r v. NEIL FLOYD, 2015 QCCQ 2617

R. c. Floyd 2015 QCCQ 2617 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL TOWN OF MONTRÉAL «Criminal division» N°: 500-73-003704-125 DATE : April 1, 2015 ______________________________________________________________________ BEFORE THE HONOURABLE MYRIAM LACHANCE, JCQ ______________________________________________________________________ HER MAJESTY THE QUEEN Prosecutor v. NEIL FLOYD Accused ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Mr.

Floyd is charged with nine (9) counts of having, by deceit, falsehood or other fraudulent means, defrauded different credit institutions of a sum exceeding five thousand dollars ($5,000). [ 2 ] The prosecution produces into evidence a document which includes registered transactions on eight (8) credit cards and one (1) line of credit. The defence admits the truth of its content. [ 3 ] Between March 2007 and Mach 2008, Mr.

Floyd withdraws cash advances worth over one hundred and seventeen thousand dollars ($117,000) and makes purchases worth approximately forty-three thousand dollars ($43,000). [ 4 ] The accused applies for bankruptcy protection in January 2009. [ 5 ] Transactions worth over one hundred thousand dollars ($100,000) in casinos came to the attention of the superintendent of bankruptcy and raised his suspicions.

Gambling is a fact for which discharge may be refused under the Bankruptcy and Insolvency Act [1] . [ 6 ] At the time of his bankruptcy, the accused is unemployed and has no income. [ 7 ] Murray Diamond, the trustee in the file, testifies that the accused had indebtedness of about three hundred and fifteen thousand dollars ($315, 000) in total. Most of these debts were incurred by the use of credit cards and a line of credit, except for a debt of one hundred and nineteen thousand dollars ($119,000), owed to both the federal and the provincial governments. [ 8 ] On January 29, 2010, Mr.

Floyd receives his bankruptcy discharge despite the opposition of the superintendant of bankruptcy. QUESTION AT ISSUE [ 9 ] Did the accused defraud the credit institutions in the way by which he used his personal credit cards and line of credit? CONTEXT [ 10 ] Mr.

Floyd suffers from a head trauma, due to a car accident occurred in 1972, which would make it difficult for him to find employment. [ 11 ] From 1994 to 1997, he works for his brother’s company and never works again. [ 12 ] The Canada Revenue Agency audits him for not having filed any income tax reports for the years of 2000 to 2003 and he declares zero (0) income.

[ 13 ] Mr. Floyd has gift letters explaining how he was living and paying his living expenses. They were given to his trustee, Mr. Diamond, who testifies that the original file of the accused has been destroyed; hence, the only available documents are those in possession of the prosecution. [ 14 ] Up to April 2007, Mr.

Floyd's indebtedness was considered as being normal, regarding his personal use. [ 15 ] The better part of the cash advances and purchases on his credit cards and credit line occurred during a period of twelve (12) months, from March 2007 to March 2008. [ 16 ] The accused owes almost twenty thousand dollars ($20,000) to the bank institutions at the end of April 2007 and only makes minimum payments on all his credit cards. [ 17 ] In April 2007, he spends an additional one hundred and twenty thousand dollars ($120,000) in one month, when visiting his brother in the Bahamas.

The money is mainly gambled in the casino. [ 18 ] Except for the months of April, May and June 2007, the purchases of Mr. Floyd on his credit cards and line of credit are of lesser importance than his payments. [ 19 ] Between April 2007 and February 2008, Mr. Floyd still has no real income. Money is given to him by his mother and his brother, in order to reimburse twenty nine thousand nine hundred and five dollars ($29, 905) to the institutions holding the credit cards. [ 20 ] In February 2008, his brother stops sending him money. His mother is ill and cannot help him.

As a result, he ceases to pay his credit cards, and also because he has no taxable income, nor social assistance. [ 21 ] He stops using his credit cards and no other payments are made to reimburse the credit institutions. [ 22 ] Mr. Floyd finally resolves to see a trustee in bankruptcy to free himself from his obligations, consisting mainly in debts contracted through his credit cards. [ 23 ] The accused testifies that he never had the intention to defraud the banks or companies issuing the credit cards.

