Her Majesty the Queen - v. -, 2012 SKPC 145

IN THE PROVINCIAL COURT OF SASKATCHEWAN Citation: 2012 SKPC 145 Date: September 6, 2012 Information: 33011799 & 37241017 Location: Regina _____________________________________________________________________________ Between: Her Majesty the Queen - and - Dawn West Appearing: Jerome Tholl For the Crown Michael Megaw, Q.C. For the Accused JUDGMENT J.D. KALMAKOFF , J [ 1 ] Between May 30, 2010 and July 30, 2010, Dawn West defrauded her employer, Richmond Nychuk Law Office, of $9,317.40. Then, between November 1, 2010 and November 3, 2011, she defrauded a second employer, Audio Warehouse, of $602,000.00. Ms.

West has entered guilty pleas to two charges of fraud in excess of five thousand dollars, contrary to section 380(1) (

a) of the Criminal Code . [ 2 ] This is my decision on sentence.

I. FACTUAL BACKGROUND [ 3 ] Ms. West was hired as an office manager by Richmond Nychuk Law Office in Regina in April of 2010. Her duties included accounting, payroll and bookkeeping. During the course of her employment, Ms.

West defrauded Richmond Nychuk of $9,317.40, in the following ways: • She knowingly overpaid her own salary, over the course of three months, by a total of $3,817.40; • She obtained reimbursement from Richmond Nychuk in the amount of $4,000.00 by falsifying a credit card statement and claiming that she had used her personal credit card for a business expense when in fact she had not done so; and • On one occasion, when a client attended the office to make a $1,500.00 payment on an old account, Ms. West kept the money for herself, rather than depositing it in the firm’s account. [ 4 ] Ms.

West was dismissed from her job before Richmond Nychuk became aware of the fraud. However, once the salary overpayment was discovered, in August of 2010, Ms. West promptly admitted her wrongdoing, and repaid the $3,817.40. [ 5 ] Richmond Nychuk later discovered the $4,000.00 credit card fraud and confronted Ms. West about it via e-mail. She admitted to that, as well as to stealing the $1,500.00 payment, and promised to repay both. She ultimately paid $1,000.00 back to Richmond Nychuk, leaving $4,500.00 outstanding. [ 6 ] Shortly after her employment at Richmond Nychuk was terminated, Ms.

West was hired to work at Audio Warehouse, an electronics store with four locations in Saskatchewan, and approximately 100 employees. Ms. West was hired as a bookkeeper, at an annual salary of $36,000.00. She began work there in mid-October of 2010. [ 7 ] Ms. West performed well in her new position, and quickly earned the trust of management. By November 15, 2010, she was solely in charge of the bookkeeping operation for Audio Warehouse.

She was entrusted with all the necessary information and bank codes to make direct transfer of funds from Audio Warehouse’s corporate accounts to the bank accounts of its employees. She was permitted to work, and access Audio Warehouse’s computer system, from home. [ 8 ] Within eight days of taking over the bookkeeping operation, Ms. West began stealing from Audio Warehouse. She did so by filing false expense claims on behalf of other employees, and paying out those claims by transferring the corresponding funds from the company directly to her own bank account.

The other employees knew nothing about this, and received none of the money Ms. West stole. Ms. West’s scheme avoided detection, because claims of less than $10,000.00 needed only her own approval in order to be paid. [ 9 ] Ms. West continued this scheme over the course of the next year. Between November 23, 2010 and July 11, 2011, Ms. West stole approximately $150,000.00 in this fashion. The exact number of transactions she made during this time is unknown, but since each individual fraudulent transaction was less than $10,000.00, it is safe to say that there were no less than 15.

Between July 11, 2011 and November 3, 2011, Ms. West continued the scheme with 56 more transactions, stealing an additional $450,000.00. In total, Ms. West stole $602,000.00 in this way. [ 10 ] Ms. West spent the stolen money on personal purchases, including two vehicles, a camper trailer, furniture, electronics, housewares, clothing, jewellery, travel, a deposit for construction of a new house, a payment to secure a mortgage, and paying a debt for her ex-husband. When the scheme was finally unearthed through the discovery of an accounting irregularity and subsequent investigation, Ms.

West still had more than $200,000.00 in her bank account, as well as boxes upon boxes of merchandise which she had purchased, but not yet opened. [ 11 ] Through the immediate return of some items and cash, subsequent civil proceedings, and a $9,500.00 insurance payment from SGI (Saskatchewan Government Insurance), Audio Warehouse has recovered $339,642.47 of what Ms. West stole from them. Ms. West

has cooperated, to the extent possible, in the recovery efforts, but Audio Warehouse has still incurred substantial costs, including $45,502.77 in legal fees, as well as significant use of internal resources and manpower, in attempting to recover money and property. II. POSITION OF THE PARTIES [ 12 ] The Crown seeks a period of imprisonment in the range of 15 - 21 months, and argues that a conditional sentence order would be inappropriate. The Crown also seeks restitution of $298,301.30 to Audio Warehouse, $9,500.00 to SGI, and $4,500.00 to Richmond Nychuk. [ 13 ] Ms.

West argues that a period of imprisonment of 12 - 18 months, served in the community as a conditional sentence, is appropriate, given her lack of record, her remorse, her full cooperation in the recovery efforts, the personal issues that contributed to the offences, and the low risk she poses to re-offend. Ms. West agrees that restitution orders should be part of the sentence, and takes no issue with the figures suggested in relation to SGI and Richmond Nychuk. However, with respect to the amount sought in relation to Audio Warehouse, Ms.

West argues that the total should not include the legal fees incurred by Audio Warehouse. Those, argues Ms. West, are properly dealt with in the civil litigation process, and should not be addressed by a sentencing court. III. THE OFFENDER [ 14 ] Dawn West is 39 years old. She has no previous criminal record. She was married, but her marriage dissolved in June of 2010. She has no children. Ms. West was involved in a serious car accident in December of 2011, and suffered significant injuries from which she still experiences a number of adverse effects. [ 15 ] Ms.

West does not have any significant issues with addictions or substance abuse, except to the extent that unrestrained shopping can be considered an addiction. The pre-sentence report notes that, since her youth, Ms. West has had difficulty dealing with impulses and recognizing consequences. It is also notes that Ms. West has suffered from depression, which, it is argued, has been a significant contributing factor in her offences. [ 16 ] Ms. West graduated from high school in 1990, and received some post-secondary education.

She is not presently employed, but is receiving disability benefits due to the injuries suffered in the car accident. She is seen as a low risk to re-offend, and has a stable and supportive family. She accepts full responsibility for her offences, and expresses remorse for her actions. IV. ISSUES [ 17 ] The first issue raised in this case concerns the appropriate sentence. It is common ground that a sentence of imprisonment is called for, given the magnitude of the frauds committed by Ms. West.

The more difficult questions concern the length of that sentence, and determining whether she should serve it in a custodial facility, or in the community. [ 18 ] The second issue in this case concerns the restitution order. The appropriateness of a restitution order as a component of the sentence in this case is not in dispute, nor, for the most part, is the amount of restitution. The real issue is whether the legal fees incurred by Audio Warehouse in their efforts to recover what Ms. West stole from them can properly be included in the restitution order. V. ANALYSIS

(1) What is the appropriate sentence, and where should Ms. West serve it? [ 19 ] While sentencing is an individualized process, it is clear that substantial frauds committed by persons in a position of trust are generally met with sentences of incarceration (see R. v. Moccasin , 2006 SKCA 5 ).

[20]

Section 742.1 of the Criminal Code allows a sentencing judge to order that a sentence of imprisonment be served in thecommunity in certain cases. Some offences are, by definition, excluded from eligibility for conditional sentences, but at the time Ms.West committed these offences, fraud in excess of $5,000.00 was not such an offence. Therefore, I may allow Ms. West to serve asentence of incarceration in the community if: • I impose a sentence of less than two years; • I am satisfied that allowing Ms.

West to serve the sentence in the community would not endanger the community; and • I am satisfied that service of the sentence in the community would be consistent with the fundamental purposes and principles ofsentencing set out in sections 718 to 718.2 of the Criminal Code. Sentence of less than two years [21] Given the position taken by the Crown, and having reviewed relevant authorities such as R. v. Bunn, 2000 SCC 9; R. v.Boreen (1997), (SK CA), 152 Sask. R. 153 (C.A.); R. v. Fehr, 2001 SKCA 37; R. v. Harding, 2006 SKCA 118; R. v.Dickhoff (1998), (SK CA), 172 Sask. R. 1 (C.A.); R. v.

