R. v. Walcott Date:, 2011 BCPC 101

Citation: R. v. Walcott Date: 20110428 2011 BCPC 0101 File No: 211266-1 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA REGINA v. SEWELL HOUSTON WALCOTT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE F.E. HOWARD Counsel for the Crown: Chris Johns Counsel for the Defendant: Andrew Bonfield Place of Hearing: Vancouver,, B.C.

Date of Hearing: April 18, 19, 20, 26, and 28, 2011 Date of Judgment: April 28, 2011 REASONS FOR JUDGMENT [ 1 ] The accused is charged with one count of defrauding the Ministry of Housing and Social Development of money in excess of $5,000, between the 1 st of March 2004 and the 30 th of November, 2007, by deceit, falsehood or other fraudulent means, contrary to s. 380(1) of the Criminal Code .

BACKGROUND [ 2 ] During the time period set out in the Information, from the 1 st March 2004 to the 30 th November 2007, the accused received $31,000 in benefits from the BC Government's Ministry of Housing and Social Development (the "Ministry"). At trial, the Crown narrowed the amount of the alleged fraud to cover only those benefits that the accused received between November 2006 and November 2007. During this 13 month period, the accused received a total of $11,745.21 from the Ministry, for an average of $903.48 per month. It is this $11,745.21 that is the subject of the alleged fraud.

I pause to note that the monthly benefit paid to the accused was higher than usual due to the fact that he had qualified for a disability level benefit. [ 3 ] On September 26, 2006, while receiving benefits from the Ministry, the accused purchased a residential property at 3169 Sechelt Drive, Coquitlam, BC for $421,000. He put down a cash deposit of $21,050. The property was subject to a mortgage in favour of the T- D Bank for the balance due, that being $411,748.53.

In his dealings with the Ministry, the accused never disclosed this transaction, the source of the down payment for the purchase, or other significant cash assets that he had received during the relevant time period.

Eligibility for Disability Benefits [ 4 ] The process whereby one applies for and establishes eligibility for benefits was described by the Ministry witnesses. An individual who has no or limited income, be it from employment or otherwise, and no significant assets, can apply to receive financial assistance from the Ministry. The onus is upon that individual to establish his eligibility for benefits. To that end, the applicant is required to provide full disclosure of all assets and income.

The applicant meets with an Employment Assistance Worker from the Ministry and completes an application, this being the Employment and Assistance Review form. The must applicant to disclose all sources of monthly income, including "Other Unearned Income", as well as all assets, including "Cash on Hand". He must list his bank accounts and the amount of cash in each account. Based on the financial information entered on this form, the Ministry determines whether the applicant is entitled to benefits.

Thereafter, the applicant is required to advise the Ministry of any change in circumstances that might affect his eligibility. See ss. 10 and 11 of the Employment and Assistance for Persons With Disabilities Act , [ SBC 2002] c. 41 . [ 5 ] The rights and responsibilities of the parties are set out in clear and unequivocal language on page 3 of the Employment and Assistance Review form: The BC Government's Responsibilities The BC Government is responsible for making sure assistance goes only to people who are eligible.

For this reason, the BC Government must check and make sure people who have applied for, or are receiving assistance, are eligible. My Responsibilities It is necessary for me to sign this application if I want to receive assistance. It is my responsibility to provide accurate and complete information when I apply for and continue to receive assistance. I must report all money and assets that I receive each month . . . . . .

I must report all changes in my circumstances that might affect my eligibility for assistance . [ 6 ] On page 4 of the form, the applicant is required to make the following Declaration: I declare that all the information I have provided in this application is true and complete . [ 7 ] A sole applicant with no dependants, such as the accused before me, is not entitled to "disability assistance" if he has assets with a total value of more than $3,000". "Asset" is defined so as to include cash and " equity in any real or personal property that can be converted to cash". See Sections 1(1) and 10(2)(

a) of the Employment and Assistance for Persons With Disabilities Regulations , B.C. Reg. 265/2002 . A residence which the applicant owns, but does not occupy as a residence, falls under this Regulation. The Accused's Dealings with the Ministry [ 8 ] I have before me four Employment and Assistance Review forms signed by this accused.