He honestly believed that his family would pay his debts, as usual. [ 24 ] The Crown’s position is that a reasonable person would determine that a person with no income who gambles, using money withdrawn from high interest credit cards and who continues to use these cards afterwards in order to make purchases is committing a dishonest act, in the sense of “other fraudulent means”. [ 25 ] The Crown alleges that Mr.

Floyd knew or was blind to the fact that he was risking money that belonged to his creditors when gambling at the casino or making extravagant expenditures. [ 26 ] The defence submits that all the credit cards were obtained many years before 2007 and that the accused was allowed to use them within their credit limits. He was always able to cover the payments with his family’s financial support. [ 27 ] Regarding the cash advances obtained to gamble at the casino, the defence underlines the fact that gambling is not a criminal offence.

All the credit institutions involved gave their authorization and allowed each transaction. ANALYSIS [ 28 ] Fraud is an offence of general scope.

It can encompass a wide range of dishonest dealings. [ 29 ] A criminal fraud is defined as anyone who by deceit, falsehood or other fraudulent means constituting or not a false pretence, defrauds another person of any money, value, or good, as set out in s. 380(1) of the Criminal Code [2] . [ 30 ] False pretence is defined as the representation of a fact, past or present, in words or otherwise, that which is known to be false and made with the fraudulent intent to induce the person to whom it is addressed to act on this representation. [ 31 ] There is no evidence of any lie or act of deceit in the present case. [ 32 ] The question is whether the conduct of Mr.

Floyd, in the way he used his credit cards and line of credit, is characterized as “other fraudulent means”. [ 33 ] This is a question of fact to be determined by the trier of fact [3] .

Actus reus of fraud [ 34 ] The actus reus of a fraud offence has two elements: 34.1. a dishonest act established by proof of deceit, falsehood, or "other fraudulent means"; 34.2. an element of deprivation established by proof of detriment, prejudice, or risk of prejudice to the economic interests of the victim, caused by the dishonest act [4] . [ 35 ] The mental element in the actus reus of fraud is the “voluntary act” of the accused [5] . [ 36 ] In determining the actus reus in the third category of the offence of fraud, the Crown must establish whether the means can properly be stigmatized as dishonest.

[ 37 ] Negligence, unscrupulous conduct, regardless of whether such conduct was willful or reckless, or even the person’s intention of taking advantage of an opportunity to the detriment of others, are not enough [6] . [ 38 ] The "other fraudulent means" is determined by reference to what a reasonable person would consider to be a dishonest act [7] . [ 39 ] The state of mind of the accused is irrelevant to the actus reus of fraud which is judged based on the objective facts. Mens rea of fraud [ 40 ] The function of mens rea in criminal law is to prevent the conviction of morally innocent people.

It refers to the guilty mind, the wrongful intention of an accused. [ 41 ] The mens rea consists in the subjective awareness that one was undertaking a prohibited act (deceit, falsehood or other dishonest act) which could cause deprivation in the sense of depriving another person of his or her property or putting that property at risk [8] . [ 42 ] The personal feeling of the accused about the morality or honesty of the act or its consequences is not relevant in the analysis of mens rea .

Neither is the fact that the accused may have hoped that the deprivation would not take place, or may have felt that there was nothing wrong with what he was doing. It provides no defence on the mens rea [9] . [ 43 ] Therefore, the accused's belief that his actions were not wrong or that no one would be hurt in the end does not constitute a defence to a charge of fraud. [ 44 ] The mens rea is proven when the accused intentionally committed the prohibited acts (deceit, falsehood or other dishonest act), knowing the consequences proscribed by the offence (deprivation, including the risk of deprivation).

Wilful blindness and recklessness [ 45 ] Wilful blindness and recklessness are part of the mens rea . [ 46 ] Culpability in recklessness involves conscious knowledge of the risk and intent to proceed regardless, whereas wilful blindness imputes knowledge to an accused whose suspicion is aroused to the point where he or she sees the need for further inquiries, but deliberately chooses not to make those inquiries [10] . [ 47 ] Wilful blindness imputes knowledge and recklessness presupposes knowledge. [ 48 ] The Crown submits that Mr. Floyd was wilfully blind to the situation.

