R v Schauer, 2019 ABQB 742

Court of Queen’s Bench of Alberta Citation: R v Schauer, 2019 ABQB 742 Date: Docket: 170637946Q1 Registry: Edmonton Between: Her Majesty the Queen - and - Richard Douglas Schauer and Shannon Leigh Simpson Accused Corrected judgment: A corrigendum was issued on September 24, 2019; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Donald Lee _______________________________________________________ Table of Contents Inroduction . 2

Facts . 3 Trial Fundamentals . 6 My WD Analysis With Respect to Counts 2 to 9 . 8 My WD Analysis With Respect to Count 1 . 10 Has the Crown Proven Fraud and Forgery: Counts 2 to 9 Beyond a Reasonable Doubt? . 10 Forgery, Section 366(1)(a) 10 The Essential Elements of Forgery, Section 366(1)(a) 11 Analysis with respect to the Forgery Count 3 and Counts 5 to 9 . 13 i. That the accused made a false document 13 ii. That the accused knew the document was false when he/she made it 13 iii. That the accused intended that the document be considered genuine . 13 iv.

That the accused intended that someone would be prejudiced by treating the document as genuine 14 Fraud, Section 380(1)(a) 14 Essential Elements of Fraud, Section 380(1)(a) 14 Analysis with respect to Fraud, Section 380(1) and Counts 2 and 4 . 17 i. That the accused deprived Amnor of something of value . 17 ii. That the accused’s deceit, falsehood and other fraudulent means caused the deprivation . 17 iii. That the accused intended to defraud Amnor 18 iv.

That the value of the property exceeded $5,000 . 18 Fraud and Count 1 Analysis . 18 The Accused Acted with a Common Purpose/Common Intention – Section 21(2) of the Criminal Code 22 Conclusion Count One . 24 Conclusion – Counts 2 to 9 . 26 Inroduction [ 1 ] The two co-Accused are charged pursuant to the following nine Count Indictment: 1.

That they, between the 6 th day of November, 2016, and the 3 rd day of February, 2017, both dates inclusive, at or near Edmonton, Alberta, did be deceit, falsehood or other fraudulent means, unlawfully defraud Amnor Group Inc of property, money, valuable security or a service, to wit: welding equipment and shop supplies, of a value exceeding $5,000, contrary to section 380(1) (

a) of the Criminal Code of Canada . 2. That they, on or about the 25 th day of November, 2016, at or near Edmonton, Alberta, did be deceit, falsehood or other fraudulent means, unlawfully defraud Amnor Group Inc of property, money, valuable security or a service, to wit: monies, of a value exceeding $5,000 contrary to section 380(1) (

a) of the Criminal Code of Canada . 3. That they, on or about the 25 th day of November, 2016, at or near Edmonton, Alberta, did knowing that a document, to wit: an invoice, was forged, unlawfully use, deal with or act upon the said document as if it were genuine, contrary to section 368(1) (

a) of the Criminal Code of Canada . 4. That they, between the 12 th day of December, 2016, at or near Edmonton, Alberta, did be deceit, falsehood or other fraudulent means, unlawfully defraud Amnor Group Inc of property, money, valuable security or a service, to wit: monies, of a value exceeding $5,000, contrary to section 380(1) (

a) of the Criminal Code of Canada . 5. That they, on or about the 12 th day of December, 2016, at or near Edmonton, Alberta, did knowing that a document, to wit: an invoice, was forged, unlawfully use, deal with or act upon the said document as if it were genuine, contrary to section 368(1) (

a) of the Criminal Code of Canada .

6. That they, on or about the 15 th day of March, 2017, at or near Edmonton, Alberta, did knowing that a document, to wit: an invoice, was forged, unlawfully use, deal with or act upon the said document as if it were genuine, contrary to section 368(1) (

a) of the Criminal Code of Canada . 7. That they, on or about the 15 th day of March, 2017, at or near Edmonton, Alberta, did knowing that a document, to wit: an invoice, was forged, unlawfully use, deal with or act upon the said document as if it were genuine, contrary to section 368(1) (

a) of the Criminal Code of Canada . 8. That they, on or about the 15 th day of March, 2017, at or near Edmonton, Alberta, did knowing that a document, to wit: an invoice, was forged, unlawfully use, deal with or act upon the said document as if it were genuine, contrary to section 368(1) (

a) of the Criminal Code of Canada . 9. That they, on or about the 15 th day of March, 2017, at or near Edmonton, Alberta, did knowing that a document, to wit: an invoice, was forged, unlawfully use, deal with or act upon the said document as if it were genuine, contrary to section 368(1) (

a) of the Criminal Code of Canada . [ 2 ] There are essentially two different sets of charges in this matter. The first set are fraud and forgery charges wherein Amnor Group Inc (“Amnor”) is allegedly unlawfully defrauded by the Accused as a result of forged invoices issued with respect to an Edmonton restaurant project (Counts 2 to 9). The remaining Count 1 involves alleged fraud by the Accused again against Amnor involving various items of welding equipment and shop supplies.

Facts [ 3 ] Amnor is an Edmonton corporation with assets of approximately $50 to $60 million dollars, encumbered by debts of approximately 20 to 30 million dollars. The principal owner of Amnor is Harry Kaur (“Kaur”), who decided to start up a small steel fabricating company named 3D Steel Ltd (“3D”). 3D had approximately six employees in total, and it was never profitable. [ 4 ] In October 2015, the Accused Richard Douglas Schauer (“Schauer”), was hired as a quality control manager by Amnor’s owner Kaur, in part because Kaur felt he needed some quality and financial control measures put in place for 3D.

Kaur was obviously right about the need for quality and financial controls because 3D’s financial controls were weak. [ 5 ] Schauer’s resume revealed a lengthy history as a production and operations manager with companies in fields related to 3D. His most recent job experience from 2013 until the time he was hired by Kaur was with Endeavor Steel Ltd in Edmonton, Alberta as a manager of production and field installation.

In addition to his management experience, Schauer has considerable fabricating ability in that he is also a Journeyman welder. [ 6 ] Schauer was hired to work as the quality control and continuous improvement manager of Amnor on essentially a handshake deal between he and Kaur at approximately a starting salary of $120,000 a year, with four weeks of paid vacation each year following a 90-day probationary period.

Schauer’s only direct supervisor in Amnor at the time he was hired was general manager Jago Powell (“Jago”). [ 7 ] Jago resigned his position in the Spring of 2016 and Schauer was promoted to be the general manager. Jago left in part because Amnor had hired Schauer’s common-law spouse, the co-Accused Shannon Leigh Simpson (“Simpson”), as the marketing and project manager in April 2016.

Together Schauer and Simpson, who had been together approximately since 2013, were essentially the sole day-to-day management group of 3D at all material times in this matter. 3D only had six employees including welder Eddie Arsenault (“Arsenault”) and his son. Arsenault testified in this trial and later went to work with the Accused at IDC in January 2017.

There were also a handful of employees at Amnor who worked with 3D, two of whom testified – Vic Thind, [Kaur’s first cousin], and Amnor’s Vice President Shelley Vos. [ 8 ] 3D employees used 3D purchase orders to buy welding equipment and supplies from suppliers. Schauer and Simpson were subject to purchase amount limits on these purchase orders according to Kaur of $250, according to Vic Thind of $500, and according to Shelley Vos of $1000.

Any 3D purchases over these amounts by Schauer and Simpson had to be personally approved by Kaur. [ 9 ] Kaur did lend money to Arsenault on one occasion, and did allow employees to borrow items for their personal projects on occasion. However, Kaur testified that he never lent money, supplies, or equipment to any 3D employee for any outside commercial purpose, and requested full disclosure by the employees before lending out anything for their personal use. [ 10 ] Both Accused had worked with a company called Bonn Construction Ltd (“Bonn”) on a previous restaurant project “Joey” a few years earlier.

Schauer and Simpson were familiar with the owner of Bonn, Roy Bonn, and had previous business interactions with Bonn’s operation and field manager, Jason McDonald (“McDonald”). [ 11 ] On July 18, 2016, largely as a result of these previous interactions with co-Accused, 3D gave Bonn their “Proposal” [Exhibit Book Tab 6] for the “Local Public Eatery Jasper” addition and renovation (“the Local project”). On August 8, 2016, 3D’s Proposal was resubmitted [Tab 7]. [ 12 ] Both of these Proposals contained details and particulars with respect to 3D’s “Offer” as they were described in the Proposal.

It was stated that both of 3D’s Offers were valid for no longer than 30 days and were subject to adjustment with notification. Both 3D Offers were “valid for 30 days, and shall be an integral part of the subcontract agreement”. A “Note” also accompanied both 3D Proposals that read “should our price offer be accepted, all terms and conditions noted above are to be incorporated into the contract or purchases order to be issued”. [ 13 ] Bonn then issued a purchase order dated August 30, 2016 [Tab 8], purchasing from 3D the supply of labour and materials as

per the August 8, 2016 Proposal in the amount of $59,475 plus GST. An e-mail was sent by McDonald to Simpson and Schauer attaching the purchase order, and requesting an ETA [estimated time of arrival] for shop drawings and samples [Tab 9]. [ 14 ] During the months of September, October and November 2016, the Local project was seriously behind

schedule and the shop drawings were not produced by Schauer and Simpson on a timely basis until the end of October. No work could be done without the shop drawings essentially, according to McDonald. Schauer and Simpson also took an unexpected holiday in December, so that McDonald was working days and evenings, 7 days a week virtually throughout this period on the Local project, which appeared to be in significant jeopardy because of Schauer and Simpson’s inability to do the work 3D had agreed to perform for Bonn.

McDonald had to complete the Local project by the end of December. [ 15 ] McDonald blamed Schauer and Simpson personally for the problem because he only dealt with them. He was only peripherally aware of Kaur’s existence as the owner of 3D.

McDonald resented Kaur for not even speaking to him or to his owner Ray Bonn about the delays, but otherwise looked to Schauer and Simpson to finish the Local project as agreed upon with 3D. [ 16 ] At some unknown point during this period of considerable frustration and consternation, McDonald recalls being told by one or both of the Accused that 3D was not able to complete the Local project because of understaffing and overabundance of work, and that Schauer and Simpson would complete the Local project on behalf of IDC, also known as Isle Douglas Consulting Industries Ltd (“IDC”).

Interestingly, IDC was not actually incorporated until February 23, 2017, even though it was mentioned to McDonald, and allegedly to Roy Bonn in late October 2016. [ 17 ] In his evidence, Schauer testified that he had spoken to the owner of Bonn, Roy Bonn about IDC, stating that Roy Bonn had approved of this switch. Schauer’s evidence was that Roy Bonn approved the switch because he said in profane terms that he did not care who completed the Local project, he just wanted it completed. Schauer’s counsel acknowledges Roy Bonn’s alleged response to Schauer was not introduced for the truth of its contents.

Roy Bonn did not testify in this trial. Also McDonald was never asked to actually approve the switch from 3D to IDC. McDonald does not even appear to have ever been aware of the conversation between Schauer and his boss, Roy Bonn. No replacement Purchase order was ever issued by Bonn to IDC.

Most importantly, it is undisputed that Kaur and 3D were never told of the switch. [ 18 ] In any event, IDC, the company that was completely owned and operated by Schauer and Simpson and which was not registered until February 23, 2017, issued two invoices to Bonn on November 25 and December 12, 2016 in the sums of $28,101.94 and $16,336.69 respectively. These invoices were issued by Simpson but were approved beforehand by Schauer. McDonald approved payment by Bonn.

They were actually paid in the normal course by Bonn to IDC in January 2017 [see Tab 20], and in Feb 2017 [see Tab 28] minus a $6,575 deduction that came as a result of a January 17, 2017 conversation/meeting between McDonald and Schauer. [ 19 ] McDonald testified that he did not notice that the invoices to Bonn were issued by IDC, although they clearly were, and there was even a notation on both invoices that Schauer or Simpson could be called at IDC if there were any questions regarding them at their direct phone lines, and their personal emails appeared.

However, McDonald never questioned the two invoices - ostensibly because he did not notice that IDC had issued them, and Schauer and Simpson’s names and contact information appeared on them; and because he believed that both invoices should be paid given the work that had been done on the project to that date, less the $6,575 deduction to the second invoice decided on a month after it was issued. [ 20 ] These two invoices are the subject of Counts 2, 3, 4, and 5 in the Indictment. Counts 2 and 4 allege fraud contrary to s 380 (1) (

a) of the Criminal Code ; and Counts 3 and 5 allege that the two invoices were forgeries contrary to s 368 (1)(

a) of the Criminal Code . [ 21 ] Kaur, the principal owner of Amnor, was never made aware of Schauer’s alleged discussion with Roy Bonn, nor was he made aware of Simpson and Schauer’s problems in their working relationship with McDonald on the Local project. Kaur first became aware of the November 25 and December 12, 2016 invoices when he went to try to collect the monies he believed was still owing to 3D by Bonn.

Kaur was told in January that Bonn had already paid 3D, following which Kaur then went to the police in February 2017 to complain about Schauer and Simpson. [ 22 ] Schauer had been summarily dismissed in November 2016 by Kaur, and Simpson abruptly resigned without notice because of cancer at the beginning of February 2017.

Both remained around 3D for a short period of time after their firing and resignation however. [ 23 ] The police then began an investigation in this matter and obtained a search warrant for IDC’s premises which they executed in mid-March 2017 at the manufacturing premises of IDC, and at the co-Accused’s residence. Numerous items of welding equipment and shop supplies were found and seized by police pursuant to that search at the IDC premises.

Those numerous items of welding equipment and shop supplies form the subject matter of Count 1 in these proceedings, which alleges fraud on the part of both accused. [ 24 ] Count 6 to Count 9 allege that four forged invoices were issued on or about the 15 th of March, 2017 by IDC to Bonn seeking payment of the remaining amounts owing, pursuant to the Bonn August 2016 purchase order for the Local project with 3D. These four invoices at Tabs 59 to 62 were never paid by Bonn.

Trial Fundamentals [ 25 ] Although Schauer and Simpson have both been charged and tried together, each is a separate individual and cannot be found guilty of any offence unless the evidence related to him/her proves his/her guilt of the offence beyond a reasonable doubt. The burden of proof is on the Crown to establish each Accused’s guilt beyond a reasonable doubt, and that burden remains on the Crown throughout.

Proof beyond a reasonable doubt requires that I be sure of the guilt of each Accused, and requires the Crown prove the essential element of each offence to a standard closer to absolute certainty, as opposed to just on a balance of probabilities. Neither Schauer nor Simpson is required to prove his/her innocence, or to disprove any of the evidence led by the Crown. The presumption of innocence remains with both the co-Accused throughout the trial.

Furthermore, in my attempt to resolve conflicting evidence bearing on the guilt or innocence of either Accused, it must be always understood that the trial is not a credibility contest requiring that I decide which of the conflicting

versions is true. [26] In that context, Schauer has testified in these proceedings on his own behalf.

So a WD analysis is required pursuant to R vW(D), (SCC), [1991] 1 SCR 742 at para 28 which reads: Where the defence calls the accused to give evidence that contradicts the crown evidence, the trier of fact must determine: 1.If you believe the evidence of the Accused obviously you must acquit. 2.If you do not believe the testimony of the Accused but you are left in reasonable doubt by it, you must acquit. 3.Even if you are not left in reasonable doubt by the evidence of the Accused you must ask yourself whether on the basis of the evidencewhich you do accept you are convinced beyond a reasonable doubt by that evidence of the guilt of the Accused. [27] As trier of fact, if I believe Schauer’s evidence denying guilt or I am left with a reasonable doubt as a result of Schauer’sevidence, and by any other exculpatory evidence; or if I am not sure I can accept the Crown’s version of events, I must acquit Schauer.

IfI am unable to decide whom to believe, I must acquit. [28] Even if I completely reject Schauer’s evidence, or am not left in a reasonable doubt by Schauer’s evidence and any otherexculpatory evidence in this trial, I must still not assume the Crown’s version of events to be true.

Rather I must assess carefully on theevidence that I do believe, and decide whether that evidence persuades me beyond a reasonable doubt that the Accused Schauer is guilty.Mere rejection of Schauer’s evidence, along with other exculpatory evidence, cannot be taken as proof of the Accused’s guilt beyond areasonable doubt. [29] In a criminal offence as allegedly committed in this trial by Schauer and Simpson, each may play a different part. If they areacting together, as part of a joint plan or agreement to commit the offence(

s) each may be found guilty of it.

Although Schauer andSimpson are being tried together, each is a separate individual who cannot be found guilty of any offence unless the evidence related tohim/her proves him/her guilt of the offence beyond a reasonable doubt. [30] It is necessary to also determine whether the common purpose/common intention specified in s 21(2) of the Criminal Codeapplies herein: Where two or more persons form an intention in common to carry out an unlawful purpose and to assist each other therein and any one ofthem, in carrying out the common purpose, commits an offence, each of them who knew or ought to have known that the commission ofthe offence would be a probable consequence of carrying out the common purpose is a party to that offence. [31] The common purpose s 21.2 describes that in some circumstances, one person who has agreed that what one or more others todo something unlawful may be found guilty of another crime committed by one or more of the others carrying out their originalagreement.

In other words, when two or more persons join together in a criminal venture, each may be responsible for what the others dopursuing their original goal. [32] The basis for establishing a person’s guilt in this regard has three elements:

a) Agreement;

b) Offence; and

c) Knowledge [33] The burden rests on the Crown to prove the applicability of s 21(2) and the essential elements of all the offences allegedbeyond a reasonable doubt. My WD Analysis With Respect to Counts 2 to 9 [34] Although the Accused did not have to testify in these proceedings having the benefit of presumption of innocence throughout,the Accused Schauer chose to testify. Schauer’s evidence was that 3D was suffering financially at all material times during his period ofemployment. I accept this evidence because it was not contradicted in this trial that 3D was not making money at any time.

However Ifind that the major problem for 3D, with respect to the Local project were the actions of the co-Accused. [35] Schauer testified that 3D’s problems with respect to getting work done grew significantly when 3D was successful in beingaward a $550,000 Windermere school project. This was far beyond the size of the 3D’s previous projects, and Schauer (and Simpson)felt strongly that 3D needed to hire more personnel in order to successfully complete the Windermere school project.

As such, both co-Accused, and Arsenault, met Kaur at Earl’s restaurant in August 2016 to urgently request that Kaur hire more personnel and put morefinancial resources into 3D. It is common ground that after this meeting, Kaur refused to hire anymore personnel or make any significantgreater financial contribution to 3D’s operating budget because he did not feel it was necessary based on his detailed analysis of thesituation. [36] Schauer testified that the Windermere school project’s demands on 3D were also putting a personal strain on the co-Accused,who were working overtime.

He and Simpson, who both had been thinking about starting up IDC since approximately July 2015, thendecided they would take over the Local project. [37] Schauer testified that he and Simpson discussed this with Roy Bonn specifically, and Roy Bonn responded that he did not careas long as he got his steel. This evidence was not introduced for the truth of its contents and Roy Bonn was never called to testify at this

trial, so I can put no reliance on Schauer’s testimony that he discussed this with Roy Bonn. I am unsure if this conversation actually eventook place. [38] In any event in my WD Analysis, it does not matter if Roy Bonn, and Bonn Construction approved of the Accused’s takeoverof the Bonn purchase order with 3D, because Kaur and 3D were never made aware of the this switch. If Schauer [or Simpson] believedthat Bonn’s approval for this switch exonerates them from the fraud and forgery charges that account for Counts 2 to 9, they have made amistake in law.

Ignorance of the law is no excuse in any criminal proceeding, and no defence to fraud and forgery. [39] Nor is their belief as expressed by Schauer that the Local job was beyond 3D’s ability to complete and would have beenpulled in any event from 3D therefore causing 3D no harm, an excuse at law. First, it is a highly speculative conclusion to begin with,but even if it were later found to be factual, it is irrelevant in law. [40] R v Lemire, [1956] SCR 174 approved in R v Théroux, (SCC), [1993] 2 SCR 5 at 21, contains aninteresting parallel.

In Lemire, the Quebec Attorney-General/Premier Duplessis approved a salary raise for the accused, but to preventother civil servants from learning of the raise, told the accused to submit false and misleading expense accounts. The court held that itwas no answer that the accused’s superior, the premier of Quebec had authorized the false misleading accounts because the taxpayers ofQuebec were being defrauded. Accordingly, even if some other person such as Roy Bonn, or superior, save and accept for Kaur himself,authorized the Invoices, it still would have been insufficient a defence in law.

Furthermore, in Lemire the rationale for the authorizationto submit the misleading claims was that subsequent legislative changes would legitimize the charges being claimed.

Even that wasfound by the Supreme Court of Canada as insufficient in their 1965 decision that was cited with approval by the Supreme Court ofCanada again in Théroux by MacLaughlin J as she then was in 1993. [41] Accordingly, nothing Schauer testified to with respect to the switch of the Bonn Purchase order from 3D to IDC can exoneratehe or Simpson from criminal liability in Counts 2 to 9. [42] Much of Schauer’s evidence with respect to Counts 2 to 9 concentrated on attacking the credibility of Kaur.

Kaur is describedas having a tyrannical management style, regularly threatening Schauer and the other staff at 3D with

summary dismissal. Kaur wasdescribed by Schauer as being high on marijuana most days, as a person who was so forgetful he would repeatedly not remember whathe said mid-sentence, or forget what he had previously directed be done.

Schauer claimed that Kaur hired additional personnel to workon the Windermere school project “under the table” so that he would not have to pay Workers’ Compensation Board premiums, puttingthose employees at considerable risk if they were injured on the job. [43] Kaur denies that he was impaired because of marijuana, but did admit that he used it on a regular basis for medicinal purposes.Kaur was never asked if he was “high most days” on marijuana.

In extensive testimony on trial, Kaur did not seem to have any difficultytestifying, did not appear to be forgetful, and did not fail to remember things that he was saying mid-sentence.

There was only oneoccasion when he essentially broke down and that was when he testified about the devastating affect 3D’s failure has had on him. [44] However, even if all of the accusations and attacks on Kaur’s credibility were correct, as a matter of law it still does not matterin this case because Kaur and Amnor suffered deprivation through the loss of the 3D purchase order granted to it in August 2016 byBonn, which was never communicated to Kaur or 3D by either of the co-Accused.

Accordingly Kaur’s conduct or misconduct isirrelevant for purposes of Counts 2 to 9 because he never knew of, and therefore never approved of, the switch from 3D to IDC. [45] Schauer also testified that all the work that he and Simpson did on the Local project was performed after their normal workinghours at 3D. The welding and steel fabricating was done by Schauer and Arsenault, and Simpson was running the offices of IDC.Schauer testified that he was using personal funds from his own bank account to finance the IDC operation, and that Simpson wascontributing monies from the sale of her home in Calgary.

Schauer also testified that there was little if any profit in the Local project. [46] Once again this evidence is of no relevance in my WD analysis because with respect to the legal questions raised in Counts 2to 9, it does not matter whether the Accused profited from the Local project, just as it does not matter that the co-Accused may have doneall the work on the Local project on their own time, or used their own funds to finance IDC.

This latter claim by Schauer in any event ishighly dubious given that my Count 1 analysis establishes the co-Accused took a great deal of 3D purchased items to IDC, accordinglyusing 3D to finance IDC. [47] In conclusion then, even if Schauer’s evidence with respect to Counts 2 to 9 were to be believed, it is entirely irrelevant at lawwith respect to those Counts.

Similarly Schauer’s evidence cannot possibly leave me with a reasonable doubt as to his guilt, because atlaw his evidence is no defence to the fraud and forgery charges contained in the Counts 2 to 9. [48] I will turn to the remaining evidence in this trial and other somewhat similar case law in my further discussion of Counts 2 to9 later in this decision because it is still necessary to determine if the Crown has proven all essential elements of these Counts. My WD Analysis With Respect to Count 1 [49] I now turn to my WD analysis with respect to Schauer’s evidence with respect to Count 1.

Specifically with respect to Count1, Schauer denied ever using 3D purchase orders for personal use, he denied using 3D purchase orders to buy items for IDC’s benefit,and with only one exception, Schauer denied any knowledge of any 3D equipment and supplies ending up in IDC’s premises. [50] Given Schauer’s blanket denial in this regard, I am not able to either believe his evidence outright, nor does his outright denialleave me with a reasonable doubt.

One of the limitations of Schauer’s evidence is that in many of the answers he gave with respect to theequipment and supplies that was seized from IDC’s premises, it was the co-Accused Simpson who ordered supplies for IDC. Schauerhimself had no personal knowledge as to what was or was not being ordered by IDC, so this seems to incriminate Simpson especiallywhen one considers Kaur’s uncontradicted evidence that he never loaned equipment and supplies to anyone for a commercial purpose.However, I am dubious about Schauer’s evidence because Simpson, the non-welder, would never have known what welding equipment

and supplies was appropriate to order without Schauer’s direction. [51] On the one item that Schauer acknowledges that was found at IDC that was the subject matter of a 3D purchase order, theWeldWorld welding gas container, Schauer testified that Simpson had told him that she had permission to borrow supplies from Kaurand would repay Kaur later. This is unreliable evidence particularly given Kaur’s uncontradicted evidence that he did never lent anyitems to any 3D employees for their commercial use elsewhere, and Schauer’s evidence is conveniently self-serving in any event.

Has the Crown Proven Fraud and Forgery: Counts 2 to 9Beyond a Reasonable Doubt? Forgery, Section 366(1)(a) [52] Schauer and Simpson are both charged with forgery in Counts 3, and in Counts 5 to 9. Section 366(1) of the Criminal Codereads as follows: Every one commits forgery who makes a false document, knowing it to be false, with intent (

a) that it should in any way be used or acted on as genuine, to the prejudice of any one whether within Canada or not; or The Essential Elements of Forgery, Section 366(1)(a) [53] R v Gardner, [2014] N.J. No. 72 [NFLD. Prov. Ct.] cited by the Accused Schauer, summarized the law with respect toforgery as follows at pars 33 to 40: Section 368(1)(

b) of the Criminal Code creates the offence of uttering a forged document. It states: Everyone commits an offence who, knowing or believing that a document is forged, (

a) uses, deals with or acts on it as if it were genuine. An uttering offence is separate from a fraud offence. The person uttering does not have to be the person who forged the document. Aspointed out in Helgason, at paragraph 33, forgery "is the making of the document; uttering is the use of the document." The Actus Reus: In R. v. Wightman, 2003 ABPC 202 , [2003] A.J. No. 1453 (P.C.), it was noted, at paragraph 48, that the offences of forgeryand uttering a forged document "are concerned with different acts.

Forgery deals with the making of the document; uttering deals withthe use of the document." It has been held that an "unauthorized endorsement" of a cheque constitutes the creating of a forged document (see R. v. J.J.V., [1994]N.B.J. No. 135 (C.A.) and R. v. Jones (1970), (ON CA), 11 C.R.N.S. 219 (Ont. C.A.)). It was held in R. v.

Elkin(1978), (BC CA), 42 C.C.C. (2d) 185 (B.C.C.A.), that a "forged endorsement upon an otherwise valid chequeconverts the cheque into a forged or false document." The Mens Rea: It was indicated in Elkin that once "the Crown has shown the falsity of the endorsement the document has been shown to be a forgeddocument and its use with knowledge is sufficient to show the commission of the offence." In R. v. Sebo, [1988] A.J.

No. 475 (C.A.), it was held that the offence of uttering a forged document requires proof that the accusedknew the document was false and intended for somebody to act upon it as if it was genuine." The Elements of Uttering a Forged Document Summarized: The elements of uttering a forged document, pursuant to section 368(1)(

a) of the Criminal Code, require proof that the accused: (1) used, dealt with or acted upon a document as if it were genuine; (2) knowing or believing that the document was forged. Unlike the offence of fraud, there is no requirement that the document is forged. The accused's belief that it is forged is sufficient. Inaddition, unlike the offence of fraud, there is no need for proof of deprivation or risk of deprivation and no need of proof that the accusedintended to deprive anyone of anything.

The essence of the offence of uttering a forged document is in the use of the document by theaccused. [54] R v Atwal, 2015 ONSC 4425, involves several similarities to the present case, as a bookkeeper/accountant accused hadvarious side businesses to the knowledge of his employer, who knowingly made a number of loans to the accused in exchange for equity

positons. One issue was whether the loans were repaid and in good standing, or whether the accused was helping himself to thecomplainant’s money (see Atwal at paras 9 to 18). At para 95 of Atwal, the law with respect to forgery includes the Alberta Court ofAppeal Decision in R v Sabo: A person commits forgery who makes a false document, knowing it to be false, with intent that it should in any way be used or actedupon as genuine, to the prejudice of another: s. 366 Criminal Code; R. v. Hawrish (1986), (SK CA), 32 C.C.C. (3d)446 (Sask. C.A.), at pp. 450-454.

A document is “false” where a “material part…purports to be made by or on behalf of a person…whodid not make it or authorize it to be made”: s. 321 of the Code; R. v. Nousci (1991), (ON CA), 69 C.C.C. (3d) 64 (Ont.C.A.), at paras. 16-49 (leave to appeal refused [1992] S.C.C.A. 69). A person who uses or utters a forged document, knowing orbelieving that the document is forged, commits an offence contrary to s. 368 of the Code. While the crime requires an intent to deceive, itdoes not require an intent to defraud or to cause prejudice: R. v.

Valois, (SCC), [1986] 1 S.C.R. 278, at pp. 282-3; R. v.Sebo (1988), 1988 ABCA 200 , 42 C.C.C. (3d) 536 (Alta. C.A.), at p. 540 (leave to appeal refused [1988] S.C.C.A.

No. 309).(Emphasis added) [55] Atwal was still convicted of forgery in circumstances far more exculpatory than the present case, given that the accused’s sidebusinesses were known to the complainant, that the complainant knowingly made loans to the accused in exchange for equity positions,and the complainant had very weak financial oversight and records: see paras 106 to 116 of Atwal. [56] Counts 3 and 5 deal with the November 25 and December 12, 2016 invoices in the sum of $28,101.94 and $16,336.69. Theywere issued by IDC and paid by Bonn.

Counts 6 to 9 deals with the four unpaid invoices issued by IDC to Bonn dated March 15, 2017. [57] For me to find the Accused guilty of forgery, Crown counsel must prove each of the following essential elements beyond areasonable doubt: i. That the accused made a false document; ii. That the accused knew the document was false when he/she made it; iii. That the accused intended that the document be considered genuine; and iv. That the accused intended that someone would be prejudiced by treating the document as genuine. Analysis with respect to the Forgery Count 3 and Counts 5 to 9 i.

That the accused made a false document [58] With respect to the four essential elements for forgery, it is clear that both Accused made the invoices because the invoiceswere issued by IDC, and there are only two individuals, Schauer and Simpson, involved in IDC. Schauer in his evidence admits his rolein reviewing the invoices before Simpson issued them. Schauer and Simpson’s personal emails and direct phone lines were on theinvoices, and any questions were directed to them.

Accordingly, the Crown has proven the first essential element establishes beyond areasonable doubt because of both co-Accused’s direct involvement in issuing the invoices. ii. That the accused knew the document was false when he/she made it [59] With respect to the second material element, I find that the invoices in question were false documents.

In order to be a falsedocument, the document must be false in relation to the purpose for which it was created (see R v Benson, 2012 MBCA 94 at para 44).The invoices in question clearly made a false representation as to a material particular that was false, as stated in Benson at para 51: In R. v. Semeniuk, 2005 BCSC 1473 (QL), aff’d on other grounds, 2007 BCCA 399 , 245 B.C.A.C. 110, the accusedwas charged with fraud and forgery after obtaining appeal books and transcripts for his appeal, without paying in advance, by a forgedorder through a non-existent law firm.

In convicting on the forgery count, Smith J. wrote (at para. 125): I find that the October 2, 2002, letter from Lindsay Sherman & Gardner Legal Service Corporation in its representation that the entityLindsay Sherman & Gardner was a law firm made a representation as to a material particular and that it was false in that regard. Thepoint is not that the sender told lies in the body of the letter. Undoubtedly, the sender truly did wish to order the transcripts.

Rather, theletter did tell a lie about itself by representing that it was from a law firm when it was not, just as if it has represented that it was from asignatory who had not in fact signed it. The document was false in reference to the very purpose for which it was created. [60] The false material particular in this case was that IDC was billing for work that was the property of 3D pursuant to thepurchase order of Bonn with 3D, and not with IDC. Any work performed by the co-Accused should have been for the benefit of 3D, notfor their own benefit through IDC. iii.

That the accused intended that the document be considered genuine [61] I find that the Crown has also proven the third essential element for forgery in that the Accused knew the document to be falsebecause they were both aware that the work was performed by them while employees of 3D. IDC had never been given a Purchase orderby Bonn for the Local project, and neither Kaur or 3D was ever told of the switch to IDC.

McDonald, Bonn’s operations manager on theproject, only ever knew of Schauer and Simpson when it came to the Local project, so logically any document issued that had the co-Accused’s names and personal information on it was genuine. The invoices issued by the co-Accused were fundamentally misleading bydesign.

iv. That the accused intended that someone would be prejudiced by treatingthe document as genuine [62] The final essential element to forgery has been proven by the Crown because the Accused intended that the document beacted upon by Bonn to the prejudice of 3D. This element has been proven beyond a reasonable doubt since (

a) Bonn paid IDC instead of3D, (b) 3D was never made aware by the co-Accused acting on their own behalf or on behalf of IDC that their purchase order had beenconverted for the benefit of the co-Accused and IDC and (

c) the IDC invoices all specifically referred any questions to Schauer andSimpson personally, and contained their personal emails and phone numbers.

Schauer and Simpson always knew that Bonn andMcDonald only knew them personally, so Bonn and McDonald naturally be misled to pay IDC instead of 3D, and clearly Kaur and 3Dwere deprived as a result. [63] I also note that although IDC issued the invoices, I find that Schauer and Simpson fraudulently received the monies paid byBonn in December 2016 and January 2017 personally, since IDC was not formally registered until February 23, 2017. [64] It was also highly unlikely that any financial institution would have allowed IDC to have a bank account until it formallyexisted on February 23, 2017, which was also the date the second invoice was paid by Bonn (Tab 28), the first invoice having been paidin January, 2017.

I find that Schauer and Simpson delayed incorporating IDC until late February 2017 to cover up their previous conflictof interest and other non 3D work while still employed at 3D. An earlier incorporation of IDC would have made their conflict of interestmore difficult to explain away. Fraud, Section 380(1)(a) 380

(1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of thisAct, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service, (

a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of theoffence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars Essential Elements of Fraud, Section 380(1)(a) [65] The Crown must prove each of the four essential elements beyond a reasonable doubt to establish convictions with respect tofraud regarding the IDC invoices that form the subject matter of the fraud alleged in Counts 2 and 4. [66] The four essential elements with respect to fraud are: i.

That the accused deprived Amnor of something of value; ii. That the accused’s deceit, falsehood and other fraudulent means caused the deprivation; iii. That the accused intended to defraud Amnor; and iv. That the value of the property exceeded $5,000. [67] As described in Benson at para 136 to 140, the Crown must prove both the actus reus and mens rea of the fraud offence asfollows: The Crown must prove both the actus reus and the mens rea of the offence. The actus reus of fraud has two elements, a dishonest actand deprivation. In order to succeed, the Crown has to establish dishonest deprivation.

The dishonest act is established by objectiveproof of deceit, falsehood or “other fraudulent means.” What constitutes a lie or a deceitful act for the purpose of the actus reus isjudged on the objective facts. All that need be determined is whether the accused, as a matter of fact, represented that a situation was ofa certain character when, in reality, it was not. The meaning of “other fraudulent means” is also determined objectively, by reference towhat a reasonable person would consider to be a dishonest act. See R. v. Théroux, (SCC), [1993] 2 S.C.R. 5.

The element of deprivation is satisfied on proof of detriment, prejudice or risk of prejudice to the economic interests of the victim, causedby the dishonest act. It is not essential that there be actual economic loss as to the outcome of the fraud, or that the accused have profitedfrom the fraud. See R. v. Olan et al., (SCC), [1978] 2 S.C.R. 1175 at 1182. The mens rea of fraud is the intentional commission of the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiringthe consequences proscribed by the offence (deprivation, including the risk of deprivation).

The mens rea of fraud consists in thesubjective knowledge of the prohibited act, and subjective knowledge that the prohibited act could have as a consequence thedeprivation of another (which deprivation may consist in knowledge that the victim’s pecuniary interests are put at risk). See R. v.Zlatic, (SCC), [1993] 2 S.C.R. 29. The proper focus in determining the mens rea of fraud is to ask whether the accused intentionally committed the prohibited acts (deceit,falsehood, or other dishonest act) knowing or desiring the consequences proscribed by the offences (deprivation, including the risk ofdeprivation).

The personal feeling of the accused about the honesty of the act or its consequences is no more relevant to the analysisthan is the accused’s awareness that the particular acts undertaken constitute a criminal offence (see Théroux). Where the conduct and knowledge are established, the accused is guilty whether he actually intended the prohibited consequence or wasreckless as to whether it would occur. The accused’s belief that the conduct is not wrong or that no one will be hurt in the end affords no

defence. There is no requirement of subjective awareness of dishonesty. An accused’s belief that

an act is honest will not help him if itis objectively dishonest, as determined by reasonable persons (Théroux). This should be distinguished from the accused’s belief in factsthat, if true, would deprive the act of its dishonest character.

The test for a guilty mind is an objective one. [68] R v Théroux is the leading Supreme Court of Canada’s case on fraud and it clearly states at para 24 [as quoted in R v Must,2011 ONCA 390 at para 3] with relation to the mens rea for fraud that the personal feelings of the accused are irrelevant: To succeed, the appellant must show that the facts as found by the trial judge negative the mens rea for fraud. Those facts do notnegative the mens rea; to the contrary they show that the appellant had the requisite mens rea. The mens rea for fraud has beenauthoritatively determined in R. v.

Théroux, (SCC), [1993] 2 S.C.R. 5 at para. 24: Having ventured these general comments on mens rea, I return to the offence of fraud. The prohibited act is deceit, falsehood, or someother dishonest act. The prohibited consequence is depriving another of what is or should be his, which may, as we have seen, consist inmerely placing another's property at risk. The mens rea would then consist in the subjective awareness that one was undertaking aprohibited act (the deceit, falsehood or other dishonest act) which could cause deprivation in the sense of depriving another of propertyor putting that property at risk.

If this is shown, the crime is complete. The fact that the accused may have hoped the deprivation wouldnot take place, or may have felt there was nothing wrong with what he or she was doing, provides no defence.

To put it another way,following the traditional criminal law principle that the mental state necessary to the offence must be determined by reference to theexternal acts which constitute the actus of the offence (see Williams, supra, c. 3), the proper focus in determining the mens rea of fraudis to ask whether the accused intentionally committed the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiringthe consequences proscribed by the offence (deprivation, including the risk of deprivation).

The personal feeling of the accused about themorality or honesty of the act or its consequences is no more relevant to the analysis than is the accused's awareness that the particularacts undertaken constitute a criminal offence. On the findings of fact, the appellant was aware that he was undertaking a prohibited act, namely the deceit in forging the time sheets,which could cause a risk of deprivation in the sense of depriving iGate of its property. The accused’s personal belief of entitlement todamages for breach of contract did not negative the mens rea.

That belief falls within the statement in Théroux: “The personal feeling ofthe accused about the morality or honesty of the act or its consequences is no more relevant to the analysis than is the accused'sawareness that the particular acts undertaken constitute a criminal offence.” The knowledge of risk of deprivation is found in the trial judge’s finding that the appellant, “unilaterally determined that his entitlement would be full payment for the time from January 6th to March 23rd, 2006, without affording [iGate] from whom he sought payment the opportunity either to scrutinize the amount he sought orthe period of claimed entitlement, or to dispute his claims”. (Emphasis added) [69] The case of R v Knowles, (1979) (ON CA), 51 CCC (2d) 237 (Ont CA) bears some similarity to thispresent case.

In Knowles the accused was the president of a company that supplied hardware products to franchisers. The company had apolicy that employees could not operate a franchise business to prevent conflicts of interest. The accused arranged with his cousin toacquire a franchise and the cousin applied for a loan from the company for that purpose. The case was argued on the assumption that theloan was fully secured but that the accused was the actual purchaser.

The court held that if the accused, by deceit, induced the companyto believe that the cousin was the actual purchaser for the purpose of obtaining the loan knowing that the complainant would not havemade the loan if it had known that the cousin was merely the accused’s agent, the accused would have defrauded the complainant of thefunds advanced even if the funds were ultimately recovered, and notwithstanding the proceeds of the loan were used for the purpose forwhich they were advanced, namely the purchase of the hardware business.

The court held that the dishonest deprivation consisted ininducing the complainant to its detriment to make the loan which it would not have made if it had not been deceived as to the true state ofaffairs. The deceit practiced by the accused placed him in a position where his personal interest might conflict with the interest of hisemployer and imperil the complainant's economic interests.

The complainant was thus placed, even though the loan was secured, in aposition of risk in which it would not have been placed if had not been deceived as to the true state of affairs. [70] Knowles was cited with approval by my colleague Germaine J in the mortgage fraud case R v MacMullin, 2014 ABQB 476 atpara 513. Analysis with respect to Fraud, Section 380(1) and Counts 2 and4 i.

That the accused deprived Amnor of something of value [71] In the present case, with respect to the actus reus of fraud, I find that the Crown has proven beyond a reasonable doubt thatthere was clearly a dishonest act committed by the Accused in issuing the two invoices in question on November 25 and December 12,2016, that deprived Amnor of value. ii. That the accused’s deceit, falsehood and other fraudulent means causedthe deprivation [72] The Accused argue that there was no dishonest deprivation in this case in that 3D was incapable of ever completing the Localproject.

It was the co-Accused’s view, as expressed in Schauer’s evidence, that the only means to complete the Local project was throughthe services of Schauer and Simpson in their roles as principal owners and operators of IDC. As such, the Accused argue that 3D neverlost anything as a result of IDC’s intervention in this case through the co-Accused acting together, and in fact their actions saved face and3D’s reputation which it would have lost as a result of its failure to complete the Local project.

According to Schauer it was inevitablethat the Local project would be taken away from 3D and given to someone else in the industry. Schauer reasons that IDC seamlessly

stepped in to take over the contract or purchase order with Bonn, and that was actually a benefit to 3D. [73] There are several problems with this argument on the evidence before me. Firstly, it was speculation by Schauer that 3Dwould have even lost the Local project it already had. Secondly, when Schauer and Simpson stepped in, they also did not successfullycomplete the project to Bonn’s satisfaction, so 3D still lost face and its reputation. Finally, no one at 3D was aware, with the exception of3D’s sole mangers Schauer and Simpson, that 3D had lost the Local project.

Whatever Roy Bonn may have agreed to, assuming heagreed to anything, was never conveyed to Kaur, the principal owner of 3D, or anyone else at 3D besides Schauer and Simpson. Schauerand Simpson were completely in a conflict of interest and were conducting themselves only for their own benefit, and not for the benefitof 3D.

This constitutes the deprivation required in the actus reus of fraud by Schauer and Simpson, so the actus reus of fraud has beenproven beyond a reasonable doubt. [74] I find that the Crown has proven beyond a reasonable doubt the element of deprivation in the actus reus of fraud by satisfyingme that the risk of prejudice to the economic interest of the victim Amnor was caused by the dishonest act of the co-Accused. It is notessential that there be an actual economic loss as to the outcome of the fraud, or that the Accused profited from the fraud [R v Olan, (SCC), 1978 2 SCR 1175 at pg 1182]. iii.

That the accused intended to defraud Amnor [75] The mens rea of the fraud is the intentional commission of the prohibited act, in this case the dishonest act of the Accusedboth claiming the Local project as theirs as opposed to 3Ds, knowing or desiring the consequences prohibited by the offence, includingthe risk of deprivation. The deprivation herein includes the fact that Kaur and 3D were unaware they had lost the benefit of the Bonnpurchase order and project.

The Crown has proven beyond a reasonable doubt the mens rea of fraud consisting in the co-Accused’ssubjective knowledge of the prohibited act, and the subjective knowledge of their dishonest act, and the subjective knowledge that thedishonest act could have as a consequence the deprivation of the victims pecuniary interest, either deprived in actuality or put at risk [seeR v Zlatic, (SCC), [1993] 2 SCR 29]. [76] The personal feeling of the Accused about the honesty of the act, or its consequences or the lack thereof, is no more relevantin the analysis then is the Accused’s awareness that the particular acts undertaken constitute a criminal offence.

Ignorance of the lawwith respect to fraud is no defence to a charge of fraud. iv. That the value of the property exceeded $5,000 [77] The Crown has satisfied me beyond a reasonable doubt that the value defrauded is over $5000 because the invoice amountstotal approximately $59,475.00. Fraud and Count 1 Analysis [78] Count 1 in this matter again alleges fraud contrary to s 380(1)(

a) as follows: 1. That they, between the 6th day of November, 2016, and the 3rd day of February, 2017, both dates inclusive, at or nearEdmonton, Alberta, did be deceit, falsehood or other fraudulent means, unlawfully defraud Amnor Group Inc of property, money,valuable security or a service, to wit: welding equipment and shop supplies, of a value exceeding $5,000, contrary to section 380(1)(

a) ofthe Criminal Code of Canada. [79] Count 1 alleges that the two Accused committed fraud as against Amnor between the 6th of November, 2016 and the 3rd ofFebruary, 2017.

These dates essentially cover the period of time after Schauer is fired by Kaur early in November 2016, and Simpsonresigns from 3D in early February 2017. [80] The Crown is alleging that a number of items of welding equipment and supplies were fraudulently acquired by Schauer orSimpson using 3D purchase orders they controlled, contrary to s 380(1)(a), and that Amnor was defrauded. [81] R v Leuenberger, 2014 BCCA 156, deals with a somewhat similar situation involving a series of unauthorized payments usingcheques instead of purchase orders. 3D’s purchase orders are essentially signed blank cheques to their suppliers, and Leuenberger tookplace, within a somewhat similar work environment factually described in paras 7 to 14: Kyah is a logging company operated by the Moricetown Band, a First Nations community located near Smithers, British Columbia.

From 1997 to 1999, Larry Austin managed Kyah; from 1999 to present, Warner William managed the company. PVA has an office in Houston, British Columbia. During the relevant time period, it had three employees. Ms. Leuenberger does nothave a professional accounting designation. In 1997, Mr. Austin engaged PVA for bookkeeping services. Ms. Leuenberger did Kyah’s accounting until 2004, managing its accountspayable, payroll, tax returns, and financial statements. There was no written contract between Kyah and Ms. Leuenberger, but a blockmonthly amount was negotiated orally. Ms.

Leuenberger later unilaterally varied the block monthly method of payment to an hourlyrate. Throughout the relevant period, Kyah had an operating account at the Royal Bank of Canada. Cheques from this account required twosignatures. Mr. William had signing authority and after Mr. Austin left the company, Ms. Leuenberger was also given signing authority. Around July 2004, the Canada Revenue Agency (“CRA”) garnished Kyah’s bank account after Ms. Leuenberger failed to file its GSTreturns. As a result, Kyah was unable to meet its payroll obligations. Ms. Leuenberger was out of the country at the time.

Mr. William then terminated Kyah’s relationship with Ms. Leuenberger and retained a new accounting firm, Carlyle Shepherd & Co. Wayne Callison, an accountant at the firm, managed Kyah’s books. Mr. Callison was assisted by his son, Dorian Callison (who I willcall “Dorian” to avoid confusion). Wayne Callison contacted Ms. Leuenberger to obtain Kyah’s financial records to resolve the GST problem. Mr. Callison pieced togetherKyah’s financial history from the records he eventually obtained from PVA (with much difficulty and delay) and from Kyah’s bank.

Hefound the synoptic journals did not match the cheques he obtained from the bank. Between November 1998 and July 2004, there were53 cheques payable to PVA, but recorded in the synoptic journals as being paid to other parties. Mr. Callison reported the false entries to the police in the fall of 2004. They commenced their investigation in December 2004. A civiltrial took place in 2006 and criminal charges were laid against Ms. Leuenberger in December 2008.

The criminal trial proceededintermittently from October 31, 2011 to April 24, 2012 [82] Leuenberger at paras 48 to 51 and paras 73 and 74 discuss the actus reus and mens rea of fraud in the context of somewhatsimilar circumstances: The actus reus of fraud is established by proving: (1) deceit, falsehood or other fraudulent means; and (2) deprivation caused by theprohibited act, whether actual loss or putting the victim’s pecuniary interests at risk: Théroux at 20.

Thus, the first ground of appealchallenges the judge’s finding of fact that the Crown proved deprivation on the part of Kyah, an essential element of the actus reus offraud. As to the first parts of the actus reus of fraud, falsehood has been defined as a deliberate lie, while deceit is established when an accusedinduces a person to believe something the deceiver knows is false: R. v. Stephenson, 2006 BCCA 25 at para. 102. As to “other fraudulent means”, it is not necessary an accused personally considers his or her means to be honest.

Rather, whether theconduct amounts to fraudulent means is determined objectively, by reference to what a reasonable person would consider to be adishonest act: R. v. Zlatic, (SCC), [1993] 2 S.C.R. 29 at 45. The fact an accused used funds in a manner not authorizedis sufficient grounds for finding he or she acted dishonestly: Zlatic at 44-47; R. v. Currie (1984), 5 O.A.C. 280 at para. 14. This Court, in R. v.

Kingsbury, 2012 BCCA 462 , summarized “deprivation”, the element at issue here, as follows: [29] … In Théroux it was expressed in three ways: 1) that as a consequence of the prohibited act there be a deprivation of “theeconomic interests of the victim” (R. v.

