2012 NBCA 77, 2012 NBCA 77

COURT OF APPEAL OF NEW BRUNSWICK 106-11-CA ROSAIRE MICHAUD APPELLANT ROSAIRE MICHAUD APPELANT - and - - et - HER MAJESTY THE QUEEN RESPONDENT SA MAJESTÉ LA REINE INTIMÉE Michaud v. R., 2012 NBCA 77 Michaud c.

R., 2012 NBCA 77 CORAM: The Honourable Justice Richard The Honourable Justice Bell The Honourable Justice Quigg CORAM : L’honorable juge Richard L’honorable juge Bell L’honorable juge Quigg Appeal from a decision of the Provincial Court: May 6, 2011 (conviction) Appel d’une décision de la Cour provinciale : Le 6 mai 2011 (déclaration de culpabilité) History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : Inédite Preliminary or incidental proceedings: September 6, 2011 Procédures préliminaires ou accessoires : Le 6 septembre 2011 Appeal heard: March 20, 2012 Appel entendu : Le 20 mars 2012 Judgment rendered: September 10, 2012 Jugement rendu : Le 10 septembre 2012

Counsel at hearing: For the appellant: Christian Michaud and Dale Briggs For the respondent: Norman J. Bossé, Q.C. Avocats à l’audience : Pour l’appelant : Christian Michaud et Dale Briggs Pour l’intimée : Norman J. Bossé, c.r. THE C OURT The appeal is allowed in part. The convictions under s. 239(1.1) (

a) of the Income Tax Act , R.S.C. 1985, c. 1 (5th Supp.) are quashed and a verdict of acquittal is entered with respect to all counts. The appeal is dismissed with respect to the convictions under s. 6.1 of the Tax Rebate Discounting Act , R.S.C. 1985, c. T-3. Reasons for our decision will follow. LA COUR Accueille l’appel en partie. Les déclarations de culpabilité prononcées sur le fondement de l' al. 239(1.1)

a) de la Loi de l'impôt sur le revenu , L.R.C. 1985, ch. 1 (5 e suppl.) sont annulées et un verdict d'acquittement est prononcé relativement à chaque chef d'accusation. L'appel est rejeté en ce qui concerne les déclarations de culpabilité prononcées sur le fondement de l’ art. 6.1 de la

Loi sur la cession du droit au remboursement en matière d’impôt , L.R.C. 1985, ch. T-3. Les motifs de notre décision seront déposés plus tard. English version of the judgment delivered by THE COURT [1] The appeal is allowed in part. The convictions under s. 239(1.1)(

a) of the Income Tax Act , R.S.C. 1985, c. 1 (5th Supp.)

are quashed and a verdict of acquittal is entered with respect to all counts. The appeal is dismissed with respect to the convictions under s. 6.1 of the Tax Rebate Discounting Act , R.S.C. 1985, c. T-3. Reasons for our decision will follow.

COURT OF APPEAL OF NEW BRUNSWICK 106-11-CA ROSAIRE MICHAUD APPELLANT ROSAIRE MICHAUD APPELANT - and - - et - HER MAJESTY THE QUEEN RESPONDENT SA MAJESTÉ LA REINE INTIMÉE Michaud v. R., 2012 NBCA 77 Michaud c.

R., 2012 NBCA 77 CORAM: The Honourable Justice Richard The Honourable Justice Bