R v Brost, 2012 ABQB 696

Court of Queen ’ s Bench of Alberta Citation: R v Brost, 2012 ABQB 696 Date: 20121107 Docket: 120111018U2 Registry: Calgary Between: Her Majesty the Queen Respondent (Crown) - and - Milowe Allen Brost Applicant (Accused) _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice E.A. Hughes _______________________________________________________ I. Introduction [ 1 ] The Applicant, Milowe Allen Brost, seeks a review of the Court of Queen’s Bench order granting him judicial interim release.

Specifically, he argues the condition of this release setting cash bail at $1,000,000 is unreasonable. This application raises questions regarding the system of review for judicial interim release in Alberta, whether cash bail is available to an accused without the consent of the Crown, and what constitutes “reasonable” cash bail in the circumstances. II. Background

[ 2 ] Mr. Brost is charged with one count of Fraud Over $5000 under s. 380 of the Criminal Code , RSC 1985, c C-46 and one count of Conspiracy to Commit Fraud under s. 465 of the Criminal Code . The Crown alleges Mr. Brost defrauded Her Majesty the Queen in Right of Canada, through her agent the Canadian Revenue Agency (“CRA”), of Registered Retirement Savings Plan (“RRSP”) funds. [ 3 ] The Crown’s theory is that Mr. Brost established a scheme by which individuals were induced to de-register their RRSPs - to the disadvantage of the CRA and all Canadian taxpayers - and invest in the opportunities offered by Mr.

Brost and the others by claiming that these investments were RRSP eligible when, in fact, they were not (an “RRSP strip scheme”). [ 4 ] Originally Mr. Brost, Steven Kendall, Christopher Houston, and Henry Weis (since deceased) were co-accused on the same Information. Mr. Brost was severed from that Information when he was unable to retain new counsel who was available for the scheduled preliminary inquiry with the other two accused. It is the Crown’s stated intention to rejoin these three accused before proceeding to trial in the Court of Queen’s Bench. Mr. Kendall and Mr.

Houston are on judicial interim release with conditions. [ 5 ] Mr. Brost was detained on these charges at his bail hearing in the Provincial Court of Alberta on January 5, 2011. On April 5, 2012, a Reviewing Judge of this Court heard Mr. Brost’s application under s. 520 of the Criminal Code to review the Provincial Court order of detention. The Reviewing Judge found it was not necessary to detain Mr. Brost and ordered Mr. Brost released on $1,000,000 cash bail with conditions. To date, Mr. Brost has been unable to post that amount of cash bail, and he remains in custody. [ 6 ] Mr.

Brost is also the subject of two other criminal proceedings arising from the same facts: an alleged fraud on investors and theft of investor funds prosecuted by the Provincial Crown, and a Federal Prosecution for filing false tax returns and tax evasion. He was released on a $100,000 surety on the fraud and theft charges, and a $10,000 surety on the tax offences. III.

Issues [ 7 ] Three issues arise from this application: 1) What is the appropriate system of review of orders for judicial interim release in Alberta? 2) May an accused person be released on cash bail without the consent of the Crown? 3) What constitutes reasonable bail in the circumstances of this case? [ 8 ] I find a judge may review the bail decision of another judge of the same court. I also find it is not necessary to decide if, an accused may be released on cash bail without the consent of the Crown, because the Crown consented to Mr. Brost’s release on cash bail.

In addition, I find $1,000,000 cash bail is not reasonable in this case and vary the amount of cash bail from $1,000,000 to $1000 per count, with all other conditions to remain the same. My reasons follow. Alberta ’s System of Bail Review [ 9 ]

Section 520 of the Criminal Code allows an accused, not charged with a s. 469 offence, to apply for review of his or her bail to the Court of Queen’s Bench of Alberta. The relevant provisions read as follows:

(1) If a justice, or a judge of the Nunavut Court of Justice, makes an order under subsection 515(2), (5), (6), (7), (8) or (12) ormakes or vacates any order under paragraph 523(2)(b), the accused may, at any time before the trial of the charge, apply to a judge for areview of the order. ...

(7) On the hearing of an application under this section, the judge may consider (

a) the transcript, if any, of the proceedings heard by the justice and by any judge who previously reviewed the order made by thejustice, (

b) the exhibits, if any, filed in the proceedings before the justice, and (

c) such additional evidence or exhibits as may be tendered by the accused or the prosecutor, and shall either (

d) dismiss the application, or (

e) if the accused shows cause, allow the application, vacate the order previously made by the justice and make any other order providedfor in

section 515 that he considers is warranted.

(8) Where an application under this

section or

section 521 has been heard, a further or other application under this

section or

section 521shall not be made with respect to that same accused, except with leave of a judge, prior to the expiration of thirty days from the date ofthe decision of the judge who heard the previous application. [10]

Section 521 is a parallel provision which allows for the Crown to make similar applications. [11] Under s. 493 a “judge” in Alberta is defined as a judge of the superior court of criminal jurisdiction. Under s. 2 of theCriminal Code, a “superior court of criminal jurisdiction” in Alberta includes both the Court of Appeal and the Court of Queen’s Bench.Also under s. 2, a “justice” refers to justices of the peace and provincial court judges. [12] On its face, the

section contemplates that an initial bail hearing, conducted by a justice of the peace or a provincial courtjudge, may be reviewed by the Court of Queen’s Bench. While s. 520(8) makes it clear that some degree of ongoing review beyond thisfirst review is permitted, the exact nature of that further review is unclear. This ambiguity has produced at least three different lines ofjudicial reasoning regarding the jurisdiction of a superior court judge to further review a bail review decision of another judge of thesame court.

Authority on this matter is doomed to be divided by province until Parliament provides clarity through amendment, or theSupreme Court of Canada provides guidance on appeal. [13] The first line of reasoning finds s. 520(8) allows a reviewing judge to correct errors of law in the prior bail review, and/or varythe bail in light of a change in circumstances since the last bail review. This

interpretation is founded upon s. 520(7) which allows ajudge hearing a review to consider the transcript of the original bail hearing as well as the transcript of any other prior review. Thisliberal approach has been adopted in Alberta, Ontario, and Manitoba: R v Chan, 2000 ABCA 214, [2001] 261 AR 351; R v Saracino(1989), (ON SC), 47 CCC (3d) 185 (Ont H Ct J); R v Semenick, (MB CA), [1985] 2 WWR 132(Man CA).

[ 14 ] A contrasting

interpretation finds the reference to “vacating the order of a justice” in s. 520(7)(

e) determinative. The word “justice” in this subsection permits that only the initial bail decision, made by the lower court, may be varied by a superior court judge. Once the original bail decision has been varied by an order of a judge, that order becomes immune from review. Saskatchewan has adopted this restrictive approach: R v Smith , 2003 SKCA 8 , [2003] 9 CR (6th) 12. [ 15 ] A third, mixed approach suggests errors of law may be reviewed by a Court of Appeal.

Otherwise, a further review may only be considered after a previous review has been dismissed and a material change in circumstances has been established: see R v Bassett , 2010 BCSC 875 . [ 16 ] I do not read these lines of authority as building on or clarifying each other. Rather, they stand in direct contradiction. The law regarding this question, at least in Alberta, was settled by our Court of Appeal in Chan . There, Berger J.A. explicitly rejected a restrictive

interpretation of s. 520 and followed the liberal approach. [ 17 ] The Crown submits that the liberal approach is incomplete because it fails to consider the precise language of s. 520(7)(e). In the Crown’s view, once the clear presence of the word “justice” is accepted, all ambiguity in the provision is resolved. It was argued that I could distinguish my reasons from the Alberta Court of Appeal authority of Chan by simply considering the language of s. 520(7)(

e) where Berger J.A. had failed to do so. [ 18 ] With respect, the liberal approach does consider s. 520(7)(e). In Saracino , Doherty J. (as he then was) considered ss. 520 and 521 in the wider context of

Part XVI of the Criminal Code . He determined that these provisions fit into a scheme intended for the quick determination of whether or not an accused should be detained in custody pending his trial, and for the reconsideration of that question at various stages of the criminal process. He considered the parliamentary intention that the review process should be ongoing. Although he did not refer specifically to s. 520(7)(e), he held that s. 520(1) must be read in conjunction with ss. 520(7) and 520(8) in order to be properly understood.

He also specifically acknowledged the logic and consequences of the restrictive approach, but chose to not adopt this approach. [ 19 ] Doherty J. justified this

interpretation on policy grounds in his concluding remarks in Saracino at 191: There is no good policy reason for insulating a decision of a judge from review when she makes an order changing the bail status of an accused, while at the same time providing for review where her order maintains the status quo . Either order can be in error, and either order can have serious ramifications for an accused and for the community.

A right of review (subject to the requirement of leave if the earlier review was held within 30 days) is more consistent with our bail system which emphasizes flexibility and the ready availability of the means to reassess or review an accused’s bail status while the charges against him are working their way through our system of criminal justice. [ 20 ] In discussing who should have the authority to conduct these reviews, Doherty J. relied on the conclusion of Monnin C.J.M. at 136 of Semenic k: There is absolutely nothing wrong with one justice of the Court of Queen’s Bench reviewing an order either granting review or refusing interim bail release made by one of his colleagues either after the 30 day waiting period or earlier upon leave granted by him for good reasons. [ 21 ] This review is not to be conducted without boundaries.

Doherty J. qualified his earlier remarks in Saracino by adding at 191- 192: Having held that I have jurisdiction, I hasten to add two caveats. First, where the subsequent review application is based on an alleged substantial change in circumstances, then judicial comity dictates that where possible, the judge that heard the initial review application should hear the second review application as well.

Secondly, where there is no suggestion of a material change in circumstances, then the judge conducting the second review should not interfere with the existing order except where it is established that the judge conducting the first review made an error in principle in his application of the relevant provisions of the Code , which materially affected the outcome of the initial application.

[ 22 ] Mr. Brost has not alleged a change in circumstances in his application, nor the Crown in its response.

I find it unnecessary to comment further on the issue of whether or not judicial comity requires the same judge who conducted the previous review to conduct a subsequent review which alleges a material change in circumstances. [ 23 ] Alberta authorities have accepted and followed Sarcino and Chan . [ 24 ] For the reasons cited by Doherty J. in Sarcino , and adopted by Berger J.A. in Chan , I accept that a superior court judge may sit in review of a prior decision of a sister or brother superior court judge where an error in law is alleged.

Crown counsel was unable to provide any statutory provision which compels such a review to be heard by the Court of Appeal beyond the fact that a “superior court of criminal jurisdiction” includes the Court of Appeal. Bail review of a non-section 469 offences was intended to be an expeditious, ongoing, and routine process. In Alberta, this is properly conducted at the Queen’s Bench level.

This position stands in contrast to the situation for the review of bail of an accused charged with a s. 469 offence, which is subject to the specific statutory scheme for appeal to the Court of Appeal under s. 680. [ 25 ] I am mindful that lateral review is unusual in our hierarchically structured system of justice. However, I cannot conclude it was Parliament’s intention to immunize all bail reviews from scrutiny, given an error in law or a material change in circumstances, as proposed by the most restrictive approach.