He wanted to believe that his brother was going to help him, but he did not go so far as to make the necessary inquiries to ensure that was the case. [ 49 ] The Crown asks the Court to infer that Mr. Floyd was wilfully blind, being deliberately ignorant to reality. In that sense, the law would presume his knowledge, permitting to attribute criminal liability to the offence of fraud. APPLICATION TO THE PRESENT CASE [ 50 ] The testimony of the accused is not questioned by the parties.

It is not a matter of credibility. [ 51 ] The defence submits that the Crown did not prove the actus reus nor the mens rea of a fraud. [ 52 ] The defence further submits that if the Court does not agree, the evidence presented by the accused should constitute a defence raising a reasonable doubt. Actus reus [ 53 ] The Crown submits that a man with no income, entirely dependent on the goodwill payments of his family, should not be gambling with one hundred thousand dollars ($100,000) in high interest credit. A reasonable person would also find that Mr.

Floyd was dishonest by then continuing to spend up to his credit cards’ limit and make minimum monthly payments only. [ 54 ] The Crown suggests that a person using his or her personal credit card within the credit limit while knowing that he or she will not have the capacity to reimburse the bank holder commits a dishonest act by "other fraudulent means". [ 55 ] The defence contends that the accused did not use the funds in an unauthorized manner and that accordingly, there are no sufficient grounds for finding that he acted dishonestly. When he withdrew the money , the accused acted voluntarily.

But, he never intended or foresaw the facts or circumstances that could have constituted deprivation because he honestly thought that his brother would pay the credit institutions back. [ 56 ] The proof reveals that Mr. Floyd started applying for credit cards prior to the present accusations, under his real identity. [ 57 ] The money was advanced to Mr. Floyd with the authorization and the consent of the credit institutions, contrary to the usual cases in the same matter, where the accused was not entitled to the money [11] . [ 58 ] Mr.

Floyd properly identified himself to the credit institutions on the several occasions when they were contacted directly by the casino, to obtain their authorization to withdraw the cash advances. [ 59 ] But having a legal right to obtain cash advances does not allow an unrestricted right over it.

[ 60 ] The substance of a fraud does not necessarily have a link with a person's right over something. What matters is how it was obtained and what was done with it. [ 61 ] The legal access to credit does not authorize anyone to deprive or risk depriving others of their pecuniary interests, if so; it will constitute a dishonest act. [ 62 ] The defence also pretends that these credit institutions were negligent by not cancelling access to the credit. This argument affords no defence [12] .

The dishonest act committed by “other fraudulent means” [ 63 ] To establish actus reus for fraud, the Crown must establish beyond a reasonable doubt that the accused voluntarily committed the act that objectively constitutes the prohibited act. [ 64 ] Gambling is a notoriously risky enterprise but not a criminal one.

Nor is gambling with money obtained from credit. [ 65 ] But using this borrowed money with little or no concern for the reimbursement could deprive or risk depriving others of their pecuniary interests. [ 66 ] The accused’s belief that his conduct was not wrong or that no one was to be deprived in the end, is not an excuse [13] . [ 67 ] What would deprive the act of its dishonest character is if a reasonable person would foresee realistic expectations for repayments. [ 68 ] Once Mr.

Floyd had legal access to the money, the prohibited act was neither gambling nor the failure to reimburse the credit institutions. [ 69 ] The dishonest act would be the combined act of voluntarily spending the money with no concern for payment. [ 70 ] The incapacity to make the payments does not constitute a criminal offence if a reasonable person, in the same situation, would have honestly believed being able to do so [14] . Reasonable concerns for reimbursement [ 71 ] The most intensive use of Mr. Floyd’s credit is a three (3) week period in the month of April 2007.

He withdraws approximately hundred and three thousand dollars ($103,000) in cash advances, sums gambled in a casino in the Bahamas. [ 72 ] During that month, Mr. Floyd also makes purchases of approximately sixteen thousand and three hundred dollars ($16,300). [ 73 ] Mr. Floyd spends these weeks with his brother who goes to the casino with him. [ 74 ] Regarding the reimbursement of those cash advances, Mr.

Floyd says he thought that he would win money at the casino and, if not, that his brother would pay the credit institutions back. [ 75 ] His brother was aware of the cash advances and told him: “I have your back”. [ 76 ] Mr.

