R v Cooney and Bayne, 2023 ABKB 403

Court of King’s Bench of Alberta Citation: R v Cooney and Bayne, 2023 ABKB 403 Date: 20230706 Docket: 200577682Q1 Registry: Edmonton Between: His Majesty the King Crown - and - Mary Steele Cooney and Ross Vincent Bayne Defendants _______________________________________________________ Reasons for Decision of the Honourable Justice S. Leonard _______________________________________________________ I. Introduction

[ 1 ] The Defendants, Mary Steele Cooney and Ross Vincent Bayne, are charged with fraud contrary to s 380(1)(

a) of the Criminal Code , RSC 1985, c C-46 . The Crown alleges the Defendants unlawfully defrauded Beatrijs Penn of monies exceeding $5,000.00 between February 26, 2013, and October 26, 2017, by inducing her to provide loans to invest in humanitarian projects that were supposedly undertaken by Mr. Bayne. [ 2 ] The Crown’s position is that Mr. Bayne and Ms. Cooney misled Ms. Penn. She was deceived into lending money to assist in the development of projects that simply did not exist. The loans were shuffled between a series of intermediaries to distance Mr. Bayne from the Complainant. Both Mr. Bayne and Ms.

Cooney used Ms. Penn’s money for personal uses. [ 3 ] Counsel for Mr. Bayne argues Mr. Bayne was involved in bona fide business dealings. Ms. Penn’s investment simply did not pay off. I must be satisfied beyond a reasonable doubt that Ms. Penn was deceived or defrauded. [ 4 ] Counsel for Ms. Cooney argues Ms. Cooney believed Mr. Bayne was involved in bona fide business activities. She believed she was entitled to keep an administration fee from Ms. Penn’s money because that is what Mr. Bayne told her. There is nothing dishonest in her conduct. II.

Background Facts Evidence from the Witnesses [ 5 ] The Crown called one witness, the Complainant, Ms. Penn. Both Accuseds testified in their defence. In addition, Counsel for Ms. Cooney called Tristan Spearing. [ 6 ] Ms. Penn is originally from the Netherlands. She visited Canada for the first time in the summer of 2009, when she attended a seminar in Edmonton given by a spiritual teacher. She later decided to immigrate to Canada. In 2013, she obtained a student visa and began living in Canada on a full-time basis. She obtained her permanent resident status in 2021. [ 7 ] Ms. Cooney is presently 60 years old.

She lives with her friend, Mr. Spearing. She primarily takes care of Mr. Spearing. She occasionally helps seniors with moves and downsizing. She cleans or does gardening when the opportunity arises. She also has experience as a bookkeeper. [ 8 ] Ms. Penn and Ms. Cooney were both members of the John de Ruiter spiritual community. They met at a workshop and later, on February 16, 2013, met over coffee. They both had interests in alternative medicine and spirituality. [ 9 ] During the coffee meeting on February 16, 2013, Ms. Penn disclosed to Ms.

Cooney that when she was still living in the Netherlands in 2001, she was diagnosed with terminal cancer. Rather than pursuing conventional treatments, Ms. Penn sought natural treatment at the Ayurvedic College Clinic. By 2004, the cancer had reversed, and Ms. Penn was healthy. [ 10 ] Pleased with the results of her treatment, Ms. Penn provided loans to the Ayurvedic College. The College did not repay Ms. Penn when the term of the loan expired. She sued them and recovered approximately €400,000. This sum represented the entirety of Ms. Penn’s life savings. [ 11 ] In their discussions over coffee, Ms.

Cooney told Ms. Penn that she knew someone (Mr. Bayne) who could help Ms. Penn invest her money in humanitarian projects. Ms. Penn wanted to be involved with projects like this and urged Ms. Cooney to ask Mr. Bayne if she could invest $100,000 in his projects. According to Ms. Cooney, she warned Ms. Penn that projects could fall apart after years of work. At the end of the coffee meeting, Ms. Cooney indicated she would speak with Mr. Bayne to determine whether Ms. Penn could invest in his projects. [ 12 ] Ms. Cooney contacted Mr. Bayne to let him know of Ms. Penn’s interest. She testified that Mr.

Bayne’s initial reaction was that he did not know whether it could happen but that he would think about it. They subsequently met and Mr. Bayne explained a way that they could move forward. His idea was that Ms. Penn would invest directly in him and the process he was creating so that regardless of which project went through the process, Ms. Penn would benefit when it succeeded. Relationship between Mr. Bayne and Ms. Cooney [ 13 ] Ms. Cooney and Mr. Bayne have known each other since the early 2000s. They met at lectures related to health and a telephone marketing program.

They soon became friends. [ 14 ] At the time they met, Mr. Bayne was on the edge of launching a company called Arcadia Financial Corporation (“Arcadia”). According to Mr. Bayne, Arcadia was active from approximately 2001 or 2002, until it was dissolved in 2009. Arcadia was put together to acquire and remarket early-stage technology from South Korea and Japan. These projects interested Ms. Cooney and so she decided to invest in Arcadia, providing a loan in the amount of $5,000. This loan was acknowledged by Mr. Bayne in his evidence. [ 15 ] Over the years, Ms. Cooney brought Mr.

Bayne 20-25 investors that invested in Arcadia. On cross-examination, Mr. Bayne agreed that Ms. Cooney was one of his largest sources of referrals for potential investors. Mr. Bayne described her as being “very active.” [ 16 ] Mr. Bayne was sued by Richard Meyer and Boris Dwornik over his involvement in Arcadia and ultimately lost. Mr. Bayne explained that he lost everything in the lawsuit and had to go into bankruptcy in 2012. Mr. Bayne could not recall whether he discussed the bankruptcy at the February 19, 2013 meeting with Ms.

Penn but testified that it would have come up at some point and that he was not trying to hide it.

[ 17 ] Ms. Cooney’s understanding is that an individual named Mr. Meyer had requested an introduction to someone for the purpose of making an investment. Mr. Bayne provided that introduction. Mr. Meyer was not satisfied with the outcome and so he was suing anyone related to the situation. Mr. Bayne was one of the people he sued. The February 19, 2013 Meeting [ 18 ] Ms. Penn, Ms. Cooney, and Mr. Bayne met on February 19, 2013. Mr. Bayne described the projects he was working on. Ms. Penn understood these to be humanitarian projects. [ 19 ] Mr.

Bayne did not ask for money during this meeting but as a result of that meeting, Ms. Penn was eager to invest. The next day, Ms. Penn called Ms. Cooney and told her she wanted to move forward. Ms. Cooney’s evidence was that she reiterated that there was no way of knowing how long it would take to get a return on the investment. Events after the February 19, 2013 Meeting and the Grace Endowment [ 20 ] Ms. Penn testified that after the meeting, Ms. Cooney took over. Although Ms. Penn wanted to deal directly with Mr. Bayne, according to Ms. Penn, Ms. Cooney told her she could not. Everything had to go through Ms.

Cooney. [ 21 ] Ms. Cooney explained to Ms. Penn that the money she wanted to invest would go through Ms. Cooney. Ms. Cooney would prepare a contract for a loan that would go through an entity called the Grace Endowment. [ 22 ] Ms. Penn testified that she understood from Ms. Cooney that the Grace Endowment was a charity. She explained that Ms. Cooney did not explain what the charity did. Ms. Penn understood that her loan would go to fund humanitarian projects. The 2013 Loan Agreement [ 23 ] On February 26, 2013, Ms. Cooney presented Ms. Penn with a contract between Ms. Penn and the Grace Endowment.

The contract provided Ms.

Penn would loan the Grace Endowment $100,000 (the 2013 Loan Agreement). [ 24 ] The 2013 Loan Agreement provided, in part: WHEREAS the Borrower is in need of additional funding for purposes of pursuing the business interest of the Borrower; AND WHEREAS the Lender is aware of the purposes of the loan and has agreed to provide the Borrower with a loan in a specified amount; NOW THEREFORE, IN CONSIDERATION of a sum of one-hundred-thousand (CAD $100,000.00) in lawful money of Canada (hereinafter referred to as the “Principal Sum”) AND IN CONSIDERATION of the premises and the mutual covenants and agreements herein contained, plus other good and valuable consideration: 1.

FOR VALUE RECEIVED, The Grace Endowment PROMISES TO PAY to Beatrijs M. C. H. Penn the Principal Sum hereunder together with interest thereon of 100%. All principal and interest shall become due and be payable by the Borrower at the completion of the objectives and business activities as discussed with the Lender. [ 25 ] Ms. Cooney signed the contract as the “overseer” of the Grace Endowment. Once the 2013 Loan Agreement was signed, Ms. Penn went to the TD Bank with Ms. Cooney. Ms. Penn transferred $100,000 directly from her account to the Grace Endowment bank account (the “Grace Endowment Bank Account”).