I am equally unable to conclude it was Parliament’s intention to complicate the further review of previous bail reviews for errors in law by requiring an appeal to the Court of Appeal in the case of non-section 469 offences. [ 26 ] Accordingly, I conclude that I can and should review the decision given in Mr. Brost’s previous bail review for an alleged error in law. Cash Bail [ 27 ] Following the review hearing before me, the Crown forwarded to defence counsel and the Court cases and a

section of the text, The Law of Bail in Canada, (looseleaf), 3d ed, 2010, Gary T. Trotter, (Carswell: Toronto) which discuss whether cash bail is available to an accused without the consent of the Crown. [ 28 ] The relevant sections of the Criminal Code this issue are ss. 515(2) (

d) and (

e) which provide: ... (

d) with the consent of the prosecutor , on his entering into a recognizance before the justice, without sureties, in such amount and with such conditions, if any, as the justice directs and on his depositing with the justice such sum of money or other valuable security as the justice directs; or (

e) if the accused is not ordinarily resident in the province in which the accused is in custody or does not ordinarily reside within two hundred kilometres of the place in which he is in custody , on his entering into a recognizance before the justice with or without sureties in such amount and with such conditions, if any, as the justice directs, and on his depositing with the justice such sum of money or other valuable security as the justice directs. [Emphasis added] [ 29 ] The Crown observed in their written submissions “[s]ection 515(2)(

e) of the Criminal Code limits the application of cash bail, with or without sureties, in the absence of Crown consent, to those who are ordinarily resident more than two hundred km from the place where they are being detained....Section 515(2)(

d) allows the imposition of cash bail, without sureties, where the Prosecutor consents .” I agree with the Crown’s reading of these two subsections. [Emphasis added] [ 30 ] At the first review hearing, the Crown was not asked if it consented to cash bail. The Crown advised me they do consent to

Mr. Brost’s release on $1,000,000 cash bail. I infer this consent includes all reasonable cash bail. [31] Justice Trotter in his above noted text observes that our current bail provisions were enacted to dispense with the need for anaccused to deposit money in order to gain his or her release. [32] However, in Alberta cash bail is commonly ordered without the Crown advising whether or not they consent. [33] Trotter J. discusses this issue and the state of the law at 6-13 - 6-15 as follows: Melo (ON SC), [1996, 49 CR (4th) 184 (Ont Ct J( Gen Div))]also attacked the stipulation in s. 515(2)(

d) that requiresthe Crown to provide its consent before a cash deposit can stand in the stead of a surety. This requirement is peculiar. It is unclear whyParliament attached this condition to the availability of cash deposits in this paragraph. The availability of this form of release shouldremain solely within the discretion of the justice or judge considering release. Contrast the situation under s. 679(5), in which there is nolimitation on combining a surety with a deposit and no requirement of the Crown’s consent.

The reviewing judge in Melo found that theconstitutional argument respecting the necessity of crown consent “has merit in some circumstances.” However, it was unnecessary toresolve the issue as it was ultimately determined that Melo ought to be released in a manner that did not require a deposit. The issue was addressed again in R. v. Saunders (2001). Facing charges relating to a home invasion robbery, the accused was orderedreleased on a recognizance with various conditions. He was unable to meet the conditions of release and remained in custody.

In themeantime, the Crown brought a review under s. 521 of the Code, arguing that the accused should be detained. The accused argued thathe should be released on a cash bail because he was unable to find a surety. However, the Crown refused to consent to a cash deposit.This gave rise to the issue of whether s. 515(2)(

d) was unconstitutional. In a thorough judgment, one that contemplated the availability of cash bail under s. 515(2)(

e) in relation to accused persons detained farfrom their homes, McKinnon J. Held that the provision violated s.11(

e) of the Charter: I am unable to accept the Crown’s position that the words in issue serve any proper judicial function. It seems an anomaly to givecomplete judicial interim release authority to a justice from whom an appeal can be taken, but to hive off one aspect for the solediscretion of the prosecutor from which no appeal can be taken. It is my view that the words, “with the consent of the prosecutor” contained in sec. 515(2)(

d) offend sec. 11(

e) in that they permit adenial of reasonable bail without just cause. Accordingly I direct that s. 515(2)(

d) be read down to exclude those words. This issue arose again in R. v. Folkes (2007). The accused was released on surety bail with the further requirement of a cash deposit. TheCrown commenced a review of this decision, arguing that the order was not authorized by either ss. 515(2)(

