence is entitled to
    substantial deference:
Handy
, at para. 153. However, the absence of a
    Crown request, and an admissibility analysis made without submissions from the
    parties are, in my view, circumstances that remove the basis for such
    deference.

[49]

The
    trial judges consideration of probative value (namely, similarity and linkage)
    and of prejudice did not have the benefit of a clear articulation by the Crown
    of the exact acts claimed to be similar, the issue on which evidence of those
    similar acts was to be used, and the inferences the evidence was said to
    support. It also did not have the benefit of any submissions by the defence. As
    set out above, both an identification of the acts said to be similar, and a
    clear articulation of the purpose for which the similar fact evidence is to be
    used are central to the admissibility inquiry. They determine and delimit the
    acceptable use to which admissible similar fact evidence may be put.

[50]

The
    trial judge said he was using evidence across counts. The statement is not
    itself clear as to whether he identified all of the evidence on each count as
    probative so as to be useable on every other count, or only certain evidence (for
    example, the existence of a stolen vehicle and/or part in each count). The
    trial judge then stated that he would use similar fact evidence on the issue of
    knowledge, to support the inference that it is less probable that one would not
    know about a large amount of stolen cars and parts on their property than a
    small amount. This suggests that he was referring to the presence of stolen
    vehicles and parts on the three properties as the facts that were similar
    between the counts, in support of a specific inference. But whatever the trial
    judge may have meant to identify as the similar acts, it was neither requested
    by the Crown nor an issue on which the defence had an opportunity to make
    submissions.

[51]

Moreover,
    despite describing the issue and inference for which he intended to use the
    cross-count evidence, the trial judge did not limit his use to that issue
.
In
    my view, the Crowns own description on appeal of the use to which the trial
    judge put the evidence across counts better captures the way it was used. Namely,
    it was used to support an inference that the appellant was engaged in a
    business of dealing in stolen vehicles and parts, which had a certain method of
    operating, including procuring wrecks, removing VINs from them and attaching
    them to stolen vehicles.

[52]

Two problems
    are revealed by the use of the evidence across counts for that purpose. First,
    the similar acts seemingly identified by the trial judge in his admissibility analysis
    were expanded beyond the presence of stolen vehicles and parts referred to in
    the counts to include evidence about the way in which the vehicles or parts in
    various counts appeared, what had been done to them, by whom and for what
    purpose. Second, the trial judge went beyond the issue and inference he stated in
    his admissibility analysis to draw a different inference. The trial judge did
    not indicate how he considered the probative value and prejudice aspects of the
    admissibility inquiry for that expanded set of acts or for that different purpose
    and different inference, let alone how he satisfied himself the test was met. I
    therefore agree with the appellant that the trial judges consideration of the
    elements of the admissibility test was flawed.

[53]

As
    my discussion below will illustrate, these errors, namely the use of evidence
    across counts as similar fact evidence without any request, and the use of
    evidence for a purpose beyond that analysed by the trial judge when he
    considered admissibility, affected the trial judges conclusions on each count
    on which he recorded a conviction.

(4)

There are Insufficient Findings Independent of the Trial Judges Errors
    in his Use of Evidence Across Counts for the Convictions to Stand

[54]

I do
    not accept the Crowns contention that the convictions can stand because there
    were sufficient findings made by the trial judge unrelated to his use of
    similar fact evidence. The trial judges reliance on evidence across counts
    cannot be untangled from his findings made only on evidence given in respect of
    a specific count. This is clear from his statement near the beginning of his
    reasons that he would use evidence across counts, and is buttressed by the
    examples below.