The Administration Fee and the Involvement of Praxis Information Management [ 26 ] After Ms. Penn’s money was deposited into the Grace Endowment Bank Account, Ms. Cooney and Mr. Bayne met to discuss next steps. Mr. Bayne wanted Ms. Cooney to manage communications with Ms. Penn, including setting up meetings and keeping her up to date. He suggested to Ms. Cooney that she could keep 10% of the funds received from Ms. Penn as an administrative fee. Mr. Bayne would then be able to focus his efforts on the projects. [ 27 ] At the meeting, Mr. Bayne also told Ms.

Cooney that he was going to need a money order for his landlord and that his wife also needed money. Ms. Cooney transferred $8,400 and $3,000 to Mr. Bayne’s landlord and Mr. Bayne’s wife, respectively. [ 28 ] A contract was entered between Praxis Information Management Inc. (“Praxis”) and the Grace Endowment. Mr. Bayne testified that Praxis is an Alberta information management company created by Rick Kalivoda and Tymothy Sotnikow. The contract was signed by Mr. Sotnikow on behalf of Praxis. Mr.

Bayne explained that it was designed so that the Grace Endowment could retain the services of Praxis to “collate, collect, develop, and ultimately remarket information.” [ 29 ] Mr. Bayne testified that he personally had a contract with Praxis to “provide research networking development and essentially prod the knowledge necessary to be able to build and fund a project.” He testified that the work he was doing for Praxis was the work that Ms. Penn was interested in supporting. Despite this, he agreed that he did not discuss Praxis with Ms.

Penn at the February 19 th meeting, nor did he have a contract with Praxis on February 19 th . Mr. Bayne testified that he entered the contract with Praxis in April 2013, after the loan was advanced. [ 30 ] Mr. Bayne testified that his contract with Praxis provided that:

the information [he] generated, the networks [he] was able to collect… the knowledge that we were able to collect, and the process pieces that [he] was able to formulate, if we were able to get that to a point where we could prove the concept, that that then became intellectual property of Praxis that could be remarketed so that we could reuse it in different applications and different locations. [ 31 ] The contract between Praxis and Mr. Bayne was not entered in evidence. Mr. Bayne acknowledged during cross-examination that the trial might be the first time the existence of a contract came up. [ 32 ] Ms.

Cooney kept 10% of the funds and the rest of the money went to Praxis. Praxis kept a small amount of money for administration, with the remaining money transferred to Mr. Bayne. In 2013 and 2014, Praxis transferred the money directly to Mr. Bayne. Starting in 2015, Praxis transferred the money to Mr. Bayne’s wife’s company. From there the money was deposited into the Baynes’ joint account. Subsequent Meetings [ 33 ] After the initial funds were advanced, Ms. Penn continued to meet with Ms. Cooney on a regular basis. They often met weekly but sometimes they met every other week. Ms. Penn did not meet with Mr.

Bayne as frequently, meeting with him only once every three or four months. Ms. Penn never met with Mr. Bayne alone. Ms. Cooney was present at all the meetings with Mr. Bayne. [ 34 ] According to Ms. Penn, she was not allowed to contact Mr. Bayne, and she often asked questions that Ms. Cooney refused to answer. Ms. Penn testified that Ms. Cooney told Ms. Penn that Ms. Cooney had a nondisclosure agreement with Mr. Bayne. On cross- examination, counsel for Mr. Bayne contended that the nondisclosure agreements were between Mr. Bayne and his clients, not between Mr. Bayne and Ms. Cooney. Ms. Penn asserted that Ms.

Cooney told her the non-disclosure agreements were between Mr. Bayne and Ms. Cooney. [ 35 ] When Ms. Penn met with Mr. Bayne, Ms. Penn described Mr. Bayne as giving a monologue. It was not a discussion. The monologues were not about the projects she invested in, but were about trade, the Silk Road, commodities, and the collapse of banks. Mr. Bayne would give an update on the kinds of connections he had but never mentioned names. The status of the humanitarian projects was not discussed. As Ms. Penn put it, “[t]hey disappeared from the table.” Subsequent Loans [ 36 ] By 2014, Ms. Penn understood from Ms.

Cooney that the money was being used to keep Mr. Bayne’s family afloat. Ms. Cooney told her that the money was going to a bank in Calgary and that Mr. Bayne’s wife would pick it up. Ms. Penn recalls Ms. Cooney telling her that Mr. Bayne could not earn money because if he did, it would go to the people that were hurt in his bankruptcy rather than to his family. [ 37 ] Ms. Penn and Ms. Cooney continued to meet every week. Ms. Penn’s evidence was that at some point Ms. Cooney told Ms. Penn that they were out of money. Ms. Penn liked feeling like part of a team of people and she agreed to advance more money. Ms.

Penn signed a second loan agreement dated May 12, 2014, with the Grace Endowment in the amount of $150,000. She advanced this money in three separate instalments of $50,000. Although she now understood that this money was being used by Mr. Bayne’s family, she nonetheless expected to get it back. [ 38 ] Ms. Penn continued to advance money to the Grace Endowment and at one point was advancing $5000 per month. Although Ms. Cooney asked Ms. Penn if she needed another loan agreement for these advances, Ms. Penn said no because Ms.

Cooney had been saying that a payout was expected soon and there were billions of dollars in a bank safe. Ms. Penn trusted Ms. Cooney. Despite there not being loan agreements, Ms. Penn testified that these advances were loans, not gifts. [ 39 ] Ms. Penn testified that she advanced a further $3,000 before Christmas one year. Ms. Cooney wanted to visit her family in the United States, and she needed it to pay for plane tickets and gifts. Ms. Cooney assured Ms. Penn that she would get the money back. [ 40 ] On May 10, 2016, Ms. Penn advanced $30,000 to the Grace Endowment. Ms. Penn testified that Ms.

Cooney asked for more money because they had run out. Ms. Penn was not told how these funds were used. [ 41 ] Ms. Penn testified that in September 2016, she advanced $20,000 so that Mr. Bayne, Ms. Cooney, and Mr. Spearing could determine whether they could earn an income from Bitcoin. Again, she advanced the money through the Grace Endowment. Ms. Cooney denied receiving money from Ms. Penn to invest in bitcoin however, the Agreed Statement of Facts includes a transfer from Ms. Penn to the Grace Endowment on September 16, 2016 in the amount of $20,000. [ 42 ] In approximately November 2017, Ms. Penn met with Mr.

Bayne and Ms. Cooney and told them she could not contribute any more. She was getting in financial trouble and was having difficulty paying for her own expenses. Mr. Bayne thanked Ms. Penn, told her it was okay, and said she had done enough. [ 43 ] In all, Ms. Penn advanced $343,000 to the Grace Endowment between February 26, 2013, and October 26, 2017 (the Loan Period). Ms. Penn was the only person that provided capital to fund the projects being pursued by Mr. Bayne. [ 44 ] Ms. Penn has never been repaid, despite having asked for repayment. Ms. Penn reported these matters to the police on March 10, 2018. III.

Agreed Statement of Facts

Flow of Money [ 45 ] The following information comes from an Agreed Statement of Facts executed by the Defendants. There is no dispute regarding the amount of money advanced by Ms. Penn, the entities to which it was advanced, or the amounts that were ultimately either transferred to Mr. Bayne or deposited into the joint account he shared with his wife.

i) Funds from Ms. Penn to the Grace Endowment [ 46 ] Between February 26, 2013, and October 26, 2017, Ms. Penn transferred $343,000 to the Grace Endowment Bank Account as follows: February 26, 2013 $100,000 November 23, 2013 $3,000 April 15, 2014 $50,000 May 7, 2014 $50,000 May 12, 2014 $50,000 September 16, 2016 $20,000 May 10, 2016 $30,000 February 2017 $5,000 March 2017 $5,000 April 2017 $5,000 May 2017 $5,000 June 2017 $5,000 July 2017 $5,000 August 2017 $5,000 October 26, 2017 $5,000 [ 47 ] When Ms.

Penn’s loan of $100,000 was transferred to the Grace Endowment Bank Account on February 26, 2013, there was an outstanding balance of $1,303.81 on that account. Ms. Penn was not the only source of funds into the Grace Endowment Bank Account; money from Mr. Spearing was also deposited into this account. ii) Funds from Grace Endowment to Praxis [ 48 ] Money from the Grace Endowment Bank Account was transferred to a bank account registered to Praxis.

This was the only source of funds into the Praxis Bank Account. [ 49 ] Over a period of four years, $255,000 was transferred from the Grace Endowment Bank Account to the Praxis Bank Account. In total, there were 51 transfers in the amount of $5,000.

During this four-year period, there were no other deposits into this account. iii) Funds from Praxis to other recipients [ 50 ] Over a period of four years, funds from the Praxis Bank Account were transferred to the following recipients: Amount from Praxis Method of Transfer Recipient Year of transfers Over $78,000 Cheque Ross Bayne 2013 and 2014 Over $80,000 Cheque 1866872 Alberta Ltd. 2015, 2016, and 2017 Over $60,000 e-transfer 1866872 Alberta Ltd. 2015, 2016, and 2017 [ 51 ] There were other minor expenditures from the Praxis Bank Account during this period, mostly to restaurants. Mr.

Sotnikow received cheques totalling $710.17 and three other people received email transfers totalling approximately $1,400. [ 52 ] It is important to note that the transfers to Mr. Bayne occurred in 2013 and 2014. There were no transfers to Mr. Bayne directly in 2015, 2016 or 2017. In those years, the transfers were all to 1866872 Alberta Ltd. 1866872 Alberta Ltd. [ 53 ] Mr. Bayne’s wife, Yvonne Verhoeff-Bayne, was the sole shareholder and director of the numbered company 1866872 Alberta Ltd., operating as “Paint Cakes 4 Kids.” Ms. Verhoeff-Bayne was the only person associated with the 1866872 Alberta Ltd.

Bank Account and the only person with signing authority over this account. [ 54 ] The 1866872 Alberta Ltd. Bank Account shows the following activity between 2015 and 2017: Source Method of Transfer Amount Praxis Cheque Over $75,000 Un-named accounts e-transfer Over $70,000 [ 55 ] Over $140,000 worth of cheques were written out to Ms. Verhoeff-Bayne from the 1866872 Alberta Ltd. Bank Account. Personal Bank Account of Mr. Bayne and Ms. Verhoeff-Bayne

[56] Mr. Bayne and Ms. Verhoeff-Bayne shared a personal bank account, registered in both of their names. [57] Between 2013 and 2017, the sources of funds into this account were as follows: Source Amount Method of Transfer Recipient Year of transfersPraxis $78,200 Cheque Ross Bayne 2013 and 20141866872Alberta Ltd. $134,000 Cheque Yvonne Verhoeff-Bayne 2015, 2016 and 2017 [58] The only sources of funds into this account came from Praxis, 1866872 Alberta Ltd. and smaller amounts for landscapingwork from River City Landscape and Maintenance. There were also some cheques written to Ms. Verhoeff-Bayne for art classes.

IV. The Law The Offence of Fraud [59] The Crown must prove the following elements beyond a reasonable doubt: (

a) That the Accused(

s) deprived Ms. Penn of something of value; (

b) That the value of the property exceeded $5,000; (

c) That the Accused(

s) deceit, falsehood or other fraudulent means caused the deprivation; and (

d) That the Accused(

s) intended to defraud Ms. Penn. [60] There is no dispute that Ms. Penn advanced $343,000 to the Grace Endowment as a series of loans and that she has not beenrepaid. As such, there is no dispute between the parties that Ms. Penn has been deprived of something of value exceeding $5,000. Thefirst two elements of the offence of fraud are therefore established, beyond a reasonable doubt. [61] The actus reus of fraud consists of two elements: dishonesty and deprivation: R v Iyer, 2020 ABCA 439 at para 24 (Iyer),citing R v Olan, (SCC), [1978] 2 SCR 1175 at 1182.

Dishonesty includes deceit, falsehood, or other fraudulent means:Iyer at para 25. [62] In Olan at 1180, the Court explained that “other fraudulent means” includes: ...means which are not in the nature of a falsehood or a deceit; they encompass all other means which can properly be stigmatized asdishonest. [63] In R v Theroux, (SCC), [1993] 2 SCR 5 at 16-17 (Theroux), the Court defined “other fraudulent means” toinclude “the use of corporate funds for personal purposes, non-disclosure of important facts, exploiting the weakness of another,unauthorized diversion of funds, and unauthorized arrogation of funds or property.” The Court also reiterated that “other fraudulentmeans” are determined by what reasonable people consider to be dishonest dealings. [64] In determining whether the means can be stigmatized as dishonest, the Court in R v Zlatic, (SCC), [1993] 2SCR 29 stated the following at para 19: …one applies a standard of the reasonable person.

Would a reasonable person stigmatize what was done as dishonest? Dishonest is, ofcourse, difficult to define with precision.

It does, however, connote an underhanded design which has the effect, or which engenders therisk, of depriving others of what is theirs... [65] For instances of deceit or falsehood, the Court will not need to determine whether they are “dishonest dealings” in the eyes ofreasonable people; rather “all that needs be determined is whether the accused, as a matter of fact, represented that a situation was of acertain character, when, in reality, it was not”: Theroux at 17. [66] The mens rea of fraud consists of “…the subjective awareness that one was undertaking a prohibited act (the deceit, falsehoodor other dishonest act) which could cause deprivation in the sense of depriving another of property or putting that property at risk”:Theroux at 19.

With respect to mens rea, the Court further noted at 19: ...The fact that the accused may have hoped the deprivation would not take place, or may have felt there was nothing wrong with what heor she was doing, provides no defence... the proper focus in determining the mens rea of fraud is to ask whether the accused intentionallycommitted the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiring the consequences proscribed by the offence(deprivation, falsehood, or other dishonest act).

The personal feeling of the accused about the morality or honesty of the act or itsconsequences is no more relevant to the analysis than is the accused’s awareness that the particular acts undertaken constitute a criminaloffence. Circumstantial Evidence and Proof Beyond a Reasonable Doubt [67] In order to convict an accused on the basis of circumstantial evidence, the Court “must be satisfied beyond a reasonable doubtthat the only rational inference that can be drawn from the circumstantial evidence is that the accused is guilty”: R v Griffin, 2009 SCC28 at para 33.

Some courts use the word “reasonable” instead of “rational.” Both words are correct and have the same meaning: R v

Villaroman, 2016 SCC 33 at paras 32-34 (Villaroman). [68] In a circumstantial case, the Court must be cautious not to “‘fill in the blanks’ or bridge the gaps in the evidence to support theinference that the Crown invites it to draw”: Villaroman at para 26. [69] There is no obligation on the accused to prove facts that support explanations other than the guilt of the accused: “inferencesconsistent with innocence do not have to arise from proven fact”: Villaroman at para 35.

This is consistent with the well-known principlein R v Lifchus, (SCC), [1997] 3 SCR 320 at para 30 (Lifchus), that a reasonable doubt “is a doubt based on reason andcommon sense which must be logically based upon the evidence or lack of evidence.” (Emphasis added). [70] As noted by the Supreme Court of Canada in Villaroman, at para 38, “the line between a ‘plausible theory’ and ‘speculation’is not always easy to draw.” (Emphasis added).

The Court must ask itself (at para 38): ...whether the circumstantial evidence, viewed logically and in light of human experience, is reasonably capable of supporting aninference other than that the accused is guilty. [71] The Court in Villaroman, at para 42, affirmed the following statement of the principle as articulated by the Alberta Court ofAppeal in R v Dipnarine, 2014 ABCA 328 at paras 22 and 24-25: ‘Circumstantial evidence does not have to totally exclude other conceivable inferences’; that the trier of fact should not act on alternativeinterpretations of the circumstances that it considers to be unreasonable; and that alternative inferences must be reasonable, not justpossible. [72] The evidence in this case must be considered as a whole: “[I]t is an error of law to subject individual pieces of evidence to thestandard of proof beyond a reasonable doubt; the evidence must be looked at as a whole”: R v Lemay, 2020 ABCA 365 at para 27, citingfrom R v JMH, 2011 SCC 45 at para 31; R v Morin, (SCC), [1988] 2 SCR 345; and R v Menard, (SCC), [1998] 2 SCR 109. [73] The law, as it relates to circumstantial evidence, operates together with the principles articulated by the Supreme Court ofCanada in R v W(D), (SCC), [1991] 1 SCR 742 (W(D)).

The Crown bears the burden of proving every essential elementof the offence beyond a reasonable doubt: Lifchus at para 36. This burden never shifts to the accused. To ensure that the burden remainson the Crown, in W(

D) the Supreme Court of Canada established a framework to assist in the assessment of an accused’s evidence,which was amplified by the Alberta Court of Appeal in R v Achuil, 2019 ABCA 299 at para 18, leave to appeal dismissed (SCC), and R v Ryon, 2019 ABCA 36 at para 51 (Ryon): (

a) If you believe the accused’s evidence denying complicity or guilt (or any other exculpatory evidence to that effect),obviously you must acquit. (

b) If you do not believe the accused’s evidence denying complicity or guilt (or any other exculpatory evidence to that effect),but you are left in reasonable doubt by it, you must acquit. (

c) Even if you are not left in doubt by the accused’s evidence denying complicity or guilt (or any other exculpatory evidence tothat effect), you must ask yourself whether, on the basis of the evidence which you do accept, you are convinced beyond a reasonabledoubt by the evidence of the guilt of the accused. [74] A trial is not a credibility contest requiring the trier of fact to determine that one of the conflicting versions is true.

If, aftercareful consideration of all the evidence, the trier of fact is unable to decide whom to believe, they must acquit: Ryon at para 51. [75] I may not impose a more scrupulous standard to the testimony of the Accused than the testimony of the Complainant: R vSMC, 2020 ABCA 19 at para 20. Character Evidence of Mr. Bayne [76] It is undisputed that in a joint trial, a co-accused can introduce character or propensity evidence of another accused. However,evidence of a co-accused’s character or propensity can only be used to raise a reasonable doubt about the accused’s guilt.

It may not beused to prove the guilt of the co-accused: see R v Marks, at para 17 (ONCA) and R v Suzack, atpara 127 (ONCA). [77] In this case, Ms. Cooney attempted to elicit evidence to undermine Mr. Bayne’s credibility for the purpose of raising areasonable doubt about her own guilt. This occurred when, during the cross-examination of Mr. Bayne by counsel for Ms. Cooney,counsel asked the Court to consider whether he could cross-examine Mr. Bayne on a 2012 civil decision of the Alberta Court of Queen’sBench, rendered by Justice Sanderman, which involved Mr. Bayne as a Defendant. [78] Counsel for Ms.

Cooney initially asked that I take notice of previous findings made by Justice Sanderman in respect of Mr.Bayne’s credibility. I declined to do so, indicating that I could not take notice of or adopt the credibility findings of a previous Court inrespect of this Accused. The only purpose for which counsel for Ms. Cooney could use or elicit character evidence of Mr. Bayne wouldbe to raise a reasonable doubt about his client’s guilt. [79] On this basis, counsel for Ms. Cooney proceeded with the cross-examination of Mr. Bayne on the circumstances surroundingthe earlier civil litigation. Mr.

Bayne acknowledged the earlier litigation and acknowledged the contents of the decision of JusticeSanderman but disagreed with the characterization of events put forward by counsel for Ms. Cooney and some of the terminology or

characterization used by Justice Sanderman in his decision. [ 80 ] Nothing was elicited in the context of this area of cross-examination that puts Mr. Bayne’s character in issue, nor is there anything that raised a reasonable doubt about Ms. Cooney’s guilty. I place no weight on the evidence elicited through the cross- examination of Mr. Bayne in relation to the earlier decision of Justice Sanderman. V. Analysis [ 81 ] As mentioned above, the first two elements of fraud - deprivation of property with a value of more than $5,000 - have been proven beyond a reasonable doubt.

However, to find the Accuseds guilty of fraud, the Crown must also prove the following beyond a reasonable doubt: 1) The Accuseds used deceit, falsehood, or other fraudulent means. 2) The Accuseds intended to defraud Ms. Penn. Credibility of Ms. Penn [ 82 ] The position of both Defence counsel is that I cannot be satisfied beyond a reasonable doubt that Ms. Penn was deceived during the initial meeting because of issues of credibility and reliability. [ 83 ] Counsel for Mr. Bayne argues Ms. Penn presents as two different people.

On the one hand, she presents as being a sophisticated university-educated professional who is capable of making loans and recovering those loans through legal processes. She explained the humanitarian projects she thought she was investing in and asserted she had knowledge that banking systems were on the brink of failure. [ 84 ] Counsel for Mr. Bayne states that on the other hand, she presented as being vulnerable person who was going through a difficult time caused by immigration difficulties and language limitations.

While in examination-in-chief she seemed to understand the loan agreement, in cross-examination she indicated she had not read the agreements and provided vague responses about her understanding. [ 85 ] Counsel for Mr. Bayne argues Ms. Penn’s memory is not reliable because it is tainted by her current belief that she was deceived. I agree that Ms. Penn became agitated and angry in cross-examination. Many of her responses focussed on what she now believes she knows about Ms. Cooney and Mr. Bayne. It is evident that she is of the view that the Accuseds lied to her.

It is also evident that she is trying to find a way to explain why she gave the Accuseds her money. In hindsight she has a view that they defrauded her, but she is unable to reconcile this with what she believed initially. [ 86 ] Despite this frailty in her evidence, I am satisfied that she was told that her money would be used for humanitarian investments. Her evidence on this point is consistent with the evidence of Ms. Cooney and Mr. Bayne. Similarly, I am satisfied that she did not initially believe that her money would be used personally by Ms. Cooney and Mr. Bayne.

Again, this is consistent with the evidence of the Accuseds, both of whom acknowledged not telling her that the money she provided would be used to pay for their rent and other personal expenses. Finally, Ms. Penn was honest and consistent in her evidence that at some point prior to advancing the second loan of $150,000, she became aware that the money was being used to keep Mr. Bayne’s family afloat. Despite this knowledge, she continued to advance money. Her evidence was that she expected to be repaid. It was clear in her evidence that she was ashamed that she had continued to give Mr.

Bayne money, despite knowing it was being used by him directly. This enhances her credibility. [ 87 ] Ms. Penn explained that during the February 19, 2013 meeting, Mr. Bayne talked about humanitarian projects in less developed countries such as South Africa or India. The purpose of the projects was to develop a different kind of loan that was not normal in the financial industry. The idea was to create a type of loan that would not cause people to be dragged down by high interest. Ms.

Penn’s understanding was that people would get a loan for a year, for example, to work on organic food, clean water, or sustainable housing. If they met their project goals, they would be able to apply for the next phase of the loan under the same conditions. [ 88 ] According to Ms. Penn, Mr. Bayne wanted to develop a mechanism to fund projects in the third world. This mechanism would change the system of lending money. In subsequent meetings, Mr. Bayne explained that he had contact with a very old dynasty, a wealthy Chinese family. Ms.

Penn thought the money to repay her loan might be coming from them. [ 89 ] During cross-examination, Ms. Penn was asked questions about the terms in the 2013 Loan Agreement including the clause: “Whereas the borrower is in need of additional funding for purposes of pursuing the business interest of the borrower.” Ms. Penn explained that she thought this meant the money was for the setup of developmental projects in developing countries. [ 90 ] According to the evidence of Ms. Cooney, at the February 19 th meeting, Mr. Bayne “discussed with [Ms.

Penn] the process that he was putting together to be able to facilitate the completion of large projects and infrastructure projects and humanitarian, like all the different things that he was trying to do that he discussed on that day, that was what was – had to be completed for this contract to become due.” [ 91 ] Mr. Bayne testified that at the February 19 th meeting, he described what he was working on from two different angles. First, he described the process of predatory lending. He was relying on what he had read in a book called, Confessions of an Economic Hit Man . Mr.

Bayne explained that the book describes how large-scale funding can be designed to create onerous debt on people who ultimately cannot afford it and it becomes difficult for people to overcome the debt. [ 92 ] The second aspect Mr. Bayne discussed was his idea, or intention, to develop a different system whereby projects could get

funded but without having or leaving this heavy debt burden on those who could least afford it. Mr.

Bayne described the concept of his idea but did not describe the process because he had not yet completed it. [ 93 ] The concept he described was that: …if monies were properly allocated to a project, and the project actually proceeded as it was designed to do and it was on schedule, that at the end of a period of time like a year, that there could be an audit of the use of funds and the progress of the project, and in light of successful implementation of that, then there could be forgiveness of either the interest portion or the interest and possibly some of the principal portion which would allow them to receive additional monies to continue the project for the following year. [ 94 ] Mr.

Bayne testified he would have told Ms. Penn: …we have no interest in investing money in a particular project, and we have no interest in investing money on behalf of other people. But we are interested in working together to build a process, and develop a process, to be able to consistently duplicate that funding of projects as opposed to only putting it in one spot. And we were developing the process, and so the understanding I had is that she knew she was providing funding to allow us to develop that process. [ 95 ] Mr. Bayne acknowledged that projects in Africa came up in a general way during the conversation.

He recalled talking about sustainable housing projects in Africa, possibly in Kenya. It is also possible they talked about agriculture-based projects in Africa. [ 96 ] The evidence of all three parties is consistent. Mr. Bayne told Ms. Penn that he was working on projects that had a humanitarian component. Further, in cross-examination, Mr. Bayne acknowledged understanding that Ms. Penn believed her loans would be used to work on humanitarian projects. I find that Ms. Penn was led to believe that her money would be used for humanitarian projects. i.

Did the Accuseds Engage in Deceit, Falsehood, and Other Fraudulent Means? [ 97 ] A critical issue in this case is whether Mr. Bayne was involved in any business activities at all and, whether, in particular, he was pursuing humanitarian projects. The Crown’s position is that Mr. Bayne was not involved in any actual business activities and that the descriptions of work he gave to Ms. Penn were a ruse to induce her into believing she was investing in real projects. [ 98 ] Counsel for Mr. Bayne argues the Mr.

Bayne’s efforts were real and the Court should resist the urge to assess the quality of those efforts. [ 99 ] I first review Ms. Cooney’s credibility and evidence, before looking at Mr. Bayne. Ms. Cooney’s Credibility and Evidence [ 100 ] Ms. Cooney presents as an individual that is financially unsophisticated with a naivety about Mr. Bayne’s investments. Her evidence was that she “absolutely believed in what Ross was trying to do and that he would do it.” [ 101 ] There are aspects of her evidence that I find credible. Much of her evidence is consistent with Ms. Penn’s version of events.

She had a good recollection of meetings and was able to explain what was discussed during meetings. She gave clear evidence regarding her relationship with Mr. Bayne, her understanding of his financial difficulties, and the projects he was engaged in. [ 102 ] However, she minimized her own role in the transactions, and was vague in her evidence regarding what she told Ms. Penn about the Grace Endowment and what she told Ms. Penn about how her money would be used. Further, while she cast herself as a champion for Ms. Penn, making sure Ms. Penn understood the arrangement and reiterating the risks of investing, Ms.

Cooney stood to benefit significantly from Ms. Penn’s loans. [ 103 ] Unbeknownst to Ms. Penn, Mr. Bayne and Ms. Cooney planned for Ms. Cooney to keep 10% of Ms. Penn’s loans. This could not have come at a better time for Ms. Cooney. Ms. Cooney continued to live, in large part, on the loans advanced by Ms. Penn throughout the Loan Period. The bank records clearly establish that Ms. Cooney used the money in the Grace Endowment Bank Account for personal expenses and that most of the money in that account came from Ms. Penn. [ 104 ] The credibility of Ms.

Cooney’s version of events, as it relates to her own involvement, is further undermined by the reasons she gave for not investing her own money in Mr. Bayne’s ventures. Even though she testified that she believed in Mr. Bayne, her evidence was that she could not afford to contribute to the projects. This was despite the fact that she was receiving 10% of Ms. Penn’s money. [ 105 ] Finally, during the Crown’s cross-examination regarding the use of Ms. Penn’s funds, the Crown suggested that Ms. Cooney spent more than 10% of Ms. Penn’s money. To explain why more than $10,000 of Ms.

Penn’s money was missing from the Grace Endowment Bank Account, Ms. Cooney testified that she was holding some of Ms. Penn’s money in a safe. She went on to explain that the safe was in her house and that there was approximately $10,000 in it at the time of the second loan from Ms. Penn. Although Ms. Cooney testified that she maintained meticulous records of Ms. Penn’s money on a spreadsheet, the money in the safe was not included in these records because it “wasn’t gone.” [ 106 ] The evidence Ms. Cooney gave regarding funds in a safe was raised for the first time in cross-examination.

Even though she was examined-in-chief at length about her record keeping practices and her spreadsheet, money in the safe never came up. I find that Ms.

Cooney came up with the story of money in the safe to justify having spent more than 10% of Ms. Penn’s money. While she holds the view that she was permitted to take 10% of the money as an administrative fee, it is apparent that she understood she was not permitted to take more than 10%. I do not believe her evidence that she kept Ms. Penn’s money in a safe. [ 107 ] Ms. Cooney’s evidence with respect to her own involvement in the transactions should be rejected. It was contradictory, internally inconsistent, and self-serving.

However, I believe much of what she explained regarding the transactions and the involvement of Mr. Bayne. Her evidence regarding Mr. Bayne’s involvement is largely consistent with Ms. Penn’s evidence. Given my findings in relation to Mr. Bayne’s credibility and evidence, set out below, where the evidence of Mr. Bayne and Ms. Cooney are in conflict, I prefer the evidence of Ms. Cooney. Mr. Bayne’s Credibility and Evidence [ 108 ] In considering the credibility and evidence of Mr. Bayne, I will examine the following:

a) The impeachment of Mr. Bayne on prior compelled evidence;

b) The reasons Mr. Bayne structured the transactions to involve the Grace Endowment, Praxis, and Paint Cakes 4 Kids;

c) The nature of the relationship between Mr. Bayne and Ms. Penn;

d) Whether Mr. Bayne’s evidence regarding cash he received from Ms. Cooney is believable; and

e) The work described by Mr. Bayne. i. The impeachment of Mr. Bayne on prior compelled evidence [ 109 ] In cross-examination, Mr. Bayne testified that during the Loan Period, there were no judgment enforcement proceedings against him, that he was working for Praxis, and he implied that Mr. Meyer died at some point during the Loan Period, thus extinguishing Mr. Bayne’s obligations to Mr. Meyer. [ 110 ] The Crown applied to re-open cross-examination to question Mr.

Bayne on the status of the bankruptcy proceedings, any judgment enforcement proceedings taken against him during the Loan Period, and previous inconsistent statements given by him during the Questioning in Aid of Enforcement dated January 15, 2015. The only purpose for which the prior compelled testimony of Mr. Bayne can be used in these proceedings is for the purpose of credibility and impeaching his credibility. [ 111 ] Mr. Bayne’s initial evidence on cross-examination by the Crown was that as far as he knew, following the lawsuit no writ of enforcement was filed by either Mr. Meyer or Mr.

Dwornik against him, either before or after Mr. Meyer’s death. [ 112 ] In re-cross-examination, the Crown put the transcript of the Questioning in Aid of Enforcement, dated January 15, 2015, to Mr. Bayne. Despite the existence of this transcript, Mr.

Bayne testified that his prior testimony was true, “in my understanding of what the enforcement measure was.” He acknowledged that he participated in Questioning in Aid of Enforcement but testified that his understanding was that this was “an interview under oath where they were getting the – the basic information that they needed to be able to proceed with enforcement measures had they wanted to try to collect monies from me going forward.” He then testified that he did not understand the word, “enforcement” but that if the interview under oath was enforcement proceedings, then he agreed enforcement proceedings had been taken.

He then agreed that a writ of enforcement was filed. [ 113 ] In his initial evidence, Mr. Bayne testified that he did not owe any money associated with the litigation after Mr. Meyer died. The Crown asked, “And you still owed it throughout this period?” Mr. Bayne responded, “Yes. And ‘til Mr. Meyer died, and I don’t know – at that point I assumed it was finished.” [ 114 ] Later in the cross-examination, the Crown put to Mr. Bayne that he set up the structure of the Loan Agreements with Ms. Penn to insulate himself from his creditors. Mr. Bayne denied that this was the case.

He said: So if it all worked out and there was still that debt owing, then, yes, that would’ve been a beneficial thing. But at that point Mr. Meyer had passed away , and it wasn’t really a strong consideration in what I was trying to accomplish. [emphasis added] [ 115 ] On re-cross-examination, the Crown asked Mr. Bayne about the date of Mr. Meyer’s death. She put to Mr. Bayne that he had implied in his previous testimony that Mr. Meyers passed away during the Loan Period. Mr. Bayne responded that he did not “remember making any reference to when” Mr. Meyer died. He denied trying to imply that Mr.

Meyer died during the Loan Period. [ 116 ] With further questioning, Mr. Bayne said, “I wasn’t trying to imply a timeline, and – and I don’t recall exactly in that process when Mr. Meyer would have died. We now have the death certificate and I – and I understand that, but at the time I wasn’t trying to kind of pick a time or say that he died right after, but there was a period of time where I heard nothing from him, and then I had been notified by the newspaper that he had passed away.” Mr. Bayne then acknowledged that he knew that Mr.

Meyer was alive during the Loan Period. [ 117 ] Finally, with respect to whether Mr. Bayne was working with Praxis during the Loan Period, Mr. Bayne acknowledged testifying in these proceedings that he had a contract with Praxis, that Praxis was paying him for his time, and he was working full time for Praxis. He also agreed that he was receiving pay that came through his wife’s numbered company.

[ 118 ] On re-cross-examination, the contents of the transcript of the Questioning in Aid of Enforcement dated January 15, 2015, were put to Mr. Bayne where he testified that he did not have a job working for someone. His evidence during the Questioning in Aid of Enforcement was that the only work he did was as follows: I built a sidewalk for a guy, I trimmed a tree, I did a pipeline project, built a retaining wall, built a couple of Linux machines, just odds and ends, Linux it is a computer. [ 119 ] When asked by the Crown whether this was true, Mr.

Bayne responded, “In this context I was answering the question as a job as an employee of a company, and in that context that would have been a true statement.” He justified this response saying that he was not “working for a company as an employee.” [ 120 ] Mr. Bayne then reasserted that his evidence in the judgment enforcement proceedings was true. When asked whether this evidence conflicted with his earlier evidence that he was not doing any other work while on contract with Praxis, Mr.

Bayne responded, “No, because I would have done this sometimes on the weekends, I sometimes did it for friends in the evenings when I – when my Praxis work was done, so I continued to do odd jobs and they paid me directly for different bits and pieces through the process.” [ 121 ] Mr. Bayne justified his responses by saying that he did not have other sources of income that went to him personally. When pressed on the fact that he was receiving money that flowed from Praxis to his wife’s numbered company, Mr.

Bayne acknowledged that his answer was incomplete. [ 122 ] The transcript of Questioning in Aid of Enforcement establishes unequivocally that Mr. Bayne’s initial evidence given in these proceedings was false. The transcript itself establishes that Mr. Meyer pursued enforcement proceedings against Mr. Bayne. I do not accept that Mr. Bayne was unaware of the enforcement proceedings or that he did not understand them. His evidence on both these points was evasive and demonstrated an attempt to feign a lack of understanding as to what was occurring when he was examined under oath.