Floyd’s brother did not to testify to support his telling of the events. [ 77 ] Nevertheless, out-of-court statements tendered to show an accused's belief are admissible and are not excluded by the hearsay rule when they are put into evidence solely to prove that person's state of mind [15] . [ 78 ] The Court agrees with the Crown that there is a distinction between paying for a person’s living expenses of a few thousand dollars a month and bear the weight of over one hundred thousand ($100 000) dollars gambled in casinos. [ 79 ] According to the accused, it was at the initiative and suggestion of his brother that the accused has procured cash advances from his credit cards in the casino. [ 80 ] He bought airline tickets, made many purchases in Nassau and even covered the restaurant bill for his brother with his credit cards. [ 81 ] At first sight, it does not make sense that his brother, as he describes to be a wise businessman, let him borrow cash advances at high interest and pay for airline tickets or restaurant bills with his credit cards.

It would have been more logical for his brother to pay these expenses himself. [ 82 ] The accused testifies that it was the first time that his family had given him that amount of money and that it was above what he received for his living expenses. [ 83 ] A reasonable person would not have been satisfied nor convinced without a straightforward conversation about the reimbursements with Mr. Floyd’s brother . [ 84 ] Consequently, the Court concludes that a prohibited act was performed by the accused; therefore, the actus reus is proved.

Mens rea [ 85 ] The accused can be found guilty whether or not he actually intended the prohibited consequences or was wilfully blind or

__________________________________ MYRIAM LACHANCE, J.C.Q. Me Belinda PerezCounsel for the Public prosecution service of Canada Me Gaétan Bourassa Counsel for the accused reckless as to whether they would occur. [86] The Crown admits that the accused sincerely believed that his brother would pay the credit institutions back, but pretends thathe deliberately failed to make further inquiries with his brother. [87] This is a singular case where Mr. Floyd’s financial situation has been the same for many years.

There was nothing new to thefact that he was expecting his relatives to pay his personal credit cards and for what he was asking, as curious as it could appear toanyone’s common sense. [88] The trustee and the documentation confirm many aspects of Mr. Floyd’s testimony. [89] The accused lived exclusively upon family support after he ceased working.

His credit cards were issued prior to the presentaccusations, he always paid his debts with the money given by his family and he immediately stopped using his credit cards when hisbrother “cut him off” as his said, in February 2008. [90] He never had gambling problems before his visit to Nassau in 2007. [91] The evidence is clear and unrefuted that he reimbursed nearly thirty thousand dollars ($30,000) to the bank institutions between2007 and 2008. [92] A person with no income reimbursing that amount of money during the same period of time when he is supposed to havedefrauded the credit institutions demonstrates the peculiarity of this case. [93] An honest belief on the part of the accused that his brother would reimburse the money, even though unreasonably held,negates the mens rea and entitles him to an acquittal. [94] It seems clear that Mr.

Floyd honestly misunderstood his brother about the reimbursements. If he would have correctlyunderstood him, and nevertheless gambled the money or made great expenditures, he would have knowingly committed prohibited acts. [95] When a person gives an honest but wrong

interpretation of a fact, it should not be qualified as a criminal offence[16]. [96] This case does not outline an appropriate set of circumstances for the application of the wilful blindness rule or recklessnessdoctrine. [97] There is no proof beyond reasonable doubt that the accused was deliberately ignorant as a result of blinding himself to reality. [98] The statements or the conduct of his brother led Mr.

Floyd to believe that the advances on the credit cards would be repaid,despite the fact that he had withdrawn an important amount of money over a very short period of time. [99] His state of mind then becomes relevant[17]. [100] The Court can assess the honesty and reasonableness of the Mr. Floyd’s belief that his brother would repay his debts. [101] The accused does not have to give truthful evidence but only evidence that might be true[18]. FOR THESE REASONS, THE COURT: [102] DECLARES the accused not guilty on all counts of accusation. [11] R. v. Leuenberger, 2014 BCCA 156 , paragr. 61 and 76. [14] R. c.

Adams, (QC CA), 2. [15] R. v. Emms, 2010 ONCA 817 , paragr. 24. [16] R. c. Mongeau, (QC CA), 9.