2020 QCCQ 8885, 2020 QCCQ 8885

R. c. Comparelli 2020 QCCQ 8885 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL «Criminal and Penal Division» N o : 500-73-004096-141(002) DATE: December 14, 2020 BY THE HONOURABLE SALVATORE MASCIA ______________________________________________________________________ HER MAJESTY THE QUEEN Prosecutrix v. Americo COMPARELLI Accused AMENDED JUDGMENT 1. INTRODUCTION [ 1 ] The defendant, Americo Comparelli, stands charged with having, between January 2003 and July 2009, committed the following infractions : a.

Count 1: Conspiracy to commit fraud against the Government of Canada’s Scientific Research and Experimental Development tax credit programme (SR&ED) for a value exceeding 5,000.00$, contrary to ss. 465(1) (

c) and 380(1) (

a) Cr.C . ; b. Count 2: Committing a fraud against the SR&ED programme, the value of which exceeds 5,000.00$, contrary to s. 380(1) (

a) Cr.C . ; c. Count 3: Conspiracy to commit a breach of trust by a public officer, contrary to ss. 122 and 465(1) (

c) Cr.C. ; d. Count 4: Breach of trust by a public officer, contrary to s. 122 Cr.C . ; and e.

Count 6: Bribery of a public officer to procure or facilitate the commission of a breach of trust, contrary to s. 120 (a)(ii) Cr.C . [ 2 ] Succinctly stated, the charges against the accused stem from his employment as a Financial Reviewer (FR) at The Scientific Research and Experimental Development (SR&ED) Department of the Canada Revenue Agency while being a «silent» partner in a private firm (Delvex) that was engaged in the business of preparing and filing claims for research and development tax credits for its clients.

According to the Crown’s theory, he used his «insider» knowledge of the workings of the SR&ED program to procure an unfair advantage to Delvex’s clients. [ 3 ] More brazen still, the Crown alleges that the accused acted as a Financial Reviewer for the CRA on claims for tax credits made by two clients of Delvex: Casco Inc. and Eurostone Inc. The accused, in effect, was auditing his own clients.

Any reasonably well- informed person could properly see that the accused was in a conflict of interest between his duties and responsibilities as a public servant, on the one hand, and his existing private interests, on the other hand. [ 4 ] In return for his a ssistance in helping Delvex’s clients with their claims, the Crown alleges that he received the sum of $45,500, thereby, making him guilty of bribery. [5] Of course, the Crown’s case against the accused is premised on the assumption that the accused was a silent partner in Delvex.

In the present matter, the documentary evidence (emails and business records) contains no comprising references to Americo Comparelli. Except in the execution of his duties as a Financial Reviewer for the CRA, there is nary an email sent or received by the accused. [6] The Crown’s theory, however, is that the accused used the pseudonym «Pat» to cover his tracks. Essentially, evidence for the use of the said pseudonym had three sources: i. An email sent by a third party (someone not charged in the conspiracy) mentioning that «Pat» could be reached at the following cell phone number: 514-[...].

It just so happens that the said cell phone number is that of the accused. ii. Tables of five columns included in two separate documents suggest a link between the actual initials of the five co- conspirators in one and their pseudonyms in the other [1] . With respect to the accused, the link is between the initials «RC» inscribed on top of a third column in the first sheet and the name «Pat» written on top of the third column of a second sheet. For the Crown, the connection comes from the fact that the accused, by his own admission, was also known by his nickname, «Rico». As such, the letters

«RC» could either represent an abbreviated version of the accused’s given name «Americo» or serve as initials representing the nickname and the family name of the accused. iii. Mr. Jeff Bercovitch , a crown witness and ex-employee of the SR&ED division of the CRA, testified that «Pat» was the codename for the accused. More particularly, it was at a meeting in 2005 held at BT Céramiques (a business owned and operated by one of the co-conspirators, Mr. Frank Bruno) that the idea of a codename for the accused came up.

Along with the witness, the following people attended the meeting: Marcello Furgiuele, Frank Bruno and the accused, Americo Comparelli. [7] On the premise that the accused used the pseudonym of «Pat» to cover his tracks, the Crown referenced the documents (emails and business records) that pointed to his involvement in a scheme to fraudulently claim SR&ED tax credits from the CRA. In one email, for instance, Jeff Bercovitch wrote to Marcello Furgiello that «Pat has to get paid [2] .

In another email from Marcello Furgiuele to Frank Bruno, the former explained that Jeff Bercovitch (in his capacity as a technical writer for Delvex) will only get an additional $1,000.00 for his work as «Pat» had already given him «an advance» [3] . [8] Likewise, business documents relating to Delvex’s banking operations indicate that «Pat» had a monetary involvement in the firm.

A document entitled «Statement of Account», for instance , suggests that “Pat” paid advances to independent or private consultants for the preparation of SR&ED claims of Delvex’s clients. [4] In an entry dated June 15, 2006, for instance, we read the following: Reimbursement of advances by Pat (Miceli, $1000. 2003, Simard Beaudry $1000 2003, Hyprescon Inc. $1000 2003, Hyprescon Int $1000 2003 (sic) [5] (Emphasis added) [9] While some of the records indicate that money was advanced by «Pat» for the preparation of SR&ED claims made for Delvex’s clients, other business records indicate that he received money from the firm.

A document labelled «TEXAS HOLD’EM UNLIMITED TOURNAMENT», for instance, has five columns which—according to the Crown’s theory— summarizes the initial investment and benefits for each of the alleged co-conspirators. In the third column, under the heading «Pat», one reads the following annotations: «buy-in, $5,000»; «out $45,500» and «net, $40,000».

Always according to the Crown’s theory, the «net» $40,500 represented the accused’s net profit after subtracting his initial outlay of $5,000 [6] . [10] Though the accused stood trial alone, it should be noted that the indictment includes similar charges against two other CRA agents (Adriano Furgiuele and Antonio Girardi) as well as two other individuals who were principally involved in running the Delvex operations (Marcello Furgiuele and Frank Bruno).

As was the case with the accused, the Crown alleges that the other CRA agents were «phantom» shareholders in Delvex and that they helped the firm obtain fraudulent tax credits for its clients. Like the accused, the two other CRA agents were in an obvious conflict of interest—swearing allegiance to serve the public good whilst having a private interest in Delvex. [11] As for the two individuals who ran the day-to-day activities of Delvex (Marcello Furgielle and Frank Bruno), no one contests their right to operate a consulting firm specialized in the business of claiming tax credits for their clients.

However, they acted illegally when they included in their roster of paid consultants or secret shareholders agents at the employ of the CRA. [12] As for the accused, his defence was essentially one of denial. He denied having anything to do with Delvex. He was never a shareholder (secret or otherwise) of Delvex nor a consultant for the said firm. Likewise, he denied ever having given any advice with respect to SR&ED claims made by Delvex on behalf of its clients.

Finally, he denied having any connection to the name «Pat» mentioned in the emails exchanged between some of the co-conspirators and the «Pat» that appears in the business records of Delvex. For that matter, he flatly denied ever having gone by the pseudonym of «Pat». He admitted, however, that the cell number associated with «Pat» in one email was indeed his number. [13] Always with a view of distancing himself from any connection to Delvex, he minimized whatever contacts—business or social—he may have had with the other co-conspirators.

Adriano Furgiuele and Antonio Girardi (the other two employees of the CRA) were basically colleagues that he would sometimes meet after work for a drink (5 à 7) [7] . Describing himself as an introvert, he stated that the never went to their homes, nor did he ever meet or get to know their families.

Likewise, he had nothing more than a casual relationship with the two individuals managing the day-to-day affairs of Delvex (Frank Bruno and Marcello Furgiuele). [14] As he was not involved in any way, shape or manner in Delvex, there was nothing nefarious in the fact that he served as the Financial Reviewer for the claims made by two of the firm’s clients: Casco and Eurostone. For that matter, the record shows that there was nothing wrong with the manner in which the accused conducted the financial review of the said claims.

Nor could it be said that the accused was complacent in the execution of his duties—the evidence shows that he pointed to errors in the claims and requested that corrections be made. [15] With respect to the Eurostone file, more particularly, the evidence suggests that the accused’s audit was thorough and meticulous . One of the Crown witnesses who was present at the audit remarked that the owners of the company were annoyed by the numerous questions put to them by the accused. Just as bothersome, were the accused’s constant requests for details and supporting documents.

If the accused was a silent partner in Delvex—as the Crown claims he was—would he be such a stickler for details when reviewing the tax claims it presented on behalf of its clients? [16] Always with a view of proving that the accused could not be involved in Delvex, it was argued that his services as a Financial Reviewer would be of no help to Delvex’s clients. If selected for review, the merits of an application for SR&ED tax credits are assessed by both a research and technology analyst (RTA) and by a Financial Reviewer (FR).

The former (sometimes referred to as the scientist) assesses whether or not the project submitted by the claimant qualifies as valid research and development. As for the latter (sometimes qualified as the auditor), his job is to examine whether or not the costs associated with the project are allowable research and development expenditures. The latter’s job will often consist of validating the source documents supporting a particular claim.

[17] Of the two individuals involved in the review process, the RTA (or the scientist) is the most important. If a project doesn’tqualify as «research and development», all expenditures, no matter how important will not be eligible for a tax credit. The accused,argued defence counsel, « is a man of numbers, not of science. He had no ability to create or analyze a scientific report, genuine or false. »

As such, it would make no sense—financially or strategically—for Delvex to retain his services as he had no «real power to materiallyinfluence the outcome of an audit in its favour. » [18] In any case, all the witnesses knowledgeable of the internal functioning of the SR&ED programme stated that it was veryopen and thrived on providing as much information and guidance as possible to research and development tax credit claimants.

Why,then, would Delvex need the accused’s supposed expertise and «insider» knowledge if they can get whatever information they wantedby simply going through the regular SR&ED channels? [19] With respect to the nature of the evidence presented against the accused, defence counsel argued that it consisted mostly of« unsubstantiated gossip, rumours and innuendos. » He reminded the Court that the accused’s name never appears as a sender or as arecipient of any of the emails filed in evidence (except in his capacity as a Financial Reviewer for the CRA).

For that matter no emailswere sent or received under his supposed pseudonym-«Pat». It’s only in the messages of third parties or co-conspirators that referencesare made to the name «Pat». Surely, he can’t be held responsible for what other individuals may have said about «Pat».

Nor is an exhibitdirectly admissible against the accused simply because an alleged co-conspirator adopts its contents at trial. [20] While the co-conspirators’ exception to hearsay allows for the admission of out-of-court statements made by a co-conspirator against the accused, they are only opposable to the accused if the prosecution establishes (1) beyond a reasonable doubt, thatthe conspiracy existed and (2), based only on direct evidence against the accused that he was probably a member of the conspiracy[8].By way of consequence, the emails where the accused is neither a sender nor a recipient cannot be found to be directly admissibleagainst him.

Likewise, business documents not authored by the accused and that don’t mention his name do not constitute evidencedirectly admissible against him. In the end, the paucity of evidence directly admissible against the accused defies any conclusion that hewas a probable member of the conspiracy. In the absence of such evidence, the co-conspirator’s exception to the hearsay rule has noapplication as far as he is concerned. [21] Moreover, much of the scant evidence relied upon by the Crown to prove his participation in the conspiracy has to bedismissed as inadmissible hearsay.

The email establishing a link between «Pat’s» phone number and the accused, for instance, does notfall under the “business records” exception to the traditional rule against hearsay. More particularly, there is no evidence that (1) therecord was created in the routine of business and/or (2) that the originator of the record had a duty to make the record. Nor could theemail be saved under the principled exception to the hearsay rule. Firstly, the document had none of the hallmarks of reliability(substantive reliability and procedural reliability).

Secondly, the Crown had not established the criteria of necessity—that is, there was noevidence that the author of the email (not a co-conspirator in this case) was unavailable to give testimony. It would be blatantly unfair toallow such evidence—untested in cross-examination—to be used against the accused. [22] When the hearsay evidence is left out, all you have is the testimony of Jeff Bercovitch (an ex-employee of the CRA) to linkthe accused to the persona of «Pat» and any involvement in Delvex.

For the defence, however, the testimony of Jeff Bercovitch, washighly suspect and could not be relied upon for a conviction. Firstly, there were grounds to believe that he tailored his story according toa narrative spoon-fed to him by the RCMP. The narrative included the suggestion that the accused was «Pat». Secondly, the witness, byhis own admission, felt that he had to agree with the suggested RCMP narrative in order to avoid facing charges of his own. Thirdly, theaccused’s testimony at trial was replete with contradictions and improbabilities.

He lied to the police the first time he made a statement,he lied to the Crown and he lied at the preliminary hearing. [23] Finally, the accused argued that his testimony should, at the very least, raise a reasonable doubt. Though he had the right tosilence, he had the courage to testify and face each and every one of the allegations that the Crown levelled against him.

He dealt witheach of the relevant exhibits that mentioned «Pat» and not once was he flustered or contradicted. [24] Granted, his testimony was mostly one of denial (he denies being «Pat»; he denies being involved with Delvex or beingpaid to work for claims filed on behalf of the firm’s clients; and he denies being involved in any fraudulent tax scheme with the other co-conspirators). But if he is innocent of the charges, what else could he do but deny.

A denial of culpability cannot be turned into a reasonto disbelieve the accused[9]. [25] The accused’s testimony holding that he is not implicated in any way with Delvex engages the principles set out in R. v W.(D.), (SCC), [1991] 1 SCR 742. If it boiled down to a credibility contest, defence counsel felt confident that his clientwould win hands down over the Crown’s main witness, Jeff Bercovitch. To quote from the oral arguments of defence counsel: Between Mr. Bercovitch and Mr. Comparelli, who can you trust under WD? Undoubtedly, Mr. Comparelli. We don’t even need thiscompetition under WD.

What does the prosecution have left? Witnesses with no credibility. You have the accused who testified calmly, logically and facedcross-examination without issue. [26] Finally, the accused argued that even if the Court arrived at the conclusion that he was «Pat», it cannot be said that hecommitted the offences of fraud and corruption. Stated briefly, there could be no fraud or corruption as the evidence supported the claimthat he did his work properly. Moreover, as a Financial Reviewer, he was in no position to influence the outcome of an audit in favour ofDelvex’s clients.

Instead, it was the scientist or technical reviewer who held all the cards. If there was no science or no technicalimprovement in a project, there would be no tax credits. As a Financial Reviewer and second fiddle to the RTA, all he could do was addup and validate the figures (i.e., man-hours and materials) approved for a particular project. [27] Finally, the liberal or open nature of the SR&ED program negated any advantage Delvex could have had in including theaccused in its ranks. More particularly, there was no need of an «inside man» to get a hold of privileged information or in influencing theclaims process.

For one thing, the department thrived on forwarding information to the potential claimants of research and developmentcredits. Information was not withheld. For another thing, there was no indication that the accused had privileged information not

accessible to any outsider. At worst, he gave Delvex information that could have been given by any Financial Reviewer to any claimant of a tax credit for research and development. Surely, he could not be found guilty of fraud and corruption for merely doing his job. 2. BACKGROUND INFORMATION [28] Fraud trials—especially those involving tax frauds and corruption—as in the present matter —are getting more and more complicated. Along with the testimonial evidence, the trier of fact has to wade through a large pool of documentary evidence.

The complexity of this case is compounded by the fact that charges of conspiracy are added to the substantive charges of fraud, corruption and bribery. Along with the challenges of applying the correct evidentiary rules, the trial judge also has to render a decision which clearly articulates the reasons for his judgment. Just as importantly, justice is a public matter.

It is important, therefore, that members of the public not versed in the law understand the position of the parties on the facts and on the law as well the reasoning behind the judge’s assessment of the facts, the applicable law and the verdict rendered. [29] In the hope of making this decision readable or easier to follow, it will be helpful to describe at the outset the cast of characters in this case, including the various businesses and government agencies involved.

This will be followed by general information regarding the application of the federal Income Tax Act ( ITA ) and on the workings of the SR&ED department of the CRA.

This background information will be of primary importance when dealing with the accused's defence holding that even if he was «Pat», his conduct was not sufficiently serious to move it from the realm of administrative fault to that of criminal behaviour. 2.1 The cast of characters 2.1.1 Marcello Furgiuele [30] Marcello Furgiuele, a Crown witness, described himself as a tax consultant specialized in preparing and submitting claims for research and development tax credits for his clients. His background, however, was financial, having obtained a bachelor of commerce from Concordia University several years earlier.

As for the science or technical part of a research and development tax claim, he would retain the services of individuals better trained or more apt at producing the requisite reports (i.e. Jeff Bercovitch, Carlo Macaro and Claude Papion). [31] According to the documentary evidence, he was the sole administrator and shareholder of Delvex, a firm that was in the business of preparing and submitting claims for clients claiming research and development tax credits. The bulk of the evidence, however , establishes that Frank Bruno was the directing mind of the operations. He was the rainmaker for the firm.

More particularly, it's though his contacts that Delvex got the mandate to prepare R & D tax credit claims for large and important corporate clients such as Hyprescon and Simard Beaudry. Next, the exchange of emails between Marcello Furgiuele and Frank Bruno indicates that the former had to report to the latter. At best, Marcello Furgiello merely managed the day-to-day activities of Delvex; the real boss was Frank Bruno. [32] As a witness for the Crown, Marcello Furgiuele provided little, if any, incriminating evidence against the accused.

When questioned by Crown counsel as to the identity of «Pat» in some of the emails he either authored or received, he could not say. Likewise, he had convenient lapses in memory when questioned as to why the emails even referenced «Pat» to begin with. In many respects, his testimony resembled that of a recalcitrant witness in a mob movie who simply avoids answering the questions by pretending to be ignorant of the events or the characters involved and falls back on the go-to excuse of « I can’t remember. » [33] In a later

section of this decision, we will review some of the emails authored or received by Marcello Furgiuele in which the name «Pat» comes up. The nature or the subject matter of the emails clearly establishes that he knew who «Pat» was—any claim to the contrary has to be dismissed as total nonsense (not to say an outright lie). [34] The witness was also very protective of the role of Frank Bruno in Delvex, never implicating him as a secret shareholder or administrator of the firm.

For that matter, he was also guarded with respect to the implication of the other co-conspirators in Delvex— Adriano Furgiuele (brother of the witness) and Antonio Girardi. [35] The only time the witness appeared to be forthright was when questioned about the procedure or formalities with respect to claiming research and development credits for the firm’s clients. In the process, he also confirmed that the review of a claim hinged on the RTA’s assessment of the scientific or technological aspects of the projects submitted on behalf of his clients. As for the Financial Reviewer, he played but a secondary role.

No science, no money. [36] Finally, it should be noted that Mr. Marcello Furgiuele pled guilty to counts two and four in the present indictment back in July 2018 (fraud and breach of trust) and was sentenced to a term of 18 months of imprisonment to be served in the community. At trial, however, he maintained that he was innocent and that he was unduly pressured to accept the terms of a guilty plea. Even when confronted by Crown counsel with his sworn admission of facts filed at the time of his guilty plea, he still maintained his innocence [10] . 2.1.2 Mr .

Jeff Bercovitch [37] Jeff Bercovitch was a Financial Reviewer at the SR & ED department of the CRA from 1993 to May 2005. He resigned his post at the CRA in order to strike it out on his own as a private consultant specialized in preparing claims for research and development tax credits. [38] Though trained in finance (he graduated with a Bachelor of Commerce degree from Concordia University), he was adept at

producing technical or scientific reports. According to the evidence, he was retained by Delvex to produce the technical reports for several of its corporate clients, i.e., Hyprescon, Simard Beaudry, Miceli, Eursostone and Casco. [39] The evidence also reveals that he was drafting technical reports for a private tax consultant while still employed as a Financial Reviewer at the CRA. According to his explanations, he was just honing his skills while preparing to make his exit to the private field.

He claimed that he was never paid for his services, after all, he was just learning the ropes. [40] Along with work done for a private tax consultant whilst at the CRA, the witness also prepared the technical reports in support of the claims for tax credits submitted by BT Céramiques , a private company owned and operated by Frank Bruno, one of the alleged co-conspirators in the present matter. More importantly—at least for the purposes of this case—the witness explained that it was the accused, Amercio Comparelli, who approached him about drafting the technical reports for BT Céramiques.

Before being asked to draft the technical reports, the witness claimed that he had never heard of the company or Frank Bruno before. [41] In gathering the information necessary for BT Céramiques’ claim for tax credits, the accused served as an intermediary between the witness and the company. According to the witness , he would write on a sheet of paper the technical information he needed for the report and handed it to the accused who, in turn, would remit it to Frank Bruno.

Once the information was obtained, the accused relayed it back to the witness. [42] This witness reported that he was paid for his work on the BT Céramiques project—a small advance in the beginning and the balance to be paid to him at the end when (and if) the project was approved by the CRA. As he had yet to meet with Frank Bruno (or anyone else tied to the company), it was the accused who brought him the money. [43] At a certain point, however, questions of a technical nature by an RTA advisor of the CRA regarding the tax claims of BT Céramiques required that the witness meet with Frank Bruno .

The meeting was held at the offices of BT Céramiques sometime in 2004. Along with witness and Mr. Frank Bruno, the accused was also present. [44] The witness also attended another meeting in 2005 at the offices of BT Céramiques which included Frank Bruno, the accused and Marcello Furgiuele. According to the witness, the purpose of the meeting was to introduce him to the man he would be working with in the preparation of claims for research and development tax credits, Marcello Furgiuele.

It’s also in the course of this meeting that they decided to use the codename of «Pat» for the accused. [45] With respect to the counts of fraud and corruption, the witness mentioned that part of his work consisted in embellishing or boosting claims for tax credits. Claims were even submitted for research and development work that was never done.

Likewise, man- hours and the cost of materials for a project were also exaggerated in order to increase the amount claimed in tax credits. [46] The witness was also apt at copying work done in one project (for one company) and pasting it to another project for another company. In his testimony, he euphemistically used the term «recycling» to describe the obviously fraudulent practice of passing off old projects as new. In order to avoid detection, he (along with his co-conspirators) worked the system so that the same RTA advisor would not see or review the same report.

This could be accomplished in one of two ways: the first consisted in making sure that the report would go to a different office of the CRA, i.e., in Laval instead of Montreal. The second method involved choosing the language (French or English) in which the report would be written and submitted to the CRA. For example, a report would be written in French if the goal was to avoid a CRA review from an RTA who was particularly meticulous, knowledgeable and astute, but whose knowledge of the said language was weak.

In that case, the report would probably be passed on to someone comfortable reading a technical report in French. [11] 2.1.3 Adriano Furgiuele [47] Adriano Furgiuele is an alleged co-conspirator in this case. Though once at the employ of the CRA, he was never assigned to its SR & ED department. He is also the brother of Marcello Furgiuele. [48] The documentary evidence suggests that he was one of five individuals that invested in Delvex . His name also comes up in some of the emails filed in the court record.

He did not testify in this case. 2.1.4 Antonio Girardi [49] Antonio Girardi is another co-conspirator in the present matter. Like Adriano Furgiuele, he was once employed by the CRA, but he never worked at the SR &ED department. The documentary evidence also suggests that he was one of the five individuals that invested in Delvex.

He did not testify in this case. 2.1.5 Frank Bruno [50] An alleged co-conspirator in this case, he owned and operated BT Céramiques, a company principally involved in cement and ceramic work. [51] Though the name of Frank Bruno does not appear on official documentation, the evidence suggests that he was the principle owner and driving force behind Delvex. For one thing, the firm’s major clients were all contacts of Mr. Bruno. For another thing, the emails suggest that Marcello Furgiuele—the front man of the operation—had to report to Frank Bruno.

[52] From the evidence, we know that BT Céramiques made several claims for tax credits for research and development expenditures as early as 2003. The technical aspects of the reports supporting the said claims were prepared by Jeff Bercovitch. Frank Bruno did not testify in this case. 2.1.6 Mr. Mohamed Kamel [53] The testimonial evidence includes but a few passing references to Mohamed Kamel. In the course of his testimony, Mr. Jeff Bercovitch mentioned that Mohamed Kamel was an engineer at BT. Céramiques.

For his part, the accused claimed to never having heard of the individual, let alone met with him. [54] In this case, the importance of Mohamed Kamel for the Crown’s case lies in the fact that he sent an email to Frank Fiorino (the accountant for BT Céramiques) dated June 27, 2006, in which he gives the cell phone number of «Pat». [12] The said email was also copied and sent to Frank Bruno and Rudy Palmerino [13] . [55] Mohamed Kamel, however, did not testify in this case. As we shall see, the defence challenged the admissibility of the said email claiming that it constituted hearsay.

As for the Crown, it argued that the email was admissible under one of the recognized exceptions to the hearsay rule—be it as a business record or on the basis of the principled approach to hearsay evidence. As regards the second ground for admission (the principled exception), the Crown insisted on the inherent reliability of the email; even if the declarant was called to the stand, what more could he add except to confirm that he sent the email containing a phone number to call «Pat». 2.1.7 Mr. Frank Fiorino [56] The oral evidence includes only a few passing references to Frank Fiorino.

In the testimonies of Jeff Bercovitch and Marcello Furgiuele, we learned that he was an accountant and that BT Céramiques was one his clients. [57] Both witnesses, however, were especially guarded as to the role Frank Fiorino may or may have not played in the alleged conspiracy. Neither one of them, for instance, could explain why certain emails were sent to or received by the accountant [14] . Marcello Furgiuele, for one, relied on the familiar refrain of «I don’t remember» to avoid answering any questions concerning the accountant.

One had the impression that he used the said refrain as a sort of magical incantation designed to ward off the onslaught of probing questions from counsels. [58] As for the documentary evidence, it too, contains but few references to Frank Fiorino. The emails, however, suggest that a person named «Pat» has to be consulted in order to complete the business dealings of Delvex. More importantly, he was the recipient of an email by Mr. Kamel which included the phone number of a person called «Pat».

As mentioned above, it just so happens that the said phone number corresponds to the actual number of the accused, Americo Comparelli. [59] As was the case with Mohamed Kamel, Frank Fiorino did not testify in the present matter. In the absence of his testimony, the defence objected to the filing into evidence of the emails purportedly authored by the accountant on the basis of hearsay. Firstly, the emails could not be categorized as business records—one of the recognized exceptions to the hearsay rule.

Secondly, the emails could not be accepted under the principled exception to the hearsay rule as both the «twin pillars» of necessity and reliability were wanting. 2.1.8 Ms. Hélène Martin [60] Hélène Martin worked as a supervisor at the SR&ED department of the CRA. Called to testify as an expert witness for the Crown, she was asked to explain the purpose of the SR & ED wing of the CRA, the criteria for accepting a claim and the manner in which a claim was assessed and reviewed from a both a scientific and financial perspective.

In the course of her testimony, she filed two reports detailing all of the aforementioned subjects [15] . [61] Hélène Martin was also asked to assess the work done by the accused with respect to the financial audits he conducted for two of Delvex’s clients: Eurostone and Casco. In her oral testimony, she stated that she could detect no errors or anomalies in the financial reviews conducted by the accused: Je n’ai rien vu d’anormal dans le dossier. Je ne peux pas conclure que le travail est mal fait. [62] The two written reports also included an assessment of the accused’s financial review of Casco and Eurostone.

But for the want of certain details, she could not conclude that the accused did not perform his work properly: Même si je suis d’avis qu’iI manque de l’information et des détails dans les feuilles de travail de l’EF Americo Comparelli, provenant du fichier Excel «Airda», sur le travail effectué et sur les étapes suivies pour arriver aux chiffres finaux, je ne peux pas conclure qu’il n’a pas fait son travail de façon adéquate [16] [63] In cross-examination, defence counsel queried the witness on the system of checks or controls at the SR & ED department that would thwart a fraudulent or complacent audit of a research and development claim by an ill-intentioned Financial Reviewer.

To give but two examples, she mentioned that: (

i) the Financial Reviewer does not get to choose which files he gets to work on; and (ii) the work of the Financial Reviewer is revised by a team leader or supervisor. [64] More importantly, the review process set up by the SR & ED department relies first and foremost on the opinion or analysis of the scientific or technical reviewer (RTA). The fraudulent intent of the Financial Reviewer all comes to not if the project submitted by a claimant does not qualify as valid research and development.

No science, no tax credit. [65] Still in cross-examination, the witness elaborated on the fact that the SR & ED department of the CRA—unlike the regular audit department—was very open and provided as much information and guidance as possible to claimants for research and development

tax credits. For defence counsel, the said description of the department’s policy provided more grist to the mill for his argument to the effect that an «inside man» would be of no advantage to Delvex’s clients.

What is more, nothing in the testimony of Hélène Martin indicated that a Financial Reviewer was privy to information not available to the general public. 2.1.9 Messieurs Carlo Macaro and Claude Papion [66] Along with Jeff Bercovitch, Delvex used the services of Carlo Macaro and Claude Papion to prepare the scientific component of a claim for research and development tax credits. [67] The names of these individuals do not come up too often in the evidence.

In the testimony of Marcello Furgiuele, it appears that he retained the services of these gentlemen when he became dissatisfied with the work of Jeff Bercovitch. 2.2 Some of the businesses involved 2.2.1 Delvex [68] A federally incorporated business specialized in preparing and submitting claims for research and development tax credits for its clients. To be precise, the business’s certificate of incorporation was for a numbered company, 422364 Canada Inc.

In the company’s «annual return» for 2006 (filed in 2007), we read that it also used the name of Delvex in conducting its business [17] . [69] Officially, Marcello Furgiuele was the sole administrator and shareholder of Delvex [18] . The evidence, however, shows that Frank Bruno was the driving force behind Delvex. 2.2.2 Simard Beaudry, Hyprescon, Miceli, Eurostone, Casco, Cameo [70] These are all corporations that used the services of Delvex to prepare and submit claims for research and development tax credits.

For the most part, the scientific or technical aspects of the claims for tax credits were prepared by Jeff Bercovitch. [71] According to the Crown’s theory, the accused conducted the financial review for Eurostone and Casco.

For the Crown, this blatant conflict of interest was just one of the factors justifying a conviction for fraud, corruption and conspiracy to commit the said offences. 2.2.3 Background information on the Application of the Tax Act ( ITA ) in Canada [19] [72] Every person resident in Canada during a given taxation year is obligated to pay tax on his or her taxable income, as computed under rules prescribed by the ITA . [73] The process of tax collection relies primarily upon taxpayer self-assessment and self-reporting: taxpayers are obliged to estimate their annual income tax payable and to disclose this estimate to the CRA in the income return that they are required to file. [74] The CRA auditors have a duty to make sure that the taxpayer properly declared and computed his or her revenues under rules prescribed by the ITA .

Upon receipt of a taxpayer’s return, the Minister is directed, “with all due dispatch,” to conduct an examination and original assessment of the amount of tax to be paid or refunded, and to remit a notice of assessment to this effect. [20] Subject to certain time limitations, the Minister may subsequently reassess or make an additional assessment of a taxpayer’s yearly tax liability. [21] [75] The system is «voluntary» only in the sense that a taxpayer must file income tax returns without being called upon to do so by the Minister.

For example, the ITA creates monetary penalties for persons who fail to file their income returns. [76] The ITA also sets up penalties of the same sort for persons who repeatedly fail to report required amounts, or who are complicit or grossly negligent in the making of false statements or omissions [22] .

It follows from the tax scheme’s basic self-assessment and self-reporting characteristics that the success of its administration depends primarily upon taxpayer forthrightness [23] .It is therefore not surprising that the ITA exhibits a concern to limit the possibility that a taxpayer may attempt to take advantage of the self-reporting system in order to avoid paying his or her full share of the tax burden, by violating the rules set forth in the ITA itself [24] . [77] The nature of the tax collection scheme, however, creates an obstacle in this regard: often it will be impossible to determine from the face of the return whether any impropriety has occurred in its preparation.

A spot check or a system of random monitoring may be the only way in which the integrity of the tax system may be maintained [25] . [78] In

summary, all the ITA self-assessment and self-reporting schemes are based on honesty , truthfulness and forthrightness. It is in this context that a CRA auditor must perform his duty and do his job as a public officer. [79] It is trite to say that a CRA auditor holds a position of trust towards his employer and towards the public in general. The CRA and society rely on the integrity, good faith and fairness of the auditors in that process. Otherwise, it unduly puts at risk all of the taxation system. It can have an impact on the government’s capacity to finance its operations and to implement social programs [26] .

2.2.4 The specific context of the application of the SR & ED Program [27] [80] The Scientific Research and Experimental Development (SR & ED) tax credit is a business assistance program intended to encourage businesses to undertake research and development that will lead to new, improved, or technologically advanced products, processes, devices and materials.

This incentive program is administered by both the federal and provincial governments. [81] Considering the fact that the program gives money or credits to the claimants, it also relies on their good faith and forthrightness [28] . [82] Contrary to a regular audit performed, where there is only a financial or accounting review done by CRA auditors, the SR & ED Program adds a scientific review to the process.

If a claim is selected for review, a Research and Technology Advisor (RTA) will determine if it qualifies as «scientific research and experimental development» according to section 248 (1) of the ITA . [83] Depending on the case, the RTA can accept the claim as presented, partially accept it or totally refuse it [29] . If required, an auditor or Financial Reviewer (FR) will come into play to evaluate the appropriateness of the numbers underlying the claim.

The taxpayer or claimant has to demonstrate to the CRA that an expenditure qualifies itself to be able to benefit from the Program [30] . [84] As mentioned above, the SR & ED Program consists of a tax incentive. Hence, the CRA provides help and guidance to the taxpayers for the preparation and presentation of their claims [31] . [85] The more direct implication of the RTA and FR with the taxpayers does not mean that honesty , truthfulness and forthrightness from the taxpayers is less applicable.

To the contrary, considering the inherent complexity of the Program, all of the information provided by the taxpayers must be true, accurate and verifiable. This is also applicable to the claim preparer [32] , even if, ultimately, it is the taxpayer who signs the CRA forms and attests to the truthfulness of the content of the claim [33] . [86] The CRA is more “open” and “generous” to the public in the implementation of the SR & ED Program.

This makes it a “positive” Program to implement where you can “give money or credits away” to the taxpayers rather than a “negative” and “less generous” one, like the regular audit process, where there is a possibility that the CRA will “take money away” from the taxpayers while enforcing the ITA [34] . [87] This situation or rationale makes the Program even more vulnerable to fraud, misrepresentation and deceit. The Program is an incentive to promote R&D, not an incentive to defraud the government’s generosity and openness.

Hence, a Financial Reviewer and a RTA working in the SR & ED Program also hold a position of trust towards the CRA and the public in general. They have great responsibilities, since a lot of money is often at stake [35] .

The potential for fraud is higher as for the potential for loss by the government and society. 2.2.5 The duties and obligations of a public servant working at the CRA [36] [88] Apart from his oath or solemn affirmation of allegiance to Her Majesty the Queen, a public officer working at the CRA notably has to abide to the Code of Ethics and Conduct [37] and to the Conflict of Interest Code and Guidelines [38] and related policies. [89] In order to comply, every CRA employee shall conform to the following principles:

a) to perform his or her official duties and arrange his or her private affairs in such a manner that public confidence and trust in the integrity, objectivity and impartiality of government and the CRA are conserved and enhanced;

b) to act in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law;

c) not to have private interests, other than those permitted pursuant to this Code, that would be affected particularly or significantly by the CRA actions in which they participate;

d) on appointment to office, and thereafter, to arrange his or her private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising, but if such a conflict does arise between the private interests of an employee and the official duties and responsibilities of that employee, the conflict shall be resolved in favour of the public interest;

e) to not solicit or accept an economic benefit, other than incidental gifts, customary hospitality or other benefits of nominal value, unless the transfer is pursuant to an enforceable contract or property right of the employee;

f) to not step out of his or her official roles to assist private entities or persons in their dealings with the CRA where this would result in preferential treatment to any person;

g) to not knowingly take advantage of, or benefit from, information that is obtained in the course of his or her official duties and responsibilities and that is not generally available to the public; and

h) to not directly or indirectly use, or allow the use of, CRA or other government property of any kind , including property leased to the CRA or the government, for anything other than officially approved activities [39] [90] In sum, a public officer working at the CRA bears great responsibilities towards the public in general and its employer in particular [40] . The first mission of a CRA officer is to apply the ITA truthfully, fairly and correctly [41] .

3. THE CARTER TEST [91] The challenge in presenting the evidence in this case lies in the application of the co-conspirator’s exception to the hearsayrule. Under this exception, acts, declarations, statements or utterances of an accused’s alleged co-conspirators, performed or made infurtherance of a conspiracy, may be presented as evidence against the accused as proof of his guilt[42]. [92] The co-conspirator’s exception to the hearsay rule, however, has to contend with the problem of circular reasoning.

Moreparticularly, the preliminary condition of admissibility, the fact of a conspiracy, is also the very thing sought to be established[43]. Inthe decision of R. v. Carter, (SCC), [1982] 1 S.C.R. 938, the Court devised a three-step test intended to safeguardagainst the « grave injustice which could result from the application of the conspirators’ exception to the hearsay rule to a person, not infact, shown to be a member of the conspiracy. »[44]:

i) the Crown must prove beyond a reasonable doubt, based on all of the evidence that a conspiracy existed.

If not, the jury must acquit. ii) if there is proof beyond a reasonable doubt that a conspiracy existed, then on the basis of evidence directly admissible against theaccused, it must be shown on a balance of probabilities that the accused was a member of the conspiracy. iii) if so, the trier of fact is entitled to consider the hearsay exception and consider the evidence of the acts and declarations performedand made by the co-conspirators in furtherance of the objects of the conspiracy as evidence against the accused on the issue of guilt. 3.1 The first step of the Carter Test and the hearsay evidence [93] The application of the first step in Carter in the present matter requires an examination of both the documentary and oraltestimony.

As mentioned earlier, the oral testimony presented by the Crown has its share of difficulties: Marcello Furgiuele, for one,lapsed into complete memory loss when queried about the identity of «Pat». He also had bouts with amnesia when confronted withcompromising documents that could cast a shadow on any of the other alleged co-conspirators. [94] As for Jeff Bercovitch, his testimony was laden with contradictions and outright lies. Even the Crown characterized him asan «unsavoury witness».

This being said, the Crown minimized the attacks on the witness’s credibility by insisting that he only liedabout peripheral issues, namely, in matters implicating his own dishonest conduct while working at the CRA. On the other hand, histestimony connecting Americo Comparelli to the pseudonym of «Pat» was entirely credible. [95] To this effect, the Crown noted that the witness displayed no animus towards the accused. While he did unveil the trueidentity of the man hiding behind the alias of «Pat», the witness was nevertheless protective of the accused.

For instance, in emails eitherauthored or received by the witness, he could not provide answers as to why «Pat» was mentioned in the correspondence.

When asked tocomment on the work done by Amercio Comparelli in his capacity as a Financial Reviewer for Eurostone, he stated that the work waswell done; even adding that the accused annoyed the managers of the said company by his many questions and requests for information.He even claimed full authorship of the BT Céramiques technical report adding that the accused had no input in its content. [96] With respect to the documentary evidence to be considered in the first step of the Carter test, it should be noted that the 105exhibits were all filed at the beginning of the trial.

For the sake of convenience and flexibility, a voir dire was not held to consider theadmissibility of each and every one of the exhibits. The aim was to prevent the trial from bogging down by provisionally receiving theevidence and reserving the rulings on admissibility at the end of the hearing. [97] This being said, the Crown’s arguments with respect to the existence of the conspiracy (first step in Carter) takes forgranted that all the exhibits are admissible in evidence.

The Crown’s argument the for the admissibility of all the exhibits could besummarized as follows: i Many documents were adopted by the witnesses [98] In the present case, apart from the expert witness, Hélène Martin (whose testimony is not at stake), Marcello Furgiuele,Jeffrey Bercovitch and even the accused adopted most of the documents that were shown to them.

In that sense, none of thesedocuments was hearsay, because they became part of the testimony of each witness, which was subject to cross-examination. [99] Even documents that the witnesses couldn’t recall—but admitted writing—are admissible under the principle of pastrecollection recorded. Justice Estey, in his dissenting decision in McInroy et al. v.

The Queen, (SCC), [1979] 1 SCR588, at pp. 607-608, described the rule as follows: The rule is of long standing in the law of evidence that documentary evidence will be admitted through a witness in the witness boxwho, although the witness cannot recall the substance of the document or perhaps the precise event described or recorded therein, is ableto swear to its truth at the time of the trial.

Where time has elapsed or where the witness in his daily life participated in a large number of such events or transactions, it is entirelyunrealistic to expect a witness to say, or indeed to believe him if he did say, that upon examining the instrument he was able to recall hisentry or the event.

The law in acknowledging these realities has long recognized the procedure the witness may incorporate in his testimony the contents ofsuch deeds or documents when he adopts those contents as part of his testimony. ii Under the business records exception to the hearsay rule [100] All the documents filed in evidence related to promoting Delvex’s business of preparing and submitting research and

development claims for tax credits on behalf of its clients.

The routine nature of their creation, the fact that they are relied on for business purposes and the absence of any motive to misrepresent the information recorded have all been identified in the traditional hearsay exception as factors which provide some circumstantial guarantee of trustworthiness justifying reception for its truth of the hearsay contents of such records [45] . iii On the basis of the principled exception to the hearsay rule [101] Under the principled exception, hearsay can exceptionally be admitted into evidence when the party tendering it demonstrates that the twin criteria of necessity and threshold reliability are met on a balance of probabilities [46] . [102] With respect to reliability, the Crown’s arguments highlighted the context in which they were created—to make Delvex a successful and profitable company.

In the pursuit of its business objectives, there was no reason for the protagonists involved in the present case to lie to each other. [103] In short, the circumstances in which the documents were created make them sufficiently reliable that contemporaneous cross-examination would add little, if anything, to the process. [47] [104] In considering the reliability prong of the principled approach to hearsay, Crown counsel reminded the Court of the crucial distinction between threshold reliability and ultimate reliability: threshold reliability concerns admissibility, whereas ultimate reliability concerns reliance [48] .

In assessing threshold reliability, the trial judge’s preoccupation is whether in-court, contemporaneous cross- examination of the hearsay declarant would add anything to the trial process. [49] It’s also at this stage that the trial judge must decide on the availability of competing explanations and whether the trier of fact will be in a position to choose between them by means of adequate substitutes for contemporaneous cross-examination (procedural reliability). [50] [105] In contrast, ultimate reliability concerns «reliance» of the evidence in order to determine the ultimate issues at trial.

This includes to what degree the statement should be believed. [51] The ultimate reliability of hearsay evidence requires consideration of the whole of the evidence. [106] In short, in the hearsay context, the difference between threshold and ultimate reliability is qualitative, and not a matter of degree, because the trial judge’s inquiry serves a distinct purpose. [52] In assessing substantive reliability at the threshold level, the trial judge does not usurp the trier of fact’s role.

Only the trier of fact assesses whether the hearsay statement should ultimately be relied on and its probative value. [53] [107] To preserve the distinction between threshold and ultimate reliability and to prevent the voir dire from overtaking the trial, «[t]here must be a distinction between evidence that is admissible on the voir dire to determine necessity and reliability, and the evidence that is admissible in the main trial. » [54] [108] Regarding the criteria of necessity, one has to bear in mind that it should not be equated with the unavailability of the witness, but rather with the unavailability of the testimony [55] .

Thus, it matters little whether the witness is present, if he refuses or neglects to testify openly or if he declares that he has no useful memory to do so. As the Crown noted in its written submissions, the testimony of Marcello Furgiuele is a blatant example of this situation. He was there to testify, but had selective «memory lapses», especially when it came to documents that contained incriminating evidence against him or the alleged co-conspirators. [109] As for the defence, it did not contest the admissibility of all the exhibits that the Crown sought to tender as evidence.

In its written submissions, the concessions were set out as follows: i. The Defence accepts, for instance, that several documents are of a public nature and therefore are prima facie admissible if authentic and relevant; ii. The Defence accepts that the parties’ admissions also support the admissibility of certain exhibits; iii.

The Defence accepts that, given the testimony of Jeffrey Bercovitch, documents authored by witnesses where the name Pat is mentioned, likely pass the threshold admissibility standard (although our position is that they have no weight, given the lack of credibility of Jeff Bercovitch). [110] What the defence did not accept, however, is that the rules of evidence be stripped of their most essential component: the rules of relevancy and materiality.

As the defence sees it, the wholesale reception of all the exhibits as directly admissible against the defendant in this matter would be akin to conflating his status with that of other co-conspirators not currently on trial.

An exhibit does not become directly admissible against the accused simply because an alleged co-conspirator adopts its contents at trial. [111] Referring to the Carter rule, defence counsel reminded the Court that opposability depends on (1) establishing that the accused was part of the conspiracy on a balance of probabilities and (2) that the statements were made in furtherance of the conspiracy in question. By way of consequence, documents not authored by the defendant cannot be found to be directly admissible against him to establish his participation in the conspiracy or common design.

The same reasoning holds true for emails that were neither authored nor sent by the defendant. [112] As mentioned in an earlier section, the defence argued against the Crown’s liberal use of the hearsay exceptions for the wholesale admission of all of the documentary evidence. With respect to the business records exceptions to the rule, defence noted that many of the emails were wanting in one or more of the following prerequisites for admissibility: (

i) an original entry (ii) made contemporaneously (iii) in the routine (iv) of business (

v) by a recorder with personal knowledge of the thing recorded as a result of having done or observed or formulated it (vi) who had a duty to make the record and (vii) who had no motive to misrepresent. [56]

[113] With respect to the principled exception to hearsay, defence argued against the admission of documents that were found wanting in one or the other of the two requirements for admissibility: reliability and necessity. This was particularly the case with the defence challenge to exhibits P-15 and P-36. The former exhibit was authored by Frank Fiorino, an accountant who does not appear as a co-conspirator in this case. For that matter, his exact role (if any) in the alleged conspiracy is not clear. The latter exhibit was authored by Mohamed Kamel, an engineer at BT Ceramiques that we know little about.

He, too, was not called to the stand by the Crown. [114] All this being said, the application of the Carter test requires that I examine, firstly, all the evidence to see if a conspiracy exists. In the absence of an unlawful scheme, the accused must be acquitted. [115] Before reviewing all the evidence, I must set out the legal principles that will dictate the admissibility of the documentary evidence. More particularly, are they admissible under the business records exception to hearsay or under the principled exception to the said rule or both? 4.

ADMISSIBILITY OF THE DOCUMENTARY EVIDENCE UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE OR UNDER THE PRINCIPLED APPROACH TO RULE. 4.1 Some preliminary remarks on using Exhibit P-36 as the template for our analysis [116] The case for the Crown hinges on the premise that the accused used the alias of «Pat» to hide his involvement in Delvex. In the 105 exhibits filed by the Crown, by far the most damning against the accused is Exhibit P-36. The said exhibit consists of a chain of emails in which Mohamed Kamel forwards to Frank Fiorino the cell phone number of «Pat»: 514-[...].

The said number just happened to be the phone number of the accused. [117] For the sake of clarity, let’s describe the chain of emails at Exhibit P-36: It begins with a message from Jeff Bercovitch to Frank Bruno (at BT Céramiques), dated June 22, 2006; Mohamed Kamel (at BT Céramiques) is copied. Essentially, the message is a short note from Jeff Bercovitch stating that the «credit value of certain projects should be « minimized» and attributed to other projects. » [118] In response to the first email, Mr. Mohamed Kamel, sent an email to Frank Fiorino (Messieurs Frank Bruno and Rudy Palmerino were cc’

d) stating the following: Good Day Frank, As we spoke yesterday, Pat called me back and he said that he does not have to see the technical report, and he is waiting for your call whenever you like to finalize the thing with him. Pat Cell: 514-[...] (…) (Emphasis added) [119] As expected, the admissibility of Exhibit P-36 as an exception to the hearsay rule was the subject of much debate between the parties. In the following sections, I will deal with the admissibility of the said document under the business records exception to the hearsay rule and under the principled exception to the rule.

My analysis will serve as a template when dealing with the admissibility of other documents as exceptions to the hearsay rule. 4.1.1 Admissibility under the business records exception at common law? i. Relationship between

section 30 of the CEA and the common law business records exception [120]

Section 30 of the Canada Evidence Act [57] (hereafter, CEA ) provides for the admission of a record made in the usual and ordinary course of business. Nevertheless, the common law business records exception to the hearsay rule continues to operate [58] . [121] As noted in McWilliams, the statutory provisions « admit a broader range of out-of-court statements, but impose a procedural regime which contains a distinct set of conditions to admission. » [59] Thus, where the conditions of

section 30 are not met, resort may be had to the common law exception. [122] One of the requirements set out for the application of s. 30 of the CEA, is the filing of an affidavit. For obvious reasons in the present case, it was not possible for the authorities to obtain affidavits from Delvex. As the Crown explained: « You cannot ask for affidavits from persons involved in the commission of an offence or that are being suspected of committing an offence. » Hence, the admissibility of the email can only be justified under the common law business records exception to the hearsay rule. ii.

The common law business records exception to the hearsay rule [123] The common law rule was originally articulated by the Supreme Court in Ares v. Venner [60] , and included a requirement that the recorder have personal knowledge of the thing recorded [61] . However, that requirement was excised in R. v. Monkhouse [62] :

[23] In his useful book, Documentary Evidence in Canada (Carswell Co., 1984), Mr. J. D. Ewart summarizes the common law rule after the decision in Ares v. Venner as follows at page 54: “the modern rule can be said to make admissible a record containing (

i) an original entry (ii) made contemporaneously (iii) in the routine (iv) of business (

v) by a recorder with personal knowledge of the thing recorded as a result of having done or observed or formulated it (vi) who had a duty to make the record and (vii) who had no motive to misrepresent. Read in this way, the rule after Ares does reflect a more modern, realistic approach for the common law to take towards business duty records.” [24] To this

summary, I would respectfully make one modification. The “original entry” need not have been made personally by a recorder with knowledge of the thing recorded.

On the authority of Omand, Ashdown, and Moxley, it is sufficient if the recorder is functioning in the usual and ordinary course of a system in effect for the preparation of business records. [63] [124] In Sopinka , the rationale for the common law exception was explained as follows: §6.209 […] Today, necessity is […] grounded in the fact that the declarant's identity may be unknown in a large business enterprise, or that the attendance in court of that person, even if known, could not add anything to what was previously recorded in the document.

Moreover, the statement was said to possess a circumstantial guarantee of truth based upon the assumption that a declarant would fear censure and dismissal should an employer discover an inaccuracy in the statement.

Also, the constant routine and habit in making entries provided some likelihood of accuracy. [64] [ References omitted] [125] In the same vein, the Court in Wilcox stressed the inherent reliability or trustworthiness of business records. [65] [126] In sum, the business records exception allays the concerns over hearsay evidence by benchmarking objective factors for reliability and trustworthiness. [127] With respect to the admissibility of Exhibit P-36 under the business records exception to the hearsay rule, the legal issue can be framed as follows : Was Mohamed Kamel under a duty to send the email and retain it as a record in the routine of business, without motive or interest to misrepresent the facts contained therein? [128] It must be emphasized that for the common law business exception to apply, there must be evidence that Mohamed Kamel was under a specific duty to keep the record.

In addition, there must be evidence that this casual email constitutes a «record» in the ordinary sense of the word. Finally, one must distinguish between the substantive content of the e-mail and the documentary record of the e-mail. iii. The duty requirement [129] In R. v. Wilcox, the Crown appealed the trial judge’s exclusion of a book used by the clerk of a fisheries company to keep track of payments to fishermen (referred to as the “fish book”). The clerk had not been directed by anyone to maintain the book; he had in fact been instructed to keep computer records.

In addition, no one else knew the book existed. [66] [130] The Court of Appeal considered that because the clerk was not under a duty to keep the book, it did not meet the requirements of the common law rule: [50] […] As Ewart points out, at common law, there must be a duty to make the very document in issue: see J. Douglas Ewart, Documentary Evidence in Canada (Carswell, 1984) at 57. In my opinion, it could not be said that Mr. Kimm had any duty to keep this crab book. As the trial judge found, Mr.

Kimm was “...entirely on his own in keeping” ... it and “... in fact it was kept against instructions...”. [51] The duty to maintain the record was thought by the common law to be one of the circumstantial guarantees of the document’s trustworthiness . As Sopinka, Lederman and Bryant put it: “... [a business record] was said to possess a circumstantial guarantee of truth based upon the assumption that a declarant would fear censure and dismissal should an employer discover an inaccuracy in the statement .”: John Sopinka, Sidney N. Lederman and Alan W.

Bryant, The Law of Evidence in Canada, 2d ed. (Toronto: Butterworths, 1999) at pp. 211 - 212. [67] [Emphasis added] [131] Ultimately , the Court found that the «fish book» was admissible under the principled approach ( we will return to this case in the second part of this chapter). [132] By analogy to this case, we are not aware of any evidence that Mohamed Kamel was under a specific duty to send this email or retain it as a record.

If he had made a mistake in typing out “Pat”’s phone number, it is difficult to imagine that he would have faced disciplinary consequences in his capacity as an engineer at BT Céramiques. iv. E-mails as business records [133] A common argument in support of their admission as business records exception to the hearsay rule is that email correspondence is regularly created by company employees as part of their business activity. [134] Sending or receiving an email from work, however, does not automatically make the evidence admissible under a business record exception of hearsay.

If that were the case every bit of correspondence—be it by letter, by email or by telephone call would qualify willy-nilly under the rule. This cannot be the right result . Many mail items received by a business do not document activities

that are routine or regularly conducted. [135] Instead, one must look at each of the emails content to determine if it qualifies under the business records exception tohearsay. Was it created contemporaneously? Was it sent by someone with knowledge of the information contained in the email? Was theemail sent or received in the course of a regular business activity? Was the person sending or receiving the email bound by a duty or abusiness policy to report or record the information in the email? Did the person have a reason to misrepresent the information containedin the email? v.

Jurisprudence – emails as business records [136] There are very few cases relating to the application of the common law business records exception to emails. [137] There are some civil law cases from common law provinces that deal with emails under the common law exception. Forexample, in civil litigation involving a cooperative housing association (co-op), the Supreme Court of British Columbia held that anemail from a board member was admissible as a business record.

However, it had not been formally objected to on the basis of hearsayand the issue does not appear to have been argued by the parties: [155] I note that this e-mail communication was sent by a Board member in relation to a delegated Board function and in the ordinarycourse of business of the Co-op.