McCullough, 2002 SKQB 242; R. v. Purves, 2011 SKQB162; and R. v. Oates, 2008 SKQB 274, I am satisfied that a period of imprisonment of less than two years is appropriate in this case. Whether allowing Ms. West to serve her sentence in the community would endanger the community [22] In considering this factor, I must consider the risk that Ms. West will re-offend while subject to the sentence, and the potentialgravity of any such re-offending (R. v. Proulx, 2000 SCC 5). [23] Ms. West has no prior criminal record. She has no history of failing to comply with any orders of the Court.

While theoffences before me were committed in succession, and over a significant period of time, she has admitted the offences and accepts fullresponsibility for them. She has complied, to the extent possible, with efforts to recover the stolen money. She has made efforts to dealwith her physical and mental health issues, and has a supportive family situation. Ms. West has also complied with bail conditions fornearly nine months without any reported breaches. [24] I am satisfied that allowing Ms. West to serve her sentence in the community would not endanger the community. Whether allowing Ms.

West to serve her sentence in the community would be consistent with the fundamental purposes and principlesof sentencing in sections 718 to 718.2 of the Criminal Code [25] In any case, a sentencing decision must be guided by the provisions of sections 718 to 718.2 of the Criminal Code. While theindividual offender is central to the process, her circumstances cannot be the entire focus. In this case, I must look beyond simply thequestion of whether allowing Ms. West to serve the sentence in the community would endanger the community.

The sentence I imposemust respect and balance all the relevant principles of sentencing. [26] According to

section 718, the fundamental purpose of sentencing is to contribute to respect for law and the maintenance of ajust, peaceful and safe society by imposing just sanctions having one or more of the objectives set out in that section. Those objectivesinclude denunciation of unlawful conduct; deterring the offender and others from committing offences; separation of offenders fromsociety where necessary; rehabilitation of offenders; providing reparations to the victim and community; and promoting a sense ofresponsibility in offenders as well as acknowledgment of harm done.

The relative emphasis to be placed on each of these objectivesvaries according to the circumstances of the offence and the offender.

[27] The fundamental principle of sentencing, as set out in

section 718.1 of the Criminal Code, is that a sentence must beproportionate to the gravity of the offence and the degree of responsibility of the offender. Regardless of the relative emphasis given tothe sentencing objectives listed in

section 718, the resulting sentence must respect the fundamental principle of proportionality (R. v.Nasogaluak, 2010 SCC 6; R. v. Ipeelee, 2012 SCC 13). [28]

Section 718.2 requires a sentencing judge to have regard for secondary sentencing principles, including consideration ofaggravating and mitigating circumstances, totality, parity, and the need to consider all available reasonable sanctions other thanimprisonment.

a) Proportionality -

section 718.1 [29] Proportionality is central to the sentencing process (R. v. Nasogaluak, supra; R. v. Solowan, 2008 SCC 62). It is the mostimportant of the factors codified in sections 718 to 718.2 (R. v. Arcand, 2010 ABCA 63). [30] Proportionality seeks to ensure that offenders are held responsible for their actions and that the sentence properly reflects andcondemns their role in the offence and the harm caused (R. v. M. (C.A.), (SCC), [1996] 1 S.C.R. 500, at para. 81 - 82). Proportionality is closely tied to denunciation, in that it ensures that a sentence reflects the gravity of the offence.

It promotes justice forvictims. It ensures public confidence in the administration of justice. It serves the principle of restraint by requiring that a sentence notexceed what is just and appropriate, given the moral blameworthiness of the offender and the gravity of the offence (R. v. Ipeelee, supra,at para. 37). [31] The offence of fraud over $5,000.00 carries a maximum penalty of fourteen years imprisonment. It is, by definition, a veryserious offence. [32] The circumstances of this case are serious as well, as Ms.

West stole more than $9,000.00 from one employer, RichmondNychuk, over the course of approximately three months. She was in a position of trust at the time. Her crime involved severaltransactions. [33] Then, within only a matter of months after leaving Richmond Nychuk, and her offence having been exposed, Ms. West begananother job with Audio Warehouse. Almost immediately, she began stealing from Audio Warehouse, eventually defrauding them ofmore than $600,000.00 over the course of a year. As was the case with Richmond Nychuk, Ms. West was in a position where AudioWarehouse trusted her with corporate money.