Further, it is not a coincidence that Praxis began directing funds to Mr. Bayne’s wife’s account in 2015. This change occurred contemporaneously with the Questioning in Aid of Enforcement and was a clear effort on the part of Mr. Bayne to hide that he was earning an income from Praxis. [ 123 ] Similarly, Mr. Bayne’s evidence that he understood his debts to have been extinguished when Mr. Meyer died, is false. Mr. Bayne ultimately acknowledged that Mr. Meyer was still alive during the Loan Period. [ 124 ] Finally, Mr.

Bayne lied during the Questioning in Aid of Enforcement when he gave evidence that he was not employed by anyone. While he was not an “employee” of Praxis, he was receiving regular payments from Praxis for work he allegedly performed. His evidence during the Questioning in Aid of Enforcement was an attempt to defeat his creditors by lying about his employment situation. [ 125 ] Just because Mr. Bayne lied during the Questioning in Aid of Enforcement about his employment to try and defeat his creditors does not mean he is lying in these proceedings. However, it does establish that he is willing to lie under oath.

Further, Mr. Bayne lied in these proceedings when he denied the existence of enforcement proceedings and tried to assert that Mr. Meyer died during the Loan Period. These lies were told to bolster his testimony regarding the reasons for structuring the transactions between Ms. Penn and himself, a critical issue in this trial. [ 126 ] Mr. Bayne was impeached on prior compelled testimony given under oath. Although he previously gave evidence that he was unemployed during the Loan Period, he was receiving remuneration from Praxis.

In addition, in these proceedings he denied the existence of judgment enforcement proceedings and suggested that Mr. Meyer died during the Loan Period, thus extinguishing the debt Mr. Bayne owed him. Both are false. [ 127 ] I conclude that Mr. Bayne is not a credible witness and that he is willing to lie under oath to achieve his objectives. ii. Structure of the transactions [ 128 ] Mr. Bayne and Ms. Cooney gave conflicting evidence regarding Mr. Bayne’s level of involvement in coming up with the structure of transactions for Ms. Penn’s loans. As noted above, where the evidence of Mr. Bayne and Ms.

Cooney are in conflict, I prefer the evidence of Ms. Cooney. [ 129 ] Ms. Penn’s money went to the Grace Endowment Bank Account. From there, the Grace Endowment sent the money to Praxis. Praxis then initially advanced money to Mr. Bayne and then in 2015, began advancing it to Mr. Bayne’s wife’s company. From there, the money was deposited into the Baynes’ joint account. [ 130 ] Mr. Bayne’s evidence was that he set up the structure “in the most simple way that I could understand, and Mary could understand that facilitated the movement.

I didn’t – couldn’t think of a better way or a more simple way to make it happen.” He testified that inserting Praxis was to ensure he could get advice from business contacts. [ 131 ] In cross-examination, Mr. Bayne denied structuring his relationship with Ms. Penn so that he would be at arm’s length from Ms. Penn and any possible consequences of breach of contract, or breach of securities laws, or breach of his duties as a bankrupt. [ 132 ] Ms. Penn’s loan flowed through the Grace Endowment to Praxis to Mr. Bayne. In 2015, the money began moving from Praxis to Paint Cakes 4 Kids.

Below, I review the evidence in regards to each of these stages of the transaction. Evidence regarding the 2013 Loan Agreement [ 133 ] In their evidence, Mr. Bayne and Ms. Cooney both blamed the other for deciding to use the Grace Endowment. Mr. Bayne’s evidence was that it was Ms. Cooney that suggested the money should go through the Grace Endowment while Ms. Cooney’s evidence was that it was Mr. Bayne who suggested the money would go through the Grace Endowment.

[ 134 ] Ms. Cooney testified that she obtained a contract from Mr. Bayne. According to Ms. Cooney, Mr. Bayne went over what had to be filled in. Ms. Cooney filled in the names of the borrower and the lender at all applicable places in the document, as well as the loan amount, the interest rate, and the date. The interest rate was set at 100% in consultation with Mr. Bayne. Mr. Bayne explained to Ms. Cooney that if Ms. Penn was going to participate, it would be a long-term commitment and it would be based on best efforts rather than dates and interest rates. According to Ms.

Cooney, this is why he suggested the 100% interest rate. [ 135 ] Mr. Bayne acknowledged providing the template to Ms. Cooney, but he denied being involved with the particulars. The document he sent would not have included any reference to dollar amount, interest amount or particulars concerning the transaction. It was only after the agreement was executed that he came to understand that the 2013 Loan Agreement contemplated a 100% interest rate. Evidence regarding the contract between Praxis and the Grace Endowment [ 136 ] Ms. Cooney’s evidence was that Mr. Bayne’s initial response to the suggestion that Ms.

Penn wanted to invest in his projects was that he did not think he could do anything because of the lawsuit he was facing. A couple of days later, the pair met again, and Mr. Bayne told Ms. Cooney that he thought of a way that he could do something for Ms. Penn. [ 137 ] According to Ms. Cooney, Mr. Bayne explained to Ms. Cooney that the money Ms. Penn contributed would be part of what he and Mr. Sotnikow were working on. Ms. Cooney testified that she suggested Ms. Penn should deal directly with Mr. Bayne but Mr. Bayne said this was not possible. Mr. Bayne explained that Mr. Sotnikow did not know Ms.

Penn so he did not want to receive money from her. Mr. Bayne suggested that Ms. Cooney could receive the money through the Grace Endowment and then Ms. Cooney could forward the money to Mr. Bayne and Mr. Sotnikow. Ms. Cooney testified she asked Mr. Bayne what she should do about a contract and Mr. Bayne responded he would send one over. [ 138 ] Ms. Cooney’s evidence was that on April 29, 2013, Mr. Bayne brought Ms. Cooney a contract for her to sign between Praxis and the Grace Endowment. Ms. Cooney’s evidence was that the contract was already signed by Mr. Sotnikow.

She explained that the contract was used to explain the movement of money to Calgary, down to Tym. This was consistent with what Mr. Bayne had previously explained to her regarding the flow of funds. [ 139 ] Ms. Cooney reviewed the contract and noticed the agreement referred to access to information rather than the flow of money or the idea of repaying Ms. Penn. She asked Mr. Bayne about this and he explained that this agreement was to explain the movement of funds to Praxis, but that Mr. Bayne would deal with the repayment of the loan to Ms. Penn privately because Mr.

Sotnikow did not want anything to do with that. Ms. Cooney testified that once she understood the path of how Ms. Penn would be repaid, she agreed to the arrangement being proposed by Mr. Bayne. [ 140 ] Mr. Bayne acknowledged in cross-examination that Praxis was not incorporated until after the 2013 Loan Agreement with Ms. Penn was signed. [ 141 ] Mr. Bayne’s evidence was that he was aware that a contract was being prepared but he denied any involvement in its drafting. His awareness of the contract was based on conversations he had with Mr. Sotnikow. He became aware of the final contract between Ms.

Cooney and Praxis within days of it being signed. He testified that the first time he saw the contract was when it was produced in the Crown’s disclosure materials. [ 142 ] Mr. Bayne denied that money flowed to him from the Grace Endowment to Praxis based on his instructions and directions. He also denied knowing about the day-to-day operations of Praxis or being, in effect, Praxis. However, in email communications, he used an email address with a Praxis domain name. [ 143 ] Despite this, Mr. Bayne testified he had a specific reason for including Praxis in the arrangement.

He explained that if the money had come directly to him from the Grace Endowment, “it would have not allowed me to include two people who I found to be very helpful in assisting me in coming as close as we could to the completion of this process.” Evidence regarding the involvement of Paint Cakes 4 Kids [ 144 ] Mr. Bayne’s evidence was that money started flowing through his wife’s business account (1866872 Alberta Ltd.) in 2015 because he received advice from his lawyer that if he was able to close a transaction, it would be better for the money to go to a company account rather than a personal account.

In other words, this was a taxing planning measure. Conclusions regarding reasons for the structure of the transactions [ 145 ] I do not believe Mr. Bayne’s evidence that he set up the transaction in the simplest way he could think of, nor does his evidence raise a reasonable doubt. Despite his evidence to the contrary, he was intimately involved in every part of the structure that was put in place between himself and Ms. Penn. [ 146 ] I accept Ms. Cooney’s version of events regarding Mr. Bayne’s involvement in drafting the 2013 Loan Agreement. I accept that Mr. Bayne selected the 100% interest rate.

I also find that Mr. Bayne was involved in drafting the contract between Praxis and the Grace Endowment. Finally, I find that Mr. Bayne’s goal was to put two layers between himself and Ms. Penn, i.e., the Grace Endowment, as well as Praxis. I also find that in 2015, Mr. Bayne began diverting funds through his wife’s company, Paint Cakes 4 Kids in order to defeat his creditors. [ 147 ] I make these findings for the following reasons:

(

a) Mr. Bayne is not a credible witness. He has previously lied under oath in order to defeat his creditors. (

b) Mr. Bayne’s evidence in this trial is not believable. His evidence was that he was not subject to enforcement proceedings and that he did not have an outstanding debt to Mr. Meyer because Mr. Meyer was dead. Neither of these statements were true. (

c) Ms. Cooney’s evidence in regards to these points is consistent with her previous role in respect of Arcadia. Her job was to bring Mr. Bayne investors. (

d) Mr. Bayne had previously been involved in a lawsuit arising from a financial transaction. He was therefore aware of the potential for personal liability to Ms. Penn. I accept that the structure he put in place was intended to shield himself as much as possible from Ms. Penn and potential liability. (

e) I accept that Mr. Bayne’s initial reaction to the suggestion that Ms. Penn wanted to invest was that he was not sure how he could make this happen. This is because he knew that as a bankrupt, any money he received would go to his creditors. (

f) The Questioning in Aid of Enforcement occurred on January 15, 2015. Mr. Bayne’s last cheque from Praxis was dated December 31, 2014. He understood that any money he accepted would be subject to enforcement proceedings, so he began sending the money through his wife. i. Mr. Bayne’s relationship with Ms. Penn [ 148 ] Throughout his evidence, Mr. Bayne denied having a direct legal relationship with Ms. Penn or having any obligations toward her. His evidence was that Ms. Penn was Ms. Cooney’s client to manage. [ 149 ] Ms. Penn thought she was providing loans to Mr. Bayne for humanitarian projects.

She knew nothing of Praxis and the structure that was in place between her and Mr. Bayne. Mr. Bayne testified that he did not tell Ms. Penn about Praxis at the February 19, 2013 meeting. In cross-examination, he asserted that at some point Ms. Penn became aware of the involvement of Praxis, but he did not recall the context in which that occurred. He acknowledged that he did not tell Ms. Penn that some of her money was being kept by Praxis. [ 150 ] Mr. Bayne testified that he did not have any conversations with Ms.

Penn “about the use of funds or the distribution of funds or where those funds were placed.” His evidence was that Ms. Penn was Ms. Cooney’s client to manage and that all discussions about the movement of money and the loan agreements did not include him. Although he acknowledged in cross-examination it would have been important for Ms. Penn to know about Praxis, this was not his role. Rather, Ms. Penn “was a client of the Grace Endowment, and the information that I shared with Mary was certainly available for Mary to share with Beatrijs.” [ 151 ] According to Mr. Bayne, Ms.

Cooney reassured him that she would manage and look after the relationship with Ms. Penn so that he could focus his efforts on the projects. His part of the money side of the arrangement was to provide invoices and receive payment. The mechanics were all taken care of by Ms. Cooney. [ 152 ] Mr. Bayne testified that he met with Ms. Penn and Ms. Cooney approximately two to three times per year. Mr. Bayne explained that during his meetings with Ms. Penn, he would explain the delays and disappointments with these various projects, including the reasons for failure.

He would also explain the projects he was working on and what it looked like going forward. Mr. Bayne believed that these projects were doable with the right combination of people. [ 153 ] Mr. Bayne testified that in meetings he had with Ms. Penn, he reassured her that he would not stop working on her behalf. He denied that that this was a commitment he had to Ms. Penn. Rather, it was an understanding between them. He testified: …it was my intention, it was my desire to complete one of these projects.

I appreciated her contribution, and it allowed us to create some momentum, and I was going to do everything I could to complete that, even if it required me working part time on my own hours in order to do so if it came to that at some point. [ 154 ] Mr. Bayne testified that his intention was to “attempt to complete what we had started.” However, he “didn’t feel it as an obligation, but it was my desire, expressed desire to do so.” Mr. Bayne recalled that at his last meeting with Ms.

Penn, when she said she was no longer able to advance any money, he “reiterated that I was going to continue to work to complete one of these processes.” Even if she was not paying him, he would not “stop working on her behalf.” [ 155 ] Mr. Bayne acknowledged that he was effectively working for Ms. Penn. In other words, if Mr. Bayne’s work was successful, Ms. Penn would benefit. [ 156 ] Although Mr. Bayne attempted to create a legal distance between himself and Ms. Penn, he communicated to her that he would continue to work “on her behalf.” While Mr.

Bayne attempted to parse words by characterizing this as an understanding rather than an obligation, from Ms. Penn’s perspective, there was no difference between these two concepts. Ms. Penn believed Mr. Bayne was working on her behalf because this is what Mr. Bayne wanted her to believe. ii. Cash given to Mr. Bayne by Ms. Cooney [ 157 ] There is conflicting evidence between Ms. Cooney and Mr. Bayne regarding the amount of cash Ms. Cooney gave to Mr. Bayne during the Loan Period. [ 158 ] Mr. Bayne testified that he received some funds from the Grace Endowment by way of cash from Ms. Cooney. He testified that

from “time to time, she would offer to provide to me some cash.” He did not account for it or add it up but indicated she would sometimes give him $100, $300 or $500. His evidence was that it was not on a regular basis, and it was sporadic. He estimated Ms. Cooney offered cash to him in this way four to five times per year for four years. In his mind, this was not a violation of his agreement with the Grace Endowment. [ 159 ] Ms. Cooney testified that when she met with Mr. Bayne, he would let her know that he needed some cash. They would then go to the TD Bank and Ms.

Cooney would withdraw $500 from the bank machine and give it to him. If he asked for a different amount, she would withdraw that amount. [ 160 ] Ms. Cooney maintained a spreadsheet of transactions (“Spreadsheet”) involving Ms. Penn’s money. The Spreadsheet shows that she gave Mr. Bayne cash on approximately 70 occasions, generally in the amount of $500 between February 27, 2013, and February 24, 2017. The total transferred to Mr. Bayne in cash was $37,050. The Spreadsheet also shows that Ms. Cooney gave Ms. Verhoeff-Bayne $4,000 on March 19, 2014. [ 161 ] The Spreadsheet was put to Mr. Bayne on cross-examination.

He testified that he did not recall the specifics of the cash he received from Ms. Cooney, and he did not recall it occurring as frequently as was demonstrated in the Spreadsheet. When asked whether the amount he received in cash from Ms. Cooney could be as high as $35,000, he testified that he really did not know. [ 162 ] I accept the evidence of Ms. Cooney that she gave Mr. Bayne cash on as many as 70 occasions, totalling approximately $37,050. iii. Mr. Bayne’s description of his work [ 163 ] There is no dispute that prior to 2013, Mr.

Bayne worked as a landscaper and picked up odd jobs painting houses and doing small repairs. After Ms. Penn stopped loaning money, this was his fallback. At the time of the February 19 th meeting, Mr. Bayne described working on the process on a part-time basis. [ 164 ] Mr. Bayne testified that after Ms. Penn advanced the money, he worked 10 hours a day, five days per week, on the project. He started at 6:00 am to catch the European day. He did all his European calls between 6:00 and 10:00 am. He would take a small break and then work through the North American time zones from east to west.

At about 7:00 pm, Asia came online with Australia, so he would do his calls to Asia in the evening. [ 165 ] Mr.

Bayne described the project he was working on as follows: • He was working to develop a system “whereby projects could get funded but without having or leaving this heavy debt burden on those who could least afford to pay for it.” • His efforts during the Loan Period were to “work to build a project or bring the pieces together of a project so that we could have a successful funding and satisfy all these obligations.” • He described the project as follows: …if monies were properly allocated to a project, and the project actually proceeded as it was designed to do and it was on schedule, that at the end of a period of time like a year, that there could be an audit of the use of funds and the progress of the project, and in light of successful implementation of that, then there could be forgiveness of either the interest portion or the interest and possibly some of the principal portion which would allow them to receive additional monies to continue the project for the following year. • He “was not working on a particular project…we were building a process, a process that we were wanting to be able to fund multiple projects in different parts of the world if we could figure out how we could get this mechanism to work.” [ 166 ] With respect to his role with Praxis, Mr.

Bayne explained that his role was to generate: networks that I was able to collect and articulate, the knowledge that we were able to collect, and the process pieces that I was able to formulate, if we were able to get that to a point where we could prove the concept, that then became intellectual property of Praxis that could be remarketed so that we could reuse it in different applications and different locations. [ 167 ] When asked what type of information Praxis was trying to collate, Mr.

Bayne responded: Well, in this context, we were – I was working diligently to try to piece together the moving parts of a very complicated international series of events or intertwining processes that ultimately could provide great benefit for the right group who had projects that wanted to seek and to secure funding. So the idea was if we could prove the concept, and say, yes, it goes through here.

This is how it works from A to Q or whatever it’s going to be, that others then could take advantage of that information that we had worked and collected and put together. [ 168 ] He claimed he “developed a network of people around the globe that could assist in finding such people because I found it quite difficult to – for – to have a constant source of people who had the volume of money necessary.” Despite speaking with wealthy people and their intermediaries on a regular basis, he never asked any of them to back his efforts to develop the process nor did he disclose to them that he was backed by a single investor.

He justified this by saying: The arrangement from my side was that we would rather take a percentage of a completed project rather than an upfront fee of some kind for services rendered, and in their context, paying me upfront didn’t make a lot of sense.

[ 169 ] Although Mr. Bayne did not tender any contracts as part of his case, he was cross-examined on a binder of documents that were disclosed to the Crown pursuant to the Canada Evidence Act , RSC 1985, c C-5 . These documents were not made an exhibit in the proceedings, but the cross-examination establishes the existence of documents with the following titles: (

a) January 28, 2015 Non-circumvent Non-disclosure Agreement between Max Langenburg of Langenburg Technologies and Ross Bayne of Praxis Information Management (

b) March 17, 2015 Confidentiality Agreement between Praxis Information Management Inc. and Grant 430 LLC (

c) August 31, 2015 Confidentiality and Non-disclosure Agreement between Ross Bayne and Rocky Mountain Refinery Inc. (

d) June 18, 2014 Non-disclosure Agreement between Richard Gibbs, Trimeteor Oil and Gas Corporation and Ross Bayne [ 170 ] Mr. Bayne acknowledged that none of these documents were contracts for the projects he was undertaking. Rather, they were early-stage documents that facilitated exploration of the projects. Very little weight can be put on this uncorroborated evidence. [ 171 ] In both examination-in-chief and re-examination, Mr. Bayne provided the particulars of projects that he was working on. These included the following: (

a) Mr. Bayne testified that, in 2013, he was working with an organization called Kanda Foundation, based in Liechtenstein, that had a credit-mirror facility that allowed cash to be created for projects based on non-liquid assets, such as bonds, standby letters of credit and promissory notes. Mr. Bayne claimed that the Kanda Foundation’s mandate was to provide funding for humanitarian projects in a way that managed the debt of the project. He also explained that the Kanda Foundation was required to invest their portion of the transaction into humanitarian projects. Mr.

Bayne had a personal relationship with one of the directors of the Kanda Foundation, named Dr. William Tao. Mr. Bayne’s evidence was that in conversations with Ms. Penn, he would have referred to Dr. Tao as “Dr. T” because of non-disclosure agreements. Mr. Bayne had an arrangement with Kanda Foundation whereby he would receive a percentage of monies that were generated from creating liquidity from non-liquid assets. The work Mr. Bayne did with the Kanda Foundation did not come to fruition and he did not receive any payment. (

b) In 2014, Mr. Bayne was involved in a project with Senomatrix. Senomatrix was a credit provider for the movement of commodities between countries. Dr. Tao approached Mr. Bayne and explained that he now had the ability to directly purchase a series of commodities through this company. Dr. Tao asked Mr. Bayne to source sellers of product that Dr. Tao could acquire. The products being sought were iron ore, liquified natural gas, liquified propane gas, and black diesel. The products were destined for China. Mr.

Bayne acknowledged there was no humanitarian component to the Senomatrix deal but explained that they were trying to facilitate trade in commodities with underprivileged countries. Mr. Bayne’s role in the deal was to introduce the parties. Had the transaction been successful, he would have earned a commission. The Senomatrix deal did not come to fruition. (

c) In 2015, Mr. Bayne was involved in a project with the PT Mandiri Bank in Jakarta, Indonesia. Mr. Bayne was introduced to a company called Indonesia International Development Corporation operated by Paul Mazzak and Ed Brigham. They had non-liquid assets inside Mandiri Bank and they were looking for assistance in getting liquidity so they could fund projects in Indonesia. Mr. Bayne introduced them to Kanda Foundation and Dr. Tao. Had the transaction been successful, Mr. Bayne would have been paid by Kanda Foundation. The deal fell through because the bank refused to execute the swift transaction. Mr. Bayne was not made aware of the reasons underlying this issue. (

d) In 2016, Mr. Bayne was involved in a project with Dr. Tao where Dr. Tao was working with Lori Venning to facilitate the acquisition of a liquified natural gas terminal in Spain called El Musel. The other component of this project was sourcing liquified natural gas outside of the Russian streams into Europe. Mr. Bayne acknowledged there was no humanitarian component to this project. (

e) In 2017 or 2018, he was involved in a project between APAPA International, NASA (phonetic) Limited and Clear TV. Final contracts were signed in respect of this project. APAPA had standby letters of credit in its possession and was offering to sell them. Clear TV wanted to purchase them. The project being funded was a waste to energy technology and development in the Bahamas. Mr. Bayne was involved with introducing the principal parties involved in the transaction. This project did not ultimately fund. Conclusions regarding Mr. Bayne’s Credibility and Evidence [ 172 ] Overall, Mr.

Bayne’s evidence was farfetched and fanciful. He repeatedly reiterated that he was trying to develop a process , “a process that we were wanting to be able to fund multiple projects in different parts of the world if we could figure out how we could get this mechanism to work.” It was never clear what Mr. Bayne was actually doing. How was he working on the process, what moving parts was he trying to bring together, what concept was he trying to prove? What was the process? [ 173 ] There is no corroboration of any of Mr.

Bayne’s alleged business activities nor is there any corroboration of the projects he described. I do not believe these projects existed. While there is no burden on an accused to prove his innocence, it is logical that if someone is engaging businesspeople on the international stage to invest millions of dollars, there would be a paper trail of some sort or some sort of corroboration. None was put into evidence. Mr. Bayne’s evidence does not have the ring of truth.

Given my findings with respect to his credibility, his version does not raise a reasonable doubt about whether he was doing any business activities. [ 174 ] Further, despite purportedly speaking with these wealthy financiers on a regular basis, Mr. Bayne acknowledged that he never asked them to back his efforts by providing capital and he never disclosed to them that his project was backed entirely by a single individual, using her life savings.

[ 175 ] I do not believe that Mr. Bayne brought any skills or knowledge to the table that would have enticed extremely wealthy people to invest in his theories. Further, if he had access to this cadre of people, he would not have had to depend on Ms. Penn for financial backing. [ 176 ] The Crown describes Mr. Bayne’s recitations of what he was working on as “word salad” and “performance art.” I agree with this characterization. Mr. Bayne strung together phrases in a way that was intended to make his project sound complicated and sophisticated.

Despite this, when the words are examined closely, they have very little concrete meaning. There is nothing within his explanations that help the listener understand what he was actually doing. [ 177 ] I find that Mr. Bayne was not engaged in any business activities other than landscaping and odd jobs. Further, his evidence did not raise a reasonable doubt as to whether he might have been pursuing the activities he described to Ms. Penn. [ 178 ] There is no evidence that he did anything in exchange for the money he received from Ms. Penn. In short, he lied to Ms.

Penn and made her believe he was an international businessperson, on the verge of hitting it big. In doing this, Mr. Bayne engaged in deceit and falsehood. i. Ms. Penn was deceived into believing Mr. Bayne was involved in business activities [ 179 ] Given my finding that Mr. Bayne was not involved in any of the business activities he described and my findings regarding Ms. Penn’s belief that she was investing in humanitarian activities, I find that the Crown has proven beyond a reasonable doubt that Ms. Penn was deceived into believing that she was investing in humanitarian activities being pursued by Mr.

Bayne. [ 180 ] Further, while I do not believe these projects were “real,” nor does Mr. Bayne’s evidence raise a doubt about their existence, the projects described by Mr. Bayne, as discussed above, did not all involve humanitarian work. Mr. Bayne’s evidence in cross-examination was that he would have explained these projects to Ms. Penn, but that he did not explain that his focus had shifted away from humanitarian work. The only way for her to understand that a change had occurred was for her to glean this from what he was describing. As such, even if Mr.

Bayne was pursuing some sort of business activities, he led Ms. Penn to believe her money would only be used for humanitarian pursuits, which it was not. [ 181 ] Although Ms. Penn eventually learned that Mr. Bayne was using her money personally, she continued to provide him with loans because she believed she would be repaid, and she did not want to let him and his family down. She believed that by providing him with further loans, Mr. Bayne would be freed up to continue the work he was doing in order to allow the investments to realize. [ 182 ] After the second loan agreement, Ms. Penn and Ms.

Cooney continued to meet weekly. Ms. Cooney provided Ms. Penn with updates on Mr. Bayne’s work, discussing the Silk Road and commerce. Ms. Penn’s evidence was that Ms. Cooney continued to report that success was right around the corner. Mr. Bayne attended meetings less frequently, once a month or once every three months. Ms. Penn’s evidence was that Mr. Bayne did not seem interested in giving her updates. [ 183 ] I have already found that Mr. Bayne was not working on any projects. Even if he was working on something, the projects he described were not limited to humanitarian work.

Despite this, he continued to receive money from Ms. Penn. His deceit and falsehood continued throughout the Loan Period. ii. Ms. Penn was deceived as to the use of her money [ 184 ] Further, Mr. Bayne, along with Ms. Cooney,

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