d) or (

e) of the Code. Thejudge at first instance concluded that pursuant to s. 515(2)(d), with the Crown’s consent, a judge may order release on a cash deposit, butwithout a surety; without the Crown’s consent, a judge may order release on the basis of a surety and a cash deposit. In a thoughtfuljudgment reviewing this decision, Marceau J. disagreed and held: With respect, the jurisprudence and the Charter do not support this

interpretation. Under s. 515(2)(

d) a Court can order an accused’srelease on the basis of a cash deposit alone. There is no authority under the

section for a Court to order release based on sureties and acash deposit either with or without prosecutorial consent. Marceau J. agreed with the proposition that the

section was put in place to benefit an accused person who had no resort to sureties. As Marcequ J. observed, the issue in the case was not resolved by resort to the decision in Saunders because that case involved thequestion of whether a cash deposit could be ordered instead of a surety, not a cash deposit with a surety. The solution was found in a anadjustment to s.515(2)(

e) by removing the geographical restrictions on ordering release with a surety and a cash deposit. [Footnotesomitted]

[34] As the Crown consented to cash bail, it was not necessary for me to ask counsel to address the constitutionality of s. 515(2)(d). “Reasonable” Cash Bail [35]

Section 11(

e) of the Canadian Charter of Rights and Freedoms,

Part I of the Constitution Act, 1982, being

Schedule B to theCanada Act 1982 (UK), 1982, c 11 [the “Charter”] reads: 11. Any person charged with an offence has the right ... (

e) not to be denied reasonable bail without just cause; [36] The Supreme Court of Canada first defined the scope of protection offered by s. 11(

e) in R v Pearson, (SCC),[1992] 3 SCR 665, [1993] 17 CR (4th) 1. Lamer C.J., speaking for the majority, summarized the fundamental criminal law principles at682: The presumption of innocence has been described as the “golden thread” woven throughout the web of criminal law (see Woolmington v.Director of Public Prosecutions, [1935] A.C. 462 (H.L.), at p. 481). It is also the common thread linking the various issues in this appeal.This appeal examines the validity of s. 515(6)(

d) of the Criminal Code under ss. 7, 9, 11(

d) and 11(

e) of the Charter. Each of theseCharter issues is linked by a single concept, namely the presumption of innocence. [37] The Chief Justice went on to consider the general guarantee of liberty under s. 7 of the Charter as being given specificmeaning by provisions, such as s. 11(e), and elaborated at 688: Viewed in this light, ss. 11(

d) and 11(

e) are parallel rights.

Section 11(

e) entrenches the effect of the presumption of innocence at the bailstage of the criminal process.

Section 11(

d) does the same at the trial stage. Sections 11(

d) and 11(

e) define the procedural content of thepresumption of innocence at the bail and trial stages of the criminal process, and constitute both the extent and the limit of thatpresumption at those stages. [38] In determining the substantive content of s. 11(

e) Lamer C.J. added at 689: “Reasonable bail” refers to the terms of the bail. Thus the quantum of bail and the restrictions imposed on the accused’s liberty while onbail must be “reasonable”. [39] The Chief Justice stated at 691: Most of the current bail provisions in the Criminal Code were enacted in the Bail Reform Act, S.C. 1970-71-72, c. 37. The Bail ReformAct established a basic entitlement to bail. Bail must be granted unless pre-trial detention is justified by the prosecution. In R. v. Bray(1983), (ON CA), 2 C.C.C. (3d) 325 (Ont. C.A.), at p. 328, Martin J.A. described the Bail Reform Act as “a liberaland enlightened system of pre-trial release”. In my view, s. 11(

e) transforms the basic entitlement of this liberal and enlightened systeminto a constitutional right.