They trusted her with access to bank codes, and trusted her to make sure that otheremployees were properly compensated. Ms. West earned $36,000.00 in salary the year she worked for Audio Warehouse; she stolenearly 17 times that amount. [34] The offences had significant impact upon the victims. In Audio Warehouse’s case, relationships with suppliers were seriouslydamaged, the ability to serve customers was significantly hampered, valued employees were lost, and financial headaches wereplentiful. Other employees did not receive Christmas bonuses that they were expecting because of the financial damage Ms.

West’soffences did to the company. [35] The offences were not spontaneous. They were planned. They were deliberate. The schemes were complex, and requiredsignificant intentional action on Ms. West’s part. The offences against Richmond Nychuk involved at least five separate transactions; theoffences against Audio Warehouse required more than 70. Ms. West was not, at the time, suffering any personal financial crisis. Shewas not in the throes of addiction. The stolen money was not spent on necessities of life; it was used to purchase things that enhancedher lifestyle, or simply made her feel good.

These actions speak of a very high degree of moral culpability. [36] In short, the gravity of the offences and the degree of responsibility of the offender in this case are extremely significant.

b) Purposes of Sentencing -

section 718

[ 37 ] Given Ms. West’s lack of past record, and the relatively low risk she presents to re-offend, it may not be necessary to separate her from society to protect the public. Rehabilitation would likely be well-served by allowing her to serve her sentence in the community, as I expect she would comply with direction from a probation officer or conditional sentence supervisor.

However, separation and rehabilitation are not the only purposes of sentencing I must consider. [ 38 ] Other sentencing purposes, such as denunciation, deterrence, providing acknowledgment of harm done, and promoting a sense of responsibility must be considered. [ 39 ] Relevant authorities make it clear that, in cases of large-scale frauds, committed by persons in positions of trust, deterrence and denunciation should be given primary focus in sentencing ( R. v. Moccasin , supra ; R. v. Harding , supra; R. v. Oates , supra; R. v.

Fehr , supra) . [ 40 ] While it is true that a conditional sentence can have a significant deterrent and denunciatory effect ( R. v. Proulx , supra ), there are some cases where the need for denunciation and deterrence is “so pressing that a period of incarceration is necessary to the ends of deterring similar conduct in the future and of expressing society’s condemnation of the offender’s conduct” ( R. v. Harding , supra , at para. 25 ; see also R. v. Dickhoff , supra ). In R. v. Fehr , supra , the Court of Appeal overturned a conditional sentence in a fraud case.

At paragraph 23, Sherstobitoff J.A. wrote that “[w]hite collar crime is an area where a term of imprisonment is the most likely to be an effective deterrent to others who might be tempted to commit similar crimes.”

c) Relevant aggravating and mitigating factors -

section 718.2 (a) [ 41 ]

Section 718.2(

a) requires that a sentence should be increased or decreased to account for any relevant aggravating or mitigating circumstances. Abuse of a position of trust or authority is specifically enumerated as an aggravating factor in

section 718.2 (a) (iii). [ 42 ] In this case, I consider the relevant aggravating factors to be the following: • The abuse of a position of trust in both offences; • There were two separate victims, and the second offence began shortly after the first; • A significant amount of money was stolen through the frauds; • The offences had a significant impact on the victims, most particularly, the business operation and all other employees of Audio Warehouse; • The offences were not isolated or spontaneous. They required planning and forethought on Ms.

West’s part, and involved a sophisticated scheme; • The offences were repeated and continuous for more than a year; • At the time she committed the offences, Ms. West fully understood the damage she was causing to the businesses and the other employees; • Ms. West benefited significantly from the offences. She used the money for personal, gratuitous and selfish consumption; and • Although some of the money was repaid, both victims still have suffered significant loss, which is unlikely to be repaid quickly. [ 43 ] There are a number of relevant mitigating factors. They are as follows: • Ms.

West has no previous criminal record;

• She entered a guilty plea and accepted full responsibility from the outset; • Ms. West cooperated with the police, and also has cooperated to the extent possible with the victims to facilitate recovery of theirlosses; and • Ms. West is remorseful.

d) Parity: sentences in similar cases [44] The principle of parity, codified in

section 718.2(

b) of the Criminal Code, dictates that an offender’s sentence should besimilar to sentences imposed on similar offenders, for similar offences, committed in similar circumstances. Parity, however, does notmean uniformity. The proportionality principle, and the individual nature of sentencing means that disparity can exist wherecircumstances warrant. Such disparities, however, should not be egregious, or unjustified. [45] The defence has filed a number of cases in which individuals received conditional sentences of imprisonment for significantfraud convictions.

The Crown has filed a number of cases in which individuals received sentences of custodial incarceration forsignificant frauds. I have carefully reviewed those cases, and I will refer only to those I consider the most relevant. [46] With the greatest of respect, I find the cases referred to by defence counsel to be distinguishable. [47] In R. v.

Bunn, supra, the Supreme Court upheld a conditional sentence largely because it viewed the loss of professional statusthat came with the conviction, along with the fact that the offender was the sole source of support for his daughter and disabled wife tobe significant factors mitigating in favour of conditional sentence. The fraud in that case was also only $86,000.00. [48] In R. v. Cook, 2005 BCPC 716, and R. v. Kohuch, 2011 ONCJ 620, the offenders had significant psychiatric issues whichmitigated in favour of conditional sentence.

In fact, in Kohuch, the sentencing judge referred to it as “one of those rare” cases justifyinga conditional sentence order. [49] In R. v. Robinson (2003), 58 W.C.B. (2d) 408 (Ont. S.C.J.), the Court referred to “unique and exceptional circumstances” inimposing a conditional sentence for a $200,000.00 fraud. The “unique and exceptional circumstances” included the fact that, if theoffender were incarcerated, her children would be left solely in the care of their depressed and suicidal father. [50] In R. v.

Zenari, 2012 ABPC 7, the offender defrauded his employer, but spent much of the money he stole in trying to addresshis wife’s health problems. The offender repaid the money entirely before sentencing. Further, the fact that he had not committed thefrauds out of greed or on a luxurious lifestyle was considered to be part of the “truly exceptional” circumstances justifying a conditionalsentence. [51] In R. v. Salikin, 2011 SKPC 179; R. v. Turner, 2006 ABPC 189; R. v. Watkinson, 2001 ABCA 83; and R. v.

Hache, 2012SKPC 38, the offenders all had significant gambling addictions which were seen as a factor sufficient to reduce the moralblameworthiness of the offenders such that conditional sentences were appropriate. In R. v. Purves, 2011 SKQB 162, the offender had acombination of alcohol addiction, gambling addiction, and a propensity to participate in risky get-rich-quick schemes that led to the sameconclusion. R. v. Horvath (1997), (SK CA), 152 Sask. R. 277 (C.A.), while not specifically referred to by defence, isdistinguishable for the same reason. [52] Ms.

West has no addiction issues, apart from a propensity towards excessive shopping. While she has suffered fromdepression, there is no evidence before me which suggests that depression reduced her moral blameworthiness in respect of the offencesshe committed. The breach of trust in her case was significant. The offences were repeated over a significant period of time, with manytransactions and a sophisticated scheme. The amount of money stolen was extremely significant. While greed may not have been theonly motivating factor, the money Ms.

West stole was used primarily for the selfish fulfilment of desire for material things. In light of allthat, Ms. West’s case is most similar to the following:

R. v. Harding , supra . In that case, the offender was the financial secretary for a union. He embezzled some $329,000.00 over a period of five years. He spent much of the money on gambling, but also spent a significant amount on lavish lifestyle purchases. The trial judge imposed a conditional sentence of two years less a day.

However, the Court of Appeal overturned the sentence, and substituted 18 months imprisonment, noting that, in the circumstances, a conditional sentence order violated the principle of proportionality, and did not give sufficient expression to the need for denunciation and deterrence; nor did it adequately express the aggravating effect of the breach of trust committed by the accused. R. v. Oates , supra . In that case, the offender, in a breach of trust situation, defrauded the government of $460,000.00 over a period of 5½ years. She had repaid $200,000.00 of the money by the time of sentencing.

She had a previous conviction for fraud. She was a pathological gambler, but had not incurred any debts as a result. The trial judge imposed a sentence of 15 months imprisonment, noting, at paragraph 56 that “...it is important in a fraud of this magnitude to denounce this unlawful conduct. It is also important to deter this offender and others from committing offences.” R. v. Fehr , supra. In that case, the accused, a bookkeeper, defrauded his employer of $220,000.00 over a 10 year period. The offender was 56, and had no record.

He had paid back $80,000.00 prior to sentencing, and entered into an agreement to pay back the remainder. The trial judge imposed a conditional sentence of two years less a day. The Court of Appeal set aside the sentence, and imposed a prison term of 11 months (noting that the appropriate term for the offence would be one of 18 months, but gave him credit for the portion of the conditional sentence already served).

The Court noted that, because the offence was motivated by greed, a conditional sentence violated the principles of proportionality and parity, and failed to adequately address the need for denunciation and deterrence. R. v. Dickhoff , supra . In that case, the accused was the manager of a trust company. He committed a fraud totalling in excess of $1,000,000.00. The trial judge sentenced him to five years imprisonment. The Court of Appeal reduced the sentence to two years less a day imprisonment, and rejected a conditional sentence.

It held that, because of (1) the breach of trust involved, (2) the gravity of the offence, (3) the repeated nature of the frauds, and (4) the fact that the key motivation for the offender was greed, a conditional sentence was inappropriate. At paragraph 76, Vancise J.A. wrote: “While the objectives of denunciation and general deterrence can be met by a non-custodial sentence in some cases, this is not one of them. It is not a case where a conditional sentence of imprisonment would be appropriate.” R. v. Stirling , 2010 ABCA 338 .

In that case, the offender stole $146,069.00 from her employer, and made a further $107,000.00 in unauthorized withdrawals to pay accounts. She was 56 and had no criminal record, and made full restitution prior to sentencing. The trial judge imposed a two year less a day conditional sentence, which was overturned on appeal, and replaced with a prison term of one year. At paragraph 16, the Court of Appeal noted: “...the moral blameworthiness of offenders who commit this type of crime is high.

The crime is repeated and deliberate.” The Court endorsed a line of cases which hold that a conditional sentence does not provide appropriate denunciation and deterrence in cases for which there is no explanation for the offence other than greed.

e) Restraint [ 53 ] Sections 718.2(

d) and (

e) require that an offender not be deprived of liberty if less restrictive sanctions are appropriate. A sentencing judge must always consider all available sanctions other than imprisonment that are reasonable in the circumstances. [ 54 ] I have considered all reasonable alternatives to imprisonment, and I have concluded that, in the circumstances of this case, none are appropriate. A conditional sentence would not adequately reflect the gravity of the offences or the degree of Ms. West’s moral culpability.

A conditional sentence would not properly reflect the aggravating factors in this case, nor would it adequately address the need for denunciation of Ms. West’s crimes or for deterrence of other offenders. In my view, a conditional sentence in this case would also offend the principle of parity. [ 55 ] In short, I am satisfied that a conditional sentence in this case would not be consistent with the purposes and principles set out in sections 718 to 718.2 of the Criminal Code . A term of actual imprisonment is required.

f) Totality [ 56 ]

Section 718.3(4)(c)(ii) gives the Court discretion, if imposing a sentence of imprisonment for more than one offence, to order that the sentences be served consecutively.

Section 718.2 (

c) requires that, where consecutive sentences are imposed, the combined sentences should not be unduly long or harsh.

[57] In this case, the offences committed by Ms. West, while similar, were separate and distinct. The offences involved differentvictims, and were separated by time, in that the offence committed against Richmond Nychuk was complete before Ms. West begancommitting the offence against Audio Warehouse. In my view, consecutive sentences are appropriate. [58] That being the case, I must not only determine the appropriate sentence for each offence, I must also look at the total sentence,to ensure that it does not exceed what is appropriate given Ms. West’s overall level of culpability (R v. M.(C.A.), supra; R. v.

Taylor,2010 MBCA 103). [59] In this case, I consider a fit and appropriate sentence for the fraud committed against Audio Warehouse to be a term ofimprisonment of 18 months in a Provincial Correctional Centre. I consider a fit and appropriate sentence for the fraud committed againstRichmond Nychuk Law Office to be a term of imprisonment of three months, to be served consecutively. The resulting total sentence of21 months imprisonment, in my respectful view, is not unduly harsh or excessive, given the gravity of the offences, and Ms. West’soverall culpability. It also recognizes the mitigating effect of Ms.

West’s guilty pleas, acceptance of responsibility, the restitution paid tothis date, and her cooperation with the efforts of the victims to recover their losses. In fact, in the absence of those mitigating factors, apenitentiary sentence such as was imposed in R. v. Gopher, 2006 SKCA 86; R. v. Moccasin, supra; and R. v. Besler, 2011 SKPC 134may well have been appropriate.

(2) Should legal costs incurred by Audio Warehouse in efforts to recover their loss be included in the restitution order? [60] A restitution order is a discretionary order. It forms part of a sentence, and must be imposed with broader sentencingprinciples in mind. In cases involving breach of trust, such as this one, the goals of protecting the public, denouncing the conduct andcompensating the victim are paramount. While I must give some consideration to the offender’s ability to pay and other factors such asrehabilitation, those considerations are secondary in this case (R. v. Castro, 2010 ONCA 718; R. v.

Fitzgibbon, (SCC),[1990] 1 S.C.R. 1005). I am satisfied that it is appropriate to impose restitution orders as part of the sentence in this case. [61] Both Crown and defence agree that restitution orders in the amount of $4,500.00 in favour of Richmond Nychuk Law Officeand $9,500.00 in favour of SGI, are appropriate. Further, both agree that a restitution order in favour of Audio Warehouse, in someamount, is appropriate. The exact amount, however, is in dispute. [62] Ms. West admits that she defrauded Audio Warehouse of $602,000.00.

Both the Crown and defence agree that AudioWarehouse has recovered $349,192.47 of that amount (including the $9,500.00 payment from SGI). This leaves $252,807.53“unrecovered”. [63] The Crown submits that Audio Warehouse has also incurred legal costs of $45,502.27 in its efforts to recover its loss, andargues that this amount should be added to the “unrecovered” amount, and included in the restitution order. Ms. West disagrees. [64]

Section 738 of the Criminal Code provides the authority for making restitution orders. The relevant portions read as follows: 738(1) Where an offender is convicted...of an offence, the court imposing sentence may, ...in addition to any other measure imposed onthe offender, order that the offender make restitution to another person as follows: (

a) in the case of damage to, or the loss or destruction of, the property of any person as a result of the commission of the offence...bypaying to the person an amount not exceeding the replacement value of the property as of the date the order is imposed, less the value ofany part of the property that is returned to that person as of the date it is returned, where the amount is readily ascertainable. [65] In R. v.

Devgan (1999), (ON CA), 136 C.C.C. (3d) 238, the Ontario Court of Appeal determined that theprovisions of the Criminal Code in force at the relevant time did not provide a sentencing judge with authority to make a compensationorder which included legal costs. The Court of Appeal concluded that a compensation order was limited to amounts representing theactual loss of property.

[66] It should be noted, however, that at the time the offences occurred in Devgan, the relevant provision of the Criminal Coderelating to restitution were worded differently than the current

section 738. The relevant provision considered in Devgan was section725(1), which read, in part, as follows: 725(1) A court that convicts...an accused of an offence may, on the application of a person aggrieved, at the time sentence is imposed,order the accused to pay to that person an amount by way of satisfaction or compensation for the loss of or damage to property sufferedby that person as a result of the commission of the offence. [67] The notable difference between the former section 725(1) and the current section 738(1) is that the current

section refers torestitution for “replacement value of the property as of the date the order is imposed”, while the former

section limited compensation to“loss of or damage to property”. It would appear that, in some respects, the new section 738(1) grants the Court more discretion than didthe old one. Analogy can be drawn to the insurance industry, where “replacement value” generally refers to the cost of replacing theactual item in question. It does not factor in reduction in value of an asset based on depreciation. “Replacement value” seeks to restorethe aggrieved party back to the situation they enjoyed before the loss was suffered. [68] In R. v. Dennis, 2003 BCSC 2017; R. v. Smith, 2009 ABPC 194; and R. v.

Kwaw, 2011 ONCJ 29, the sentencing courts dealtwith the current section 738(1) in considering this issue. In each of those cases, the courts granted restitution orders that included legalfees incurred by the victims in attempts to recover losses. [69] In Smith, the offender was convicted of theft, and a number of victims sought restitution orders which included legal fees theyincurred in the course of attempting to recover their property. The Court made a restitution order which included those fees, however thewritten judgment does not give detailed reasons in that respect.

In Kwaw, the Court granted a restitution order to the victims whichincluded legal fees incurred by the victims.

Those legal fees were not in dispute, so they were easily ascertainable. [70] In Dennis, the Court adopted a definition of “replacement value” that included the “full cost of repairing the damage”, and assuch, included legal fees incurred in recovery efforts by the victims, where those amounts were readily ascertainable. [71] It would seem, from reading these decisions, that section 738(1) provides authority for including legal costs in a restitutionorder, as they may be characterized as part of the “replacement value of the property”, given that they are a cost incurred in the processof replacing or recovering the property.

However, the determination that I have authority to include legal fees in the restitution orderdoes not end the matter. I must still consider whether, in the circumstances of this case, it is appropriate to exercise my discretion in thatfashion. [72] While restitution orders have an essential place in the sentencing process, they should be made with restraint and caution, andnot seen as a substitute for civil proceedings. A restitution order in a criminal proceeding is not the appropriate vehicle for sorting outserious disputes involving complex financial transactions and contested facts.

As Chief Justice Laskin noted in R. v. Zelensky, (SCC), [1978] 2 S.C.R. 940, at pp. 963-4, discussing the provision then in force relating to restitution orders:

Section 653 does not spell out any procedure for resolving a dispute as to quantum; its process is, ex facie,

summary but I do not thinkthat it precludes an inquiry by the trial judge to establish the amount of compensation, so long as this can be done expeditiously andwithout turning the sentencing proceedings into the equivalent of a civil trial or into a reference in a civil proceeding... It must be obvious, therefore, that s. 653 is not the platform upon which to unravel involved commercial transactions in order to providemonetary redress to those entitled thereto as against an accused.

The latter, too, may have a proper interest in insisting that civilproceedings be taken against him so that he may avail himself of the procedures for discovery and production of documents, as well as ofa proper trial of issues which go to the merit of monetary claims against him. Again, the criminal court cannot be expected to nor shouldit act under s. 653 if it would be required to interpret written documents in order to arrive at a sum of money sought through an order ofcompensation.

So too, it would be improper to invoke s. 653 if the effect of provincial legislation would have to be considered in order todetermine what order should be made. Indeed, any serious contest on legal or factual issues, or on whether the person alleging himself tobe aggrieved is so in fact, should signal a denial of recourse to an order under s. 653.

[ 73 ] The former Chief Justice’s

interpretation in Zelensky is consistent with the wording of the current version of section 738(1), which allows for restitution orders to be made in relation to amounts that are “readily ascertainable”. [ 74 ] In this case, the legal fees claimed on behalf of Audio Warehouse are stated in a precise amount. It is not disputed that Audio Warehouse has incurred those fees. However, Ms. West does not admit that those legal fees are reasonable and properly attributable to recovery of loss on behalf of Audio Warehouse. In short, there is a factual dispute on that point; Ms.

West contests that portion of the “replacement value” of the property, and as such it cannot be said to be “readily ascertainable”. Applying Zelensky , this is not the appropriate forum for resolving that factual dispute; that is a question better decided through the civil process. I therefore decline to include Audio Warehouse’s legal costs in the restitution order. VI. CONCLUSION [ 75 ] On Information 33011799, Count #2, I sentence Ms. West to a term of imprisonment of 18 months to be served in a Provincial Correctional Centre. Pursuant to

section 738 of the Criminal Code , I also order that she pay restitution of $9,500.00 to Saskatchewan Government Insurance (SGI), and $252,807.53 to Audio Warehouse Ltd. [ 76 ] On Information 37241017, Count #1, I sentence Ms. West to a term of imprisonment of three months to be served in a Provincial Correctional Centre, consecutive. Pursuant to

section 738 of the Criminal Code , I also order that she pay restitution in the amount of $4,500.00 to Richmond Nychuk Law Office. [ 77 ] In light of the sentence of imprisonment, the surcharges are waived. J.D. Kalmakoff, J