[55]

The
    trial judge reached his conclusions on 34 of the counts together in five
    paragraphs. Those counts dealt with possession of stolen vehicles found on the
    Seneca Steel property, a stolen vehicle and trailer found on the Kucan
    property, and stolen parts found on the Kucan and Auto Enterprises properties. The
    trial judge did not describe how the evidence on any individual count satisfied
    him of the appellants guilt on that count. Rather, he reached his conclusions about
    these counts on the evidence he applied across the counts. He referred not only
    to the sheer quantity of stolen property, but also to how the cross-count
    evidence led him to infer that the appellant ran a stolen car and parts
    business with a particular way of operating. The following statements made in
    those five paragraphs illustrate this:

Given the evidentiary connections, the [appellants] detailed
    knowledge of his own business and the significant number of stolen parts from
    high end vehicles stacked like cordwood throughout the Kucan property I
    conclude that the [appellant] knew about all of the stolen property at [the
    Kucan property]. I am also convinced that he knew about the two vehicles at the
    Seneca Steel property, which are also linked to [the Auto Enterprises property]
    in the evidence, as I have set out

Property was repaired at [the Auto Enterprises]. Legitimate and
    stolen inventory was stored at [Auto Enterprises], with the overflow going to
    the Kucan propertyThe number of parts from high end, recently stolen vehicles
    at [the Kucan property] was strikingThe shop at the Kucan property was in an
    obvious state of disuse. All these nice new cars had to be chopped up at [Auto
    Enterprises]. Everybody must have noticed.

Procuring stolen vehicles and procuring wrecks to provide false
    VINs to disguise the stolen vehicles was a key part of the businessthe
    absolute number [of stolen parts] present here, when taken with the documentary
    evidence found in the office, make the case that [the appellant] was
    deliberately dealing in stolen goods.

[56]

Even
    when the trial judge analysed a count by itself, his analysis cannot be
    divorced from the conclusions he drew from using evidence across counts. Count 1
    related to a stolen truck brought to the Auto Enterprises property, which the
    appellant testified he thought had been brought there to be repaired. It was
    tracked and seized by the police within a day of its arrival at Auto
    Enterprises. The trial judge did refer to certain evidence specific to that
    count, such as a smashed GPS monitor on the truck, which he considered to be an
    obvious indication that it was stolen. But he did not limit himself to that
    sort of evidence. He went on to say that:

This truck needed to be taken to a receiver of stolen goods,
    not a legitimate repair shop. The vehicle needed to be re-VINned not
    repaired...Of course the accused knew that this truck had just been stolen.

[57]

When
    read with the trial judges finding from evidence on other counts that
    procuring stolen vehicles and providing false VINs to disguise them was a key
    part of the appellants business, the import of the above statement is clear. The
    trial judge used his conclusions from evidence across counts in his analysis of
    Count 1 (a count which did not involve a vehicle with a missing or altered
    VIN) to determine that the accused knew the truck was stolen. His statement in
    the course of his analysis on this count, that the circumstantial evidence
    that [the appellant] was deliberately running a stolen car and parts operation
    is compelling, makes that clear.

[58]

I
    reach the same conclusion with respect to the trial judges brief analysis of the
    other counts. He did not only analyse specific events relating to each count,
    but came to a verdict based on the totality of the evidence on all counts. When
    convicting on Count 5, which dealt with a stolen vehicle found on the Auto
    Enterprises property, he said:
as with all aspects of
    Auto Enterprises business
, [the appellant] knew about the stolen
    property (emphasis added).

[59]

When
    convicting on Counts 6, 7, 8, 9 and 11, three of which were stolen property
    counts and two of which were fraud counts, he stated:

When [the appellant] needed some dirty work done,
he often used [a business associate]
...
[the appellant] knew about the stolen parts, or stolen vehicle,
    as the case may

be
...I have no doubt that
    the accused knew about the stolen parts, whoever installed them. [Emphasis
    added.]

[60]

When
    convicting on Count 10, a stolen property charge involving a vehicle at the
    Auto Enterprises property, he stated that [t]he stolen vehicle was in the
    possession of the accused and
again
I have no
    doubt that he knew just where it came from (emphasis added).

[61]

These
    statements, taken together with the trial judges earlier statement that he
    would use evidence across counts, do not support the view that the trial
    judges reasons can be parsed as the Crown contends. His conclusion that the
    appellant was running a stolen car and parts operation with a particular method
    of operation, arrived at by applying evidence across counts, appears to be an important
    part of the foundation for his conclusions on each count.