Section 11(

e) creates a

basic entitlement to be granted reasonable bail unless there is just cause to do otherwise. [40] The principle that bail should not be set so high as to amount to a detention order has become a constitutional guarantee: R vSaunter, 2006 ABQB 808; relying on the principle as established in R v Garrington, (ON SC), [1973] 1 OR 370, 9CCC (2d) 472 (Ont H Ct J). This guarantee involves a positive obligation on the part of the justice or judge setting bail to make inquiriesinto the ability of the accused to pay.

In Saunter, Veit J. stated at para 17: The effect of not inquiring into whether an accused can post a specific amount of bail is equivalent to deliberately setting cash bail in anamount that the accused cannot raise. In each situation, the quantum of cash bail is not, as required, “reasonable”. In this context, it mustbe observed that Alberta accused do not have access to bail services providers - bail bondsman; the amount of bail will only be“reasonable” if it takes into account the accused’s personal financial circumstances. [41] Mr.

Brost alleges two errors in principle were made during his bail review hearing: basing the quantum of cash bail on theamount involved in the offence and improperly assuming Mr. Brost’s ability to pay $1,000,000 cash bail. [42] Several submissions were made in reply. For example, Crown counsel noted the Reviewing Judge considered the gravity ofthe offences and the risk that Mr. Brost might flee Canada in setting the quantum of cash bail. Counsel also offered several instances ofthe Reviewing Judge making inquiries into the accused’s ability to pay.

The Crown provided a document dated May 2, 2005 that listedextensive assets allegedly held by Mr. Brost in Canada, the USA and offshore. [43] I have no difficulty accepting that the Reviewing Judge inquired into Mr. Brost’s ability to pay, and am deferential to theassessment of the appropriateness of judicial interim release and cash bail as a condition of that release. I am not inclined to assume orinfer that the Reviewing Judge deliberately set the amount of cash bail so high as to amount to a detention order. [44] However, I find the assumption upon which Mr. Brost’s ability to pay was based, to be in error.

In Particular, I find thefollowing comment made by the Reviewing Judge to be troubling: It is up to Mr. Brost whether he gets out or not. I don’t like using this expression but I think it’s most appropriate, I didn’t fall off theturnip truck yesterday either. You don’t engage in these kinds of activities without there being a coffee can somewhere. [45] To date, the Crown has not located any assets listed in the May 2, 2005 document in Canada, the United States, or overseas.Mr. Brost’s house in Chestermere was foreclosed.

While it was suggested that some of the money perpetrated by fraud went into thepurchase of the home of one of Mr. Brost’s children, this asset has not been seized. No evidence was offered to suggest that Mr. Brost,who is on Legal Aid, lied to Legal Aid about his impecunious status. On the whole, little evidence of Mr. Brost’s current financial statuswas offered at all. [46] The allegation that Mr. Brost has money tucked away is one of the very issues for which he has been charged. Mr.

Brost’sguilt or innocence has not yet been determined in any of the three proceedings against him arising from this factual matrix. Thisdetermination is properly the function of a trial, not a bail hearing. To presume Mr. Brost still possesses large assets overseas in the faceof his declared impecunious status and the foreclosure on his Chestermere property is to presume him guilty of the charges he faces. Noamount of cash bail based on a presumption of guilt can be reasonable under s. 11(e). [47] Having found a reversible error in the presumption of Mr.

Brost’s guilt, I find it unnecessary to address the allegation that theReviewing Judge inappropriately based the quantum of cash bail on the amount involved in the charges. Disposition [48] For the reasons given above, I vary the previous order setting cash bail at $1,000,000 and I set Mr. Brost’s bail at $1000 percount. This is an amount counsel for Mr. Brost submitted Mr. Brost and/or his family can raise. All other release conditions set by the

Reviewing Judge continue. Heard September 28, 2012 Dated at the City of Calgary, Alberta this 2 nd day of November, 2012. E.A. Hughes J.C.Q.B.A. Appearances: Tyler Lord of the Public Prosecution Service of Canada for the Crown Shamsher Kothari, Barrister & Solicitor for the Accused