Olan, (SCC), [1978] 2 S.C.R. 1175 as quoted in Théroux at 15); 2) that theprohibited consequence of the dishonest act is to deprive another of “what is or should be his”, which may consist of “merely placinganother’s property at risk” (Théroux at 19); or 3) “[a possible] actual loss or the placing of the victim’s pecuniary interests at risk”caused by the dishonest act (Théroux at 20; see also in R. v. Zlatic, (SCC), [1993] 2 S.C.R. 29 at 43).

The mens rea of fraud is established by proving: (1) subjective knowledge of the prohibited act; and (2) subjective knowledge that theperformance of the prohibited act could have as a consequence the deprivation of another. The Crown must prove the accusedknowingly undertook the conduct that constitutes the dishonest act and subjectively appreciated that the consequences of such conductcould be deprivation: Théroux at 20. A person cannot escape liability for conviction by believing she is doing nothing wrong.

In Kingbsury, the Court observed: [46] Théroux and its companion case, Zlatic, clarified that the test for mens rea of fraud should reflect traditional mens rea principles;the focus should be on the accused’s subjective knowledge of the prohibited act and the prohibited consequences that together composethe actus reus of the offence. But the majority also made it clear that a number of matters are not relevant to the mens rea. An honestbelief that one’s conduct is not dishonest is irrelevant.

An honest belief that one’s conduct is not wrong or a hope or expectation that nodeprivation will occur is equally irrelevant. [47] If it is sufficient to establish mens rea that an accused know the facts that objectively constitute a prohibited act such as deceit,and the accused’s subjective belief that the act is not deceitful is irrelevant, I fail to understand how an accused’s honest but mistakenbelief that he is entitled to property can be relevant to the mens rea respecting deprivation.

To allow an honest mistake about legalentitlement that if true would mean that there was no deprivation of something the victim was entitled to would not be consistent withthe majority’s analysis in Théroux, that the requisite mens rea be connected to the prohibited act element of the offence of fraud. [83] Kingsbury, discussed in Leuenberger, interestingly involved an unsuccessful argument by the accused that he had an honestbut mistaken belief that he actually, or by color of right, owned the disputed trailer in question. The accused was nevertheless convictedof fraud.

Kingsbury is also interesting because he was acquitted of the theft charged. Defence counsel have urged before me that I acquiton the fraud charge in Count 1 because the Crown should have charged the co-Accused with theft.

The co-Accused before me may havecommitted theft, but they clearly committed fraud as well. [84] Applying the law with respect to fraud as outlined, the evidence establishes beyond a reasonable doubt that four orange vinylwelding screens and four curtain frames, approximately 6 feet by 6 feet each were ordered by Schauer on November 9 and picked up onNovember 23, 2016, and are depicted as being found in the IDC premises in Exhibit 18 photographs 3, 4 and 13. Unopened weldingscreens that fit within the welding frames are depicted in photographs 21 and 22.

It is clear from Tab 13 that the welding screens inquestion were ordered by Schauer on behalf of 3D, and the photographs 3, 4 and 13 clearly show four large 6 feet by 6 feet orangewelding frames found in IDC’s business premises. Accordingly, I find that the Crown has proven beyond a reasonable doubt that thewelding frames depicted in photographs 3, 4 and 13, and the unopened welding screens shown in photographs 21 and 22 ordered anddescribed in Tab 13 are the same welding frames and screens authorized by Schauer in the invoice dated November 9, 2016 that endedup in IDC’s premises.

The value of the screens and frames from Tab 13 are $164 and $418.20 respectively. [85] The Crown also alleges that Simpson ordered a number of items on behalf of 3D on November 10, 2016 including a dualbottle deluxe welding cabinet and shielding gases as evidenced by the WeldWorld invoice found at Tab 14. That invoice at Tab 14 has in

the Comment

section “call Shannon@780.490.6776, ext 223, when ready for pickup ”. This $5,250 welding machine, along with $605 the welding cabinet appear in photographs 12 and 10 respectively. The $50 shielding gases ordered in Tab 14 are shown in the Delivery Action that forms part of Tab 14 as being delivered and picked up by “Rick”. Schauer acknowledges in his evidence that there was no other “Rick” who worked at 3D at the time.

Accordingly, I find that the Crown has proven beyond a reasonable doubt that the items depicted in photograph 12 and 10 found at the scene of IDC are the same items that were ordered at Tab 14. [ 86 ] At Tab 14, a $1350 24-volt Miller wire feeder is shown as being ordered. Once again, the Crown has proven beyond a reasonable doubt that this wire feeder is logically the same item shown in the photograph 11 that was ordered in Tab 14. [ 87 ] The invoice found at Tab 35 from Gregg Distributors lists a Mitita brand ¼ inch die grinder at a value of $199.11.

The 3D order number 3D0781 corresponds to a purchase order book that is recorded as one issued to Simpson as part of the 3D purchase order book log shown at Tab 63. The Mikita die grinder box is shown in photograph 14. Schauer’s evidence was that a die grinder removes metal from objects which only a welder would use. This die grinder was invoiced on January 20, 2017 and was shown as a customer pick-up item.

I find that the Crown has proven beyond a reasonable doubt that it is the same item that would have been contained in the Mikita box shown in photograph 14. [ 88 ] Photograph 5 depicts a WeldWorld oxygen container with a bar code 094928893 found on the IDC premises. That bar code number matches the Delivery Action found on the third page of Tab 21. Schauer’s evidence is that he recalls picking up electrodes that were ordered from WeldWorld pursuant to this purchase order belonging to his purchase order book, order delivery date November 26, 2016.

The WeldWorld delivery note is found at the second page of Tab 21 was found in the kitchen of the residence of the co-Accused. Accordingly, I find that the Crown has proven beyond a reasonable doubt that the $26.98 WeldWorld oxygen container depicted at photograph 5 must be the same item ordered and picked up by Schauer as part of Tab 21. [ 89 ] Finally, Exhibit 38 is a $13,741.80 invoice from Highland Contracting Ltd dated December 23, 2016 which lists a number of items sold to 3D Steel Ltd.

The Paid stamp at the bottom of this invoice shows that 3D paid $6,870.90 by cheque number 7081 in May 2017, and they paid another further unspecified amount of the remaining balance by cheque number 1890. The relevant trial evidence on this Exhibit 38 is from Schauer who testified that these items should never have been billed to 3D and were in fact IDC items, but Exhibit 38 clearly shows that it was 3D that paid for part, if not all, of this invoice. Schauer’s evidence was that this error had been pointed out to Highland Contracting in a series of emails between Simpson and Highland.

However, those emails allegedly seen by Schauer were never produced at trial, and Simpson gave no evidence in the trial. Accordingly, I give no weight to Schauer’s evidence about the emails, and I find that the Accused are jointly responsible for the fraud committed with respect to Exhibit 38 the sum of $13,741.80.

The Accused Acted with a Common Purpose/Common Intention – Section 21(2) of the Criminal Code [ 90 ] It is necessary to determine whether the common purpose/common intention specified in s 21(2) of the Criminal Code applies herein: Where two or more persons form an intention in common to carry out an unlawful purpose and to assist each other therein and any one of them, in carrying out the common purpose, commits an offence, each of them who knew or ought to have known that the commission of the offence would be a probable consequence of carrying out the common purpose is a party to that offence. [ 91 ] The common purpose s 21.2 describes that in some circumstances, one person who has agreed that what one or more others to do something unlawful may be found guilty of another crime committed by one or more of the others carrying out their original agreement.

In other words, when two or more persons join together in a criminal venture, each may be responsible for what the others do pursuing their original goal. [ 92 ] The basis for establishing a person’s guilt in this regard has three elements:

d) Agreement;

e) Offence; and

f) Knowledge [ 93 ] Each of these elements must be proven beyond a reasonable doubt before I can find any accused guilty of fraud pursuant to Count 1. [ 94 ] The first element, “agreement”, requires that the Crown prove beyond a reasonable doubt that Schauer and Simpson agreed to defraud Amnor, and helped each other to do so. In this particular case, I find that Schauer and Simpson clearly had such an agreement given that they are common-law partners since approximately 2013, the only management personnel working directly at 3D, and the only persons who own and operate IDC.

Schauer and Simpson both had purchase orders that they used with respect to the above mentioned purchases and one or the other picked up the items that were ordered. No other persons were involved either in the ordering process or in the delivery process.

The items ordered, picked up or delivered, all ended up in the IDC premises. [ 95 ] The second element, “offence”, requires proof that the person that is part of the original agreement, and whose liability is to be decided on this basis, even though they were not directly involved in the ordering or the delivery process, committed the offence of fraud in carrying out the original agreement. The fraud committed here occurred in the course of carrying out the original agreement or plan. The items ordered, picked up or delivered, all ended up in the IDC premises.

[96] The third item, “knowledge”, may be proven in either of two ways. The Crown can prove that the Accused actually knew thatthe other participant in the original agreement or plan would probably carryout the offence of fraud as part of the original agreement.Knowledge is a state of mind, the Accused’s state of mind, and I find that each Accused was aware that the other in the original planwould probably carryout their original agreement.

The term agreement does not mean any formal or written plan or agreement betweenSchauer and Simpson, but from the evidence it is clear that the agreement between Schauer and Simpson did not arise on the spur of themoment at the time each fraud was committed, but clearly had been thought out.

The plan or agreement had begun as early as July 2016on Schauer’s evidence when IDC was first discussed by the co-Accused, but it is not necessary for the Court to actually determine theexact date that Schauer and Simpson came up with the plan or agreement to defraud 3D in the systematic way that I find they surely did. [97] The other way that the Crown can prove that knowledge of the other co-Accused, that has been proven in this case beyond areasonable doubt that can substitute for actual knowledge as a component of the mens rea, is that wilful blindness can be inferred toimpute knowledge.

Given that I am sure that both Schauer and Simpson saw the need at various times to make further inquiries of theother’s actions, but deliberately chose not to make those inquiries, they are guilty of wilful blindness: R v Briscoe, 2010 SCC 13, 2010 1 SCR 411. Conclusion Count One [98] I first turn to my WD analysis with respect to Schauer’s evidence with respect to Count 1.

Specifically with respect to Count 1,Schauer denied ever using 3D purchase orders for personal use, he denied using 3D purchase orders to buy items for IDC’s benefit, andwith only one exception, Schauer denied any knowledge of any 3D equipment and supplies ending up in IDC’s premises. [99] Given Schauer’s blanket denial in this regard, I am not able to either believe his evidence outright, nor does his outright denialleave me with a reasonable doubt.

One of the limitations of Schauer’s evidence is that in many of the answers he gave with respect to theequipment and supplies that was seized from IDC’s premises, it was the co-Accused Simpson who ordered supplies for IDC.

Schauerhimself had no personal knowledge as to what was or was not being ordered by IDC, so this seems to incriminate Simpson especiallywhen one considers Kaur’s uncontradicted evidence that he never loaned equipment and supplies to anyone for a commercial purpose.However, I am dubious about Schauer’s evidence because Simpson, the non-welder, would never have known what welding equipmentand supplies was appropriate to order without Schauer’s direction. [100] On the one item that Schauer acknowledges that was found at IDC that was the subject matter of a 3D purchase order, theWeldWorld welding gas container, Schauer testified that Simpson had told him that she had permission to borrow supplies from Kaurand would repay Kaur later.

This is unreliable evidence particularly given Kaur’s uncontradicted evidence that he did never lent anyitems to any 3D employees for their commercial use elsewhere, and Schauer’s evidence is conveniently self-serving in any event. [101] The law of fraud consists of the actus reus and mens rea of the offence. I conclude that Count 1 has been made out because theactus reus of fraud has been proven by the Crown beyond a reasonable doubt through the dishonest act and deprivation that occurred to3D as a direct result of Schauer and Simpson’s actions.

Similarly the mens rea of the fraud has been established because there was anintentional commission of the prohibited acts through the dishonest conduct of Schauer and Simpson that led to the deprivation. Themens rea of fraud consists of the subjective knowledge of the prohibited act, and the subjective knowledge that the prohibitive act couldhave as a consequence the deprivation of 3D’s pecuniary interests. Corporate funds of 3D were spent for the personal purposes ofSchauer and Simpson for the benefit of IDC, a business and corporation the two co-Accused exclusively controlled and operated.

In theprocess, Schauer and Simpson took advantage of the fact that they were the only two individuals effectively operating 3D, and theyexploited the lack of financial oversight in 3D. [102] Schauer and Simpson made unauthorized purchases since the evidence was clear that their authority to purchase on behalf of3D was not unlimited, but was restricted on the evidence before me to items valued at less than $250 from Kaur’s evidence; to evidencethat limited the co-Accused buying authority to items under $500 from Kaur’s first cousin Vic Thind; and from the evidence of Amnor’sVice President Shelley Vos, who thought that any item over $1000 would require Mr.

Kaur’ personal authorization.

While the evidenceis somewhat contradictory as to what the actual purchase authorization limit was at 3D, which is indicative of some of the lack ofoversight and rules in place for purchase orders, exploiting this weakness of 3D by the unauthorized diversion of funds over the mostgenerous limits of $1000, constitutes an unauthorized arrogation of funds or property by both Schauer and Simpson as described inThéroux and its companion case Zlatic. [103] Although this is a more complex case because of the limited or non-existent enforcement or oversight with respect to purchasesin 3D, any reasonable person would consider the purchases that were unauthorized made by Schauer or Simpson, for which are bothliable through the common purpose/ intension, section 21 (2) of the Criminal Code, constitute a dishonest fraudulent act.

This wouldhave been the case even if there was no purchase limit in effect because Schauer and Simpson cannot convert 3D’s property into theirown in the manner I find they did. [104] While this case is also complicated by the fact that there was actually no inventory list that was ever kept of the itemspurchased or belonging to 3D during all material times, the striking similarity between the items photographed at the IDC premises andthe items purchased on the 3D accounts as described earlier, without any evidence to the contrary or without any other possiblereasonable explanation, establishes beyond a reasonable doubt that the items purchased were the same items ordered and picked up byeither Schauer or Simpson, were the same items found at the IDC premises. [105] As was said by Ritchie J (for the majority) in Paul v The Queen, (SCC), 27 CCC (2d) 1 (SCC) at 6, [1977] 1SCR 181, 64 DLR (3d) 491: I do not think that the burden resting on the Crown to establish the guilt of the accused beyond a reasonable doubt includes the addedburden of negativing every conjecture to which circumstantial evidence might be consistent with the innocence of the accused. [106] R v Sandoval-Barillas, 2017 ABCA 154 at para 39 stated:

As to the circumstantial evidence in this case, it is timely to here note R v Villaroman, 2016 SCC 33 at para 71, [2016] 1 SCR1000. In reversing this Court and restoring a conviction, relying on the reasons of this Court in R v Dipnarine, 2014 ABCA 328 at paras 22 and 24-25, 584 AR 138, the Supreme Court said: [71] The Court of Appeal’s analysis overlooks the important point made in Dipnarine that it is fundamentally for the trier of fact todraw the line in each case that separates reasonable doubt from speculation. The trier of fact’s assessment can be set aside only where itis unreasonable.

While the Crown’s case was not overwhelming, my view is that it was reasonable for the judge to conclude that theevidence as a whole excluded all reasonable alternatives to guilt. [107] Accordingly I find both Accused Guilty pursuant to Count 1 with respect to the following items:

a) Four orange vinyl welding screens and four curtain frames, approximately 6 feet by 6 feet each valued at $164 and $418.20respectively;

b) Welding machine valued at $5,250;

c) Dual bottle deluxe welding cabinet and shielding gases valued at $605 and $50 respectively; d) 24-volt Miller wire feeder valued at $1,350;

e) Mitita brand ¼ inch die grinder valued at $199.11;

f) WeldWorld oxygen container valued at $26.98; and

g) Items invoiced from Highland Contracting Ltd for $13,741.80. Conclusion – Counts 2 to 9 [108] I find both Accused guilty pursuant to Counts 2 to 9. Heard on the 8th to 12th days of July 9th to 13th days and the 23th day of September, 2019. Dated at the City of Edmonton, Alberta this 24th day of September, 2019. Donald Lee J.C.Q.B.A. Appearances: John Baharustani of Alberta Justice and Attorney General for the Crown Stacey Purser of Liberty Law for the Richard Douglas Schauer Derek J Anderson Of Barr Picard For the Accused Shannon Leigh Simpson

_______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Mr. Justice Donald Lee _______________________________________________________ Para 40: change in sentence: Accordingly, even if some other person such as Roy Bonn, or superior, save and accept for Kaur himself, authorized the Invoices, it still would have been insufficient a defence in law.