[62]

The
    fact that the trial judge acquitted the appellant on three counts does not
    undermine this conclusion. He acquitted on one count where there was
    insufficient evidence that the item was stolen. He acquitted on another where
    evidence was lacking that the item was ever on the appellants business
    premises. And he acquitted on one fraud count because he was not satisfied that
    the purchaser of a vehicle with stolen parts had been deceived. These were
    issues unrelated to his use of similar fact evidence.

(5)

The Curative Proviso Cannot be Applied

[63]

The Crown
    also contends that any errors made by the trial judge in his use of similar
    fact evidence can be cured. I do not agree that the curative proviso in s.686
    (1) (b) (iii) of the Code can be invoked in this case. The relevant principles
    were recently set out in
R v. R.V
., 2019 SCC 41. The majority stated,
    at para 85, The curative proviso set out in s. 686(1) (b)(iii) may be applied
    where there is no reasonable possibility that the verdict would have been
    different had the error . . . not been made...Applying the curative proviso is
    appropriate in two circumstances: (i) where the error is harmless or trivial;
    or (ii) where the evidence is so overwhelming that the trier of fact would
    inevitably convict (internal citations omitted).

[64]

In my
    view the error here was neither harmless nor trivial. The trial judge ought to
    have determined each count on the basis of the evidence that was led related to
    that count. Instead he decided each count on the basis of evidence related to
    that count and to 46 other counts. He failed to treat evidence that was
    presumptively inadmissible as such; instead he drew important conclusions from
    it and applied them to each count on which he recorded a conviction. Nor, in my
    view, can we be assured that the similar fact inferences drawn by the trial
    judge would have been available to him had a proper inquiry been undertaken.
    The range of evidence, the number and variation of the counts, and the absence
    of complete argument on the issue prevents us from making that determination.

[65]

Can
    it nonetheless be said that the evidence is so overwhelming that the trier of
    fact would inevitably have convicted? Naturally, in making this determination
    an appeal court must confine itself to the admissible evidence. Since we cannot
    resolve the admissibility of the similar fact evidence inferences, those
    inferences cannot be relied upon in assessing the inevitability of conviction.
    Without those inferences, the Crown cannot demonstrate that the case on each
    count was so overwhelming that the trier of fact would inevitably have
    convicted.

E.

Conclusion

[66]

In
    my view, the trial judges errors in using evidence across counts require the convictions
    to be set aside.

[67]

I
    would allow the appeal, set aside the convictions and direct a new trial.

Released: DP August 9, 2019

B. Zarnett J.A.
I agree. K. Feldman J.A.
I agree. David M. Paciocco J.A.

[1]
He found the disclosure in relation to that charge was insufficient.

[2]

The appellant was sentenced in September 2015 to four years
    imprisonment. He abandoned his sentence appeal.

[3]

Credibility assessments are not subject to this restriction: Paciocco
    & Stuesser, at p. 89.

[4]

I use the term admissibility inquiry to refer broadly to a
    determination of whether evidence of extrinsic discreditable conduct will be
    admitted, or whether already-admitted evidence relating to one count can be
    used to prove another count. Where evidence of extrinsic misconduct is
    involved, the term admissibility inquiry is particularly apt, since the issue
    is not only how the evidence will be used, but also whether it can be heard at
    all. Where the issue is whether the evidence on one count is properly taken
    into account (i.e. is admissible) in relation to another, the inquiry will be
    not necessarily take place at the time the evidence is proffered, but may take
    place later, when the use of the evidence already admitted on one count is
    being considered in relation to another.

[5]
Failing to conduct an admissibility inquiry is an error of law. There may be
    circumstances in which such an error is not fatal on appellate review:
Sopinka,
    Lederman & Bryant
, at § 11 .163, citing
R. v. Graham
, 2015 ONCA
    113, discussed later in these reasons.