The evidence is not objected to on the basis of hearsay, and in any case I find it is admissible asa business record or as an admission in a document in possession of the Co-op[68]. [138] Contrary to the case at bar, the fact that the e-mail was «in relation to a delegated Board function» arguably satisfies the“duty” requirement. [139] In Airia Brands Inc. et al. v. Air Canada et al.[69], a class action case, the Ontario Superior Court of Justice held as follows: [20] The e-mail attachments do not constitute “business records” and are not admissible under that particular exception to the“hearsay rule”.

The e-mails are not records that must be made in the usual and ordinary course of business and it has not been establishedthat it was in the usual and ordinary course of business to make the writing or record. [21] As set out in Setak Computer Services Corp. v. Burroughs Business Machines Ltd. (1977), (ON SC), 15 O.R.(2d) 750, the mere fact that the recording of a third party statement is retained imports no guarantee of the truth of the statement.[70] [Emphasis added] vi.

Substantive content vs. documentary record [140] Finally, it is also important to distinguish between the substantive content of the email and certain information that isrecorded automatically (for example, the addresses of the recipient and the sender and the date and time of the email). [141] In this vein, in R. v. Vader[71], the Alberta Court of Queen’s Bench considered whether text messages were admissible forthe truth of their contents under

section 30 of the CEA. The Court essentially distinguished between the record of the text message (thefact that the message had been sent, the time it was sent, etc.) and its substantive content: [10] […] There is no real dispute between the parties that the Telus text message record data is accurate and reliable because of theautomated manner in which that data is generated, collected and stored. [11] What is important, however, is to examine what does “the truth of its contents” mean in this particular context.

Here the ‘truthfulcontent’ is the documentary record of information concerning when a text message was sent, its source and destination telephone, andthe text of the message is reliable and admissible. Looking at a specific example, the Telus text message records establish that on July 3,2010, someone sent a message from the McCann phone to the phone then being used by Amber Williams, and that the operator of theMcCann phone had typed a message: I’ve been trying to call you and text you and e-mail you and Facebook you, and I can’t get in touch with you.

It’s me T. his is “the truthof its contents”. [12] What the Telus text message evidence, in isolation, does not prove is who was the sender of the message, who was the message’sintended recipient, who (if anyone) received the message, who is “T”, and whether “T” truly has been trying to call, text, email, andFacebook the intended recipient of the text.[72] [Emphasis added] [142] This is essentially the equivalent of the distinction between what is and is not hearsay. [143] In the case at bar, the defence’s objection to the email concerns its substantive content (i.e. whether “Pat” could truly bereached at the phone number provided by Mohamed Kamel. vii.

Conclusion on the email (Exhibit P36) as a common law business records exception to hearsay [144] In the absence of evidence that Mohamed Kamel was under a specific duty to send and record the email, it is not admissibleunder the common law business records exception to the hearsay rule. This conclusion is all the more evident when one considers that

very little is known about Mohamed Kamel’s implication (if any) in the business activities of Delvex. [145] Also, there was no evidence establishing that Delvex had a regular practice of sending or receiving emails that recorded the type of information documented at Exhibit P-36. viii. Implied acceptance of the email [146] For the Crown, the email could be produced as evidence on the ground that it originated from a message sent by one of the witnesses, Jeff Bercovitch. Upon receipt of the said message, Mr.

Kamel forwarded an email to certain individuals, Frank Fiorino, Rudy Palmerino and Frank Bruno. [147] With respect, this argument must fail. The fact that chain of exhibits at P-36 originated with a message from Jeff Bercovitch does not mean that he implicitly adopted the contents of Mohamed Kamel’s email. 4.2 Is the e-mail admissible under the principled exception to the hearsay rule? 4.2.1 Introductory remarks [148] As noted by the Supreme Court in R. v.

Mapara [73] (hereafter, Mapara ), even if hearsay evidence does not fall under a traditional hearsay exception, it may still be admitted under the principled exception if the indicia of reliability and necessity are established on a voir dire . [149] We will explore the criteria of necessity and reliability in turn. It is important to note, however, that they can work in tandem : [46] […] [N]ecessity and reliability should not be considered in isolation. One criterion may impact on the other.

For example, as we shall see , in some cases the need for the evidence may, in large part, be based on the fact that the hearsay statement is highly reliable and the fact-finding process would be distorted without it . [74] [Emphasis added] 4.2.2 Necessity:(Supreme Court jurisprudence: the need for a flexible definition) [150] Much of the Supreme Court jurisprudence deals only superficially with the necessity requirement because the declarants were deceased [75] , were not compellable or competent witnesses [76] , categorically refused to testify [77] , or, in the cases involving prior inconsistent statements, because evidence of the same value could not be expected from the recanting witnesses [78] . [151] In R. v.

B. (K.G.) [79] , the seminal case on the admissibility of prior inconsistent statements, the Court held that the criterion of necessity must be given a flexible definition: […] [I]t is important to remember that the necessity criterion " must be given a flexible definition, capable of encompassing diverse situations" (Smith, at pp. 933-34). Wigmore, vol. 5 (Chadbourn rev. 1974), § 1421, at p. 253, referred to two classes of necessity:

(1) The person whose assertion is offered may now be dead, or out of the jurisdiction, or insane, or otherwise unavailable for the purpose of testing . This is the commoner and more palpable reason....

(2) The assertion may be such that we cannot expect, again, or at this time, to get evidence of the same value from the same or other sources.... The necessity is not so great; perhaps hardly a necessity, only an expediency or convenience, can be predicated. But the principle is the same. [Emphasis in the original.] […] The precise limits of the necessity criterion remain to be established in the context of specific cases.

It may be that in some circumstances, the availability of the witness will mean that hearsay evidence of that witness's prior consistent (the kind of statement at issue in Khan) statements will not be admissible. However, I am not prepared, at this point, to adhere to a strict

interpretation that makes unavailability an indispensable condition of necessity .

In the case of prior inconsistent statements, it is patent that we cannot expect to get evidence of the same value from the recanting witness or other sources: as counsel for the appellant claimed, the recanting witness holds the prior statement, and thus the relevant evidence, "hostage." The different "value" of the evidence is found in the fact that something has radically changed between the time when the statement was made and the trial and, assuming that there is a sufficient degree of reliability established under the first criterion, the trier of fact should be allowed to weigh both statements in light of the witness's explanation of the change. [80] [Emphasis added] [152] Later, in R. v.

Khelawon , supra , at paragraph 104 , the Court noted that «in an appropriate case, the court in deciding the question of necessity may well question whether the proponent of the evidence made all reasonable efforts to secure the evidence of the declarant in a manner that also preserves the rights of the other party.»

[153] The Court took up the issue in R. v. Baldree[81] (hereafter, Baldree), in a context where the police made no efforts to identifythe declarant. The facts are helpfully summarized in the headnote: After B was arrested, a caller telephoned B’s cell phone to arrange for a drug delivery. A police officer answered B’s cell phone andagreed to deliver the drugs at the price that B usually charged. The caller gave his address. No effort was made to find and interviewhim and he was not called as a witness.

The trial judge concluded that the police officer’s testimony was not hearsay and admitted thecontents of the call.[82] [154] The call was tendered as evidence of the implied assertion that the accused was a drug dealer. The Court held: [68] […] This is the kind of “appropriate case” contemplated by Khelawon. And the answer is that the police made no effort at all tosecure the evidence of the declarant: they never sought to interview or even find him, though he gave them his address.

Moreover, therewas no explanation offered as to why no efforts were made to locate the declarant. [69] Nor is the single telephone call in this case sufficiently reliable. As Feldman J.A. found in the court below, “[t]here was no basis tosay that the caller’s belief was reliable without testing the basis for that belief by cross-examination” (para. 146). Indeed, this is not asituation “in which it can be easily seen that such a required test [i.e., cross-examination] would add little as a security, because itspurposes had been already substantially accomplished”: Khelawon, at para. 62, quoting Wigmor

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