The entries as to his assets can be summarized as follows (Exhibits 1 to 4): 2003 Mar. 6 No bank accounts are listed Assets zero 2004 Apr. 27 Gulf & Fraser account is listed Assets zero 2006 Jan 24 GNF Financial account is listed Assets $54 2007 Oct 25 CIBC ("States only Account") Assets $4 & $20 [ 9 ] During all four of the above reviews, the accused consistently indicated, right up until October 2007, that his residence was a basement suite at 651 Prior Street, Vancouver, BC. His declared monthly rent ranged from $345 to $400.

There is no evidence that the accused ever reported a change of residence to the Ministry during 2006 or 2007 or that he ever lived in the Sechelt Drive residence that he purchased on September 26, 2006. The only reasonable inference to be drawn is that this accused did not live in this residence. Hence, the "Asset limit" referred to above – equity in real property cannot exceed $3,000 – applies to the Sechelt Drive residence. [ 10 ] I have heard testimony from two Ministry workers who dealt with the accused. Colin Murray completed the March 2003 Review form with the accused.

Patrice Struyk completed the October 2007 Review form with the accused, during which time she obtained and photocopied his identification cards: a BCID Card # 085200295 and a Citizenship Card #A9062890. The accused is clearly the man depicted in the photos on these two pieces of ID. (See Exhibit 4). Both of these Ministry workers confirmed that they went through the Review forms with the accused, asking for information about his assets and bank accounts as set out in the form. The forms were completed based on the information provided by the accused.

They both reviewed with him the Rights and Responsibility provisions set out on page 3. The accused initialled the bottom of these pages to indicate that he understood his rights and what was

required of him. The accused then signed the Declaration on page 4 of each Review form, confirming that the information he had provided was "true and complete". [ 11 ] Based on the documentary evidence before me, as well as the in-court identification of the accused, I am satisfied beyond a reasonable doubt that the accused is the man who completed the above 2003 and the 2007 Review forms. I am equally satisfied, based on the interview process described by the two Ministry workers, that the accused completed and signed the 2004 and 2006 Review forms as well.

On these forms, the name, date of birth, social insurance number, place of residence and telephone number of the applicant are consistent with all of the personal information provided by the accused in 2003 and in 2007. The Accused's Bank Accounts and the Sechelt Drive Property [ 12 ] I turn now to the evidence relating to the accused's bank dealings and his dealings with the Sechelt Drive property. The evidence on these issues is documentary in form. Paul Knowles, an investigator with the Ministry, became involved in the investigation of the accused's affairs in 2008.

Based on information in the file about the Sechelt Drive property that had been registered in the name of the accused with an attached mortgage in favour of the T-D Bank, he obtained a Production Order which he executed at the T-D Bank on April 15, 2009. The documents that he received from the T-D Bank are all before me in a binder that has been filed in these proceedings as Exhibit 10.

Unless otherwise stated, the documents referred to in this decision are all contained in Exhibit 10. [ 13 ] Again, I am satisfied beyond a reasonable doubt that the accused is the man who signed the various documents relating to the purchase of the Sechelt Drive residence and the attached mortgage, and that he is the man named in the other banking documents filed in these proceedings. This conclusion is corroborated by the fact that the accused's social insurance number, his Citizenship number, and his BCID number, as set out in the Review forms submitted to the Ministry, also appear in these documents.

There is no evidence to suggest that the accused might not be the man named in any of these documents. [ 14 ] It is apparent from the documents in the possession of the T-D Bank that the accused commenced negations to purchase a 4 bedroom home at 3169 Sechelt Drive, Coquitlam, BC in August of 2006. The Contract of Purchase and Sale shows a purchase price of $421,000. This document indicates that a deposit of $20,000 was required to secure the purchase.

The deposit amount appears to have been increased to $21,050, as evidenced by a Mortgage Commitment form executed by the accused and the T-D Bank on August 16, 2006. [ 15 ] Because he was obtaining a CMHC mortgage, the accused was required to pay an insurance premium to have the loan guaranteed. In the result, the total amount of the loan, as set out in the Mortgage Commitment letter was calculated as follows: Purchase Price $421,000.00 Down Payment $ 21,050.00 Amount $399,950.00 Insurance Premium $ 11,798.52 Total Loan $411,748.52 [ 16 ] The interest rate of 5.35% was fixed for a 5 year term.

The amortization period was for 30 years. The monthly payment required from the accused was $2,284.25 for principal and interest on the loan, plus an estimated $216.67 for property taxes, for a total monthly payment of $2,500.92. The first regular payment was due on November 1, 2006. [ 17 ] A subsequent Commitment for a Fixed Rate Mortgage was signed by the accused on September 23, 2006. Under paragraph 17 of this document, the accused agreed to a Pre-Authorized Debit procedure whereby the monthly payments due under the mortgage were to be automatically deducted from his bank account at the CIBC.

The account number that the accused provided was #8226512. He also provided a Void cheque for this account to facilitate these automatic withdrawals. This Void cheque lists two account holders, those being Wal 1 Enterprise and Sewell Walcott, both with an address of 321-2416 Main Street, Vancouver, and a phone number of 604-831- 9415.

The address does not match the Prior Street address provided to the Ministry; however, the phone number on the cheque is the same number that the accused provided during his various applications to the Ministry for social benefits. [ 18 ] On September 24, 2006, the Land Title Act Transfer was executed by the sellers in favour of the accused. On September 26, 2006, the accused executed the mortgage in favour of the T-D Bank.

For identification, he produced the same Citizenship Card #A9062890 that he used with the Ministry, plus a Driver's Licence #4536763. (See Exhibit 10, Solicitor's Final Report on Title, page 5 "Identification Verification"). I pause to note that, in his dealings with the Ministry, the accused never informed them that he possessed a valid Driver's Licence. [ 19 ] Both the Land Transfer form and the mortgage were filed in the Land Title Office on September 26, 2006. The mortgage funds were advanced and the deal completed.

The State of Title Certificate showing the accused as the registered owner of the property and the T-D bank as the registered owner of the mortgage charging the property is filed as Exhibit 6. [ 20 ] The accused immediately defaulted on his mortgage payments. An internal bank email dated January 24, 2007 indicates that the mortgage was in arrears for “3 regular payments” as of that date. It would appear that the accused had made no payment on November 1, 2006 (the first payment that was due) or on December 1, 2006, or on January 1, 2007.

In this same email, there was also a query as to whether account #00710-8226512 was the correct account from which the mortgage payments were to be withdrawn. This was the CIBC account number provided by the accused in paragraph 17 of the Commitment for a Fixed Rate Mortgage. The emails reveal that efforts were made to contact the accused up to February 9, 2007.

[ 21 ] In the meantime, on February 5, 2007, the T-D Bank withdrew $6,940 from the accused’s T-D bank account # 6427429 and applied it to its mortgage #5860768. In effect, the bank withdrew almost all of the cash sitting in this account at this time, leaving a balance of $7.15. (See page 13 of the Account History for account #6427429 in Exhibit 10) [ 22 ] Very shortly thereafter, it appears that the accused gave some thought to paying out the mortgage in full.

The T-D Bank file contains a 20 th February 2007 letter from the solicitors for the accused asking for a payout statement for the purposes of discharging the mortgage. The proposed discharge date was February 21, 2007. [ 23 ] The bank prepared a Mortgage Discharge statement which indicated that the principal owing on the mortgage as of February 5, 2007 was $410,245.44, plus interest of $950.57 accruing to February 21, 2007. Thus the balance due on the mortgage as of February 21, 2007 was $411,196.01.

There was in fact a surplus in the property tax account of $991.03, which surplus was deducted from the amount owing, leaving a balance due of $410,204.98. [ 24 ] Further sums were applicable if the mortgage was to be discharged. These included a 3 month interest penalty for prepayment ($5,375.67), plus additional fees set out in the document. In total, the bank determined that the amount required to discharge the mortgage was $420,392.72. [ 25 ] It is apparent that the accused did not pay out the mortgage at this time. He again defaulted on the mortgage payments.

On May 8, 2007, the T-D Bank filed a foreclosure Petition with the Supreme Court, seeking a declaration that the amount required to redeem the mortgage was $417,521.62 as at April 19, 2007, plus per diem interest of $59.56 from that date, plus taxable costs. The bank sought alternative forms of relief, including a Judgment against the accused for the amount owing and an Order for Sale or, failing redemption of the mortgage within the period of time fixed by the court, an Order Absolute of Foreclosure entitling the bank to vacant possession of the land.

A Certificate of Pending Litigation was obtained from the court and registered against the property in the Land Title Office. (Exhibit 8) [ 26 ] There is some hearsay evidence in this case suggesting that the bank did indeed foreclose on the property. However, there is no evidence before me as to the length of the redemption period set by the court, be that the standard 6 months, or something less or something more. Hence, I do not know when the foreclosure was concluded, assuming that it did.

There is no evidence before me as to whether there was an Order for Sale, coupled with a financial Judgment against the accused, whether there was a shortfall or a surplus payable to the accused on such a sale, or whether the bank simply assumed title to the property. Additional Financial Circumstances [ 27 ] One might well wonder how it is that the T-D Bank was prepared to loan the above funds to the accused, a man who was collecting welfare benefits at the time of his application for a mortgage. Here, the documents in the possession of the T-D Bank are of some assistance.

The T-D records contained in Exhibit 10 indicate that the accused had been a client of the bank, at least since November 28, 2005, when he opened account #6427429. On December 2, 2005, he opened account #6423024. On July 6, 2006, he opened account #3249014. None of these bank accounts were disclosed to the Ministry. [ 28 ] For identification purposes, the accused provided the bank with his Social Insurance Number, his Citizenship Card, his BCID (all of which match the information provided by the accused to the Ministry) and his Driver's Licence.

He advised the bank that he was employed by Wal 1 Enterprise and that he was the President of this company. He provided an address of 321-2416 Main Street, Vancouver. This is the same address that was on the Void CIBC cheque (Wal 1 Enterprise and Sewell Walcott) that he subsequently provided to the bank for the pre-authorized mortgage payment plan. The phone numbers that he gave to the bank were 604-215-4054 (home) and 604-726-3270 (bus).

Neither of these phone numbers matches the phone number provided to the Ministry or the phone number on the Void cheque. [ 29 ] As to his income, the bank had on file two Income Tax Return Information forms in the name of the accused, ostensibly for the Tax Years 2004 and 2005. On these two forms, the accused's address is 651 Prior Street, this being the address that the Ministry had. Both forms bear the date of August 22, 2006 at the bottom, which might be the date that they were ostensibly printed or the date that they were received by the bank.

The report for the tax year 2004 indicates a net income of $201,507. On the "Foreign Property" line, the response is "Yes". The report for the tax year 2005 indicates a net income of $363,947. On the "Foreign Property" line, the response is again, "Yes". [ 30 ] In his dealings with the bank, it is apparent that the accused appeared to be a very different person from the man who was receiving social benefits from the Ministry.

To the bank, he indicated that he was employed, the owner of a business, and in receipt of income in 2005 in excess of $360,000. [ 31 ] In fact, the Income Tax Return Information forms in the bank's possession are puzzling for a number of reasons. I will discuss only the most obvious issues that arise on the face of these documents. [ 32 ] Firstly, the report for the 2004 Tax Year indicates a Date of Assessment of November 2004. In other words, the assessment occurred before the 2004 tax year was even over. The report for the 2005 Tax Year indicates a Date of Assessment of July 2004.

This suggests that the assessment occurred before the 2005 tax year had even begun. [ 33 ] Secondly, the 2004 report in the T-D bank file must be compared to the Income Tax Return Information report for the Tax Year 2004 that the Ministry investigator had on his file. Like the 2004 report in the T-D Bank file, the report in the Ministry file is in the name of the accused, and it also bears his Social Insurance Number and his date of birth. However, on the 2004 report obtained by the Ministry, the Date of Assessment is July 2005, a more logical date. In this report, the response to "Foreign Property" is "No".

Moreover, the accused's net income (from "Social assistance payments") is just $9,507. This is far short of the $201,507 set out in the 2004 report in the T-D bank file. [ 34 ] Two possibilities arise from these documents. Either the 2004 and 2005 Income Tax Information reports provided to the T-D Bank are phony documents, or the accused lied to the Ministry about his income and the existence of foreign property in these two tax

years during which he was collecting social welfare benefits. I do not propose to include these documents in the analysis that follows,given the very real likelihood that they are false documents. [35] The T-D Bank file also contains a document purportedly executed by the mother of the accused on August 15, 2006. In thisdocument, V.

Walcott certifies that, in reference to the mortgage application of the accused, Sewell Walcott, she is "giving the abovenamed applicant a gift of $45,000, to assist with the purchase of 3169 Sechelt Drive, Coquitlam, BC, of which no repayment isexpected or negotiated." She adds that this gift is from her "own resources and is not being borrowed in any way". Oddly, on thesignature line, she simply prints her name. [36] Also in the T-D bank file, there is a Fax from the CIBC confirming that the sum of $45,000 was deposited to the accused's CIBCchequing account on August 16, 2006.

There is an attached "account transaction" slip corroborating the deposit to the accused's account#00710/***9838. The same slip indicates a balance prior to the $45,000 deposit of $2,187.81. This is not the same bank account as theCIBC account that was to be used for the monthly mortgage payments (#8226512). Based on the content of the "gift letter", thetransaction slip, and other communications associated with this gift, I am satisfied that these documents relate to the accused before meand to the Sechelt Drive property transaction.

They establish that, on August 16, 2006, the accused had $47,187.81 at his disposal in thisCIBC account. There is no evidence that these funds or this CIBC bank account was disclosed to the Ministry. [37] Details of the activity in the accused's T-D Bank accounts are found in Exhibit 10. The most active account appears to be#6427429, which was opened on November 28, 2005. I have bank statements for this account that run from September 1, 2006 toSeptember 25, 2007, when the account was closed. During this period, the accused operated this account, for the most part, in anoverdraft position.

For the purpose of this analysis, the most relevant activity is as follows: (

i) On January 24, 2007, there was a deposit of $9,834.14. This deposit brought the account into a credit position for the first time inseveral months. (ii) On February 5, 2007, there was a debit in the amount of $6,940.00 which, as noted above, was applied to the payments that wereoverdue on the Sechelt Drive mortgage #5860768. (iii) On September 25, 2007, there was a deposit of $1,815.24. This deposit was referred to as a "Collection Item". It resulted in theoverdraft in the account being paid off and the account closed. The Law [38] Section 380(1) of the Criminal Code is as follows: 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 value of thesubject-matter of the offence exceeds five thousand dollars; [39] The principles governing the determination of whether the crown has proven the offence of fraud under s. 380(1) of the Code areset out in R. v. Théroux (SCC), [1993] 2 S.C.R. 5 (SCC) and R. v. Olan (SCC), [1978] 2 S.C.R. 1175(SCC). The Actus Reus As to the actus reus of the offence of fraud, McLachlin J., speaking for the majority in Théroux, noted at paragraph 16: (

i) the offence has two elements: dishonest act and deprivation; (ii) the dishonest act is established by proof of deceit, falsehood or "other fraudulent means"; (iii) the element of deprivation is established by proof of detriment, prejudice, or risk of prejudice to the economic interests of thevictim, caused by the dishonest act. [40] Where it is alleged that the fraud was committed by deceit or falsehood, "all that need be determined is whether the accused, as amatter of fact, represented that a situation was of a certain character, when, in reality, it was not." A dishonest act committed by "otherfraudulent means" may include, among other acts, "non-disclosure of important facts".

Whether such non-disclosure amounts to adishonest act is to be determined by what reasonable people consider to be dishonest dealing. Théroux, para. 18. See also Théroux atpara. 17: Just as what constitutes a lie or a deceitful act for the purpose of the actus reus is judged on the objective facts, so the "other fraudulentmeans" in the third category is determined objectively, by reference to what a reasonable person would consider to be a dishonest act. Ininstances of fraud by deceit or falsehood, it will not be necessary to undertake such an inquiry.

[ 41 ] The element of deprivation refers to the "prohibited consequence" of engaging in the dishonest act. This prohibited consequence consists of "depriving another of what is or should be his, which may . . . consist in merely placing another's property at risk". Théroux at para. 24 . Actual economic loss is not essential to the offence. The following passage from Olan , supra, is of assistance on this issue: The element of deprivation is satisfied on proof of detriment, prejudice, or risk of prejudice to the economic interests of the victim.

It is not essential that there be actual economic loss as the outcome of the fraud. The following passages from the English Court of Appeal judgment in R. v. Allsop [ (1976), 64 Cr. App. R. 29 .] in my view correctly state the law on the role of economic loss in fraud, at pp. 31, 32: Generally the primary objective of fraudsmen is to advantage themselves. The detriment that results to their victims is secondary to that purpose and incidental. It is "intended" only in the sense that it is a contemplated outcome of the fraud that is perpetrated.

If the deceit which is employed imperils the economic interest of the person deceived, this is sufficient to constitute fraud even though in the event no actual loss is suffered and notwithstanding that the deceiver did not desire to bring about an actual loss. (Emphasis added) [ 42 ] The facts in the Théroux decision are also instructive in this regard. In this case, the accused through his construction company entered into agreements with a number of individuals for the purchase of residences.

The contracts were made and the deposits taken on the basis of a false representation by the company that the deposits were insured. No such insurance was ever in place. The company went broke. The residences were never built and most of the depositors lost their money. Both McLachlin J. (for the majority) and Sopinka J. (for the minority) concluded that there was a deprivation or risk of deprivation from the moment that the accused received the deposits knowing that there was no insurance in place. Even if the residences had been completed and the deposits never lost, a fraud had been committed.

See McLachlin J. at para. 42: ". . . the depositors did not get the insurance protection they were told they would get.

That, in itself, is a deprivation sufficient to establish the actus reus fraud." See also Sopinka J. at para. 3: ". . . there was no insurance in place and, therefore, even if the project were eventually completed, there would have been a deprivation or risk of deprivation during the uninsured period ." Mens Rea [ 43 ] The mens rea for fraud consists of "the subjective awareness" that one is undertaking a prohibited act (the deceit, falsehood or other dishonest act) which could cause deprivation in the sense of "depriving another of property or putting that property at risk". ( Théroux , para. 24 and 25 ) So, the questions for the trier of fact are: (

i) Did the accused intentionally commit the prohibited acts (deceit, falsehood, or other dishonest act)? (ii) Did he know that those prohibited acts could cause deprivation, including the risk of deprivation? At para. 26 of Théroux , McLachlin J. proposed that " recklessness as to consequences" might also suffice to establish the mens rea of fraud. [ 44 ] Although the test for mens rea is subjective in nature, this does not mean that Crown must lead positive evidence as to precisely what was in the accused's mind at the time that he committed the offence of fraud.

Depending on the evidence, the trier of fact may be in a position to draw inferences as to the accused's state of mind. See Théroux at para. 23 : [ 45 ] In certain cases, subjective awareness of the consequences can be inferred from the act itself, barring some explanation casting doubt on such inference. The fact that such an inference is made does not detract from the subjectivity of the test. The Issue [ 46 ] The defence does not dispute the allegation that the accused engaged in dishonest acts when he failed to disclose his assets and bank accounts to the Ministry.

The issue is whether the crown has established the second element of the actus reus , that is, deprivation or a risk of deprivation. Of course, absent proof of the actus reus , there would be no need to enquire into the issue of mens rea . Analysis The Actus Reus [ 47 ] The prohibited act committed by the accused was his failure to disclose his true financial circumstances to the Ministry.

Given the nature of the social assistance program, which is designed to provide financial support and shelter to persons who can establish that they have few, if any, assets and no source of income, there is no doubt in my mind that that the accused's failure to disclose his cash assets and his equity in the Sechelt Drive property would be considered dishonest by any reasonable person. In the present case, repeated dishonest acts by the accused have been proven beyond a reasonable doubt.

The material circumstances that he failed to disclose included: The Sechelt Drive property that he purchased on September 26, 2006 and the related T-D Bank mortgage The $21,050 that he used as a down payment in order to purchase this property and the financial means that he had at his disposal to make mortgage payments of $2,500.92 per month Two bank accounts in his name at the CIBC

The sums held in these CIBC accounts as of August 16, 2006, including the pre-existing balance of $2,187.81 and the $45,000 deposit (the gift) into the same account #00710/***9838. Three bank accounts in his name at the T-D Bank The $9,834.14 cash deposit into his T-D account #6427429 on January 24, 2007. The $1,815.24 cash deposit into T-D account #6427429 on September 25, 2007. [ 48 ] I turn now to the element of "deprivation, or risk of deprivation".

On this issue, the defence submission revolves around the question of whether the accused's equity in the Sechelt Drive property exceeded the allowable limit of $3,000. The defence position seems to be this: The accused was lawfully entitled to disability payments so long as the equity in this residence did not exceed $3,000. Since the crown has led no evidence as to the value of the property during the period of time that the accused was collecting benefits, there is no evidence as to the accused's equity in that property.

Hence, the crown has failed to establish that the Ministry was deprived of any funds or that there was a risk of deprivation as defined by the legal authorities. Specifically, the crown must establish that, in any given month during which the accused received a disability benefit, the equity in the property exceeded the asset limit of $3,000 or there was a risk that it might have exceeded that limit. Again, absent any evidence as to the value of the property during any particular month, the crown cannot establish deprivation or even a risk of deprivation.

Moreover, absent such information, the proper quantum of the fraud cannot be established, given that there may have been some months during which the accused was entitled to benefits because the equity that he held in the property fell below $3,000. [ 49 ] It seems to me that the defence position that the crown must lead evidence of the value of the Sechelt Drive property at various points in time during the term of the alleged fraud is a backhand way of saying that the crown must prove actual deprivation.

If we were to have evidence as to the value of the property in any given month, we would be able to determine the precise amount of equity that the accused held in the property, at that point in time, simply by referring back to the mortgage terms and any sums due under the mortgage that had not been paid.

This approach recasts the notion of "risk of deprivation" in terms so narrow that it ceases to be distinguishable from the concept of actual deprivation. [ 50 ] In fact, based on the evidence before me, I am satisfied beyond a reasonable doubt that, as long as the accused was the registered owner of the Sechelt property, there was always a substantial risk that his equity interest in the Sechelt Drive property would exceed the asset limit of $3,000. On September 26, 2006 the accused completed the purchase of the Sechelt Drive property.

A cash deposit of $21,050 was credited towards the purchase price of $421,000, leaving a balance due (including the $11,798.52 CMHC insurance premium) of $411,748.52. Funds to cover this balance were provided through the mortgage that the accused obtained from the T-D Bank. In the absence of evidence to the contrary, the only reasonable inference to be drawn is that the accused purchased the Sechelt Drive property at fair market value.

Based on the above evidence, I am satisfied beyond a reasonable doubt that the accused's equity in the Sechelt Drive property, at least on the date of purchase, was in the range of $9,251.48, this being the difference between the purchase price and the amount due on the mortgage. I am mindful of the fact that the accused was not making his mortgage payments. This may have depreciated his equity. This fact must be balanced against the significant likelihood that the market value of the property would appreciate. This was a circumstance over which the accused had no control.

In these circumstances, I am satisfied that there was always a substantial risk that the Ministry would be deprived of funds that were going to the accused in the form of disability benefits to which he was not entitled. This is all that the crown was required to prove. [ 51 ] Notwithstanding the above comments, I am of the view that the above approach to the issues in this case is actually faulty. It fails to take into account the applicable legislation and regulations that govern the accused’s entitlement to benefits. I return here to Section 10(2) of the Regulations .

A sole applicant “is not eligible for disability assistance” if he has assets with a total value of more than $3,000. [ 52 ] In my view, the actus reus of fraud in this case was complete by virtue of two events that triggered the application of this regulation. Firstly, in late August or early September 2006, the accused put down a cash deposit of $21,050 towards the purchase the Sechelt Drive property. At the moment that this accused was in possession of this undisclosed cash, he was no longer entitled to disability benefits.

Secondly, at the moment that the accused completed the purchase of the Sechelt Drive residence on September 26, 2006, he acquired an asset in which his equity interest was in the range of $9,251.48. Again, at this moment, the accused was no longer eligible to receive disability benefits. In both instances, the accused was automatically ineligible for disability benefits by operation of law. [ 53 ] Had the accused disclosed the cash asset of $21,050 and his equity interest in the Sechelt property, the Ministry would have immediately ceased paying benefits to him.

Thereafter, the accused would have been required to re-qualify if he wished to resume receiving benefits. In particular, it would have been up to him to satisfy the Ministry that he no longer owned the Sechelt Drive property or that his equity in that property was below the asset limit of $3,000. The accused never did apply to re-qualify during the period of the alleged fraud; hence, he was not entitled to receive the benefits that came to him after September 2006.

Of course, the only reason that the accused was able to avoid having to re-qualify for benefits was the fact that he was keeping the Ministry in the dark about the above

two financial events that disentitled him to benefits. [ 54 ] At the moment that the accused received his first disability benefit following his undisclosed purchase of the Sechelt Drive property, the actus reus of fraud was complete. It was repeated for each and every benefit that the accused received thereafter. The Ministry was deprived of the cash that was used to provide the accused with these benefits to which he was not entitled. Actual deprivation has been proven beyond a reasonable doubt.

These benefits were given to the accused only because he failed to disclose to the Ministry that he now had assets in excess of $3,000. His on-going dishonesty in his dealings with the Ministry prevented the Ministry from terminating his benefits, as they were entitled to do. In effect, the accused perpetuated the fraud on a month-to-month basis by his continued non-disclosure. [ 55 ] As is apparent, the value of the Sechelt Drive property after the date of purchase is immaterial to the above analysis.

I have limited that analysis to the Sechelt Drive purchase only because this is the event upon which submissions focussed. In fact, I am of the view that the accused had already lost his entitlement to on-going benefits as early as August 16, 2006 by virtue of the $45,000 gift that was deposited into one of his undisclosed CIBC bank accounts. This was a gift which, on the face of the "gift letter", was not re-payable by the accused.

This sum, together with the pre-existing balance of $2,187.81 in this same account, was well in excess of the $3,000 asset limit and was sufficient by itself to disentitle the accused to further benefits, by operation of law.

The same is true of the $9,834.14 deposited into his T-D account #6427429 on January 24, 2007. [ 56 ] I pause here to note that, if one assumes that the $21,050 deposit on the purchase of the Sechelt Drive property came from the gift of $45,000 and not from some other source, it is apparent that the accused had $57,021.95 ($47,187.81 plus $9,834.14) at his disposal from August 16, 2006 through to January 24, 2007. This sum was five times larger than the amount of the annual disability benefits that he was receiving from the BC government.

It was more than enough to provide him with a comfortable life from August 2006 to November 2007. I am mindful of the fact that crown has led no evidence as to what happened to these funds. In my view, they were not obliged to do so. It was sufficient for the crown to prove that these funds were in the possession of the accused on the dates described above and that the accused failed to disclose their existence.

Thereafter, the evidentiary burden shifted to the accused to explain why these cash assets, or some portion thereof, ought not to be considered in determining whether the crown has proven the fraud alleged. Mens Rea [ 57 ] I am satisfied, based on the interview process described by the Ministry workers and on the presence of the accused’s initials on page 3 of all four Review forms, that the accused understood that he was required to provide full and accurate answers to the financial questions posed in the forms and that he was required to report all changes in his financial circumstances.

There is no evidence to suggest that his non-disclosure of his bank accounts or his assets was accidental or otherwise inadvertent. The only reasonable inference to be drawn from the evidence is that the accused’s failure to disclose was intentional. [ 58 ] I am also satisfied that the only reasonable inference to be drawn from the totality of the evidence before me is that the accused was well aware of the fact that the Ministry could and would be tricked into continuing to pay him disability benefits to which he was not entitled, so long as he withheld disclosure of his assets.

The evidence gives rise to no possible explanation that might otherwise raise some doubt about this conclusion. Conclusion [ 59 ] The Ministry of Social Housing and Development was originally induced to provide disability benefits to the accused on the strength of the written declarations that he made as to his meagre financial circumstances. In August and September of 2006, the accused acquired assets each of which were in excess of the regulatory $3,000 asset limit, those being the $45,000 cash gift and the Sechelt Drive property.

Upon receipt of these assets, the accused automatically became ineligible for disability benefits, not because of non-disclosure, but by operation of law. He took no steps to re-apply or re-qualify for benefits. [ 60 ] By virtue of his non-disclosure of the above assets, the Ministry was induced by the accused to continue forwarding to him disability benefits to which he was no longer entitled.

The evidence establishes both elements of the actus reus of fraud, those being the dishonest non-disclosure of assets and actual deprivation in the form of disability benefits that the Ministry paid to the accused when he was not entitled to receive the same.

The accused was intentionally dishonest in his dealings with the Ministry and was well aware of that fact that his non-disclosure of significant assets would induce the Ministry to continue paying him disability benefits for which he was not longer eligible. [ 61 ] I am satisfied beyond a reasonable doubt that the accused defrauded the Ministry of Social Housing and Development of $11,745.21 in disability benefits that the Ministry paid to him between November 2006 and November 2007. _____________________________ The Honourable Judge F.E. Howard Provincial Court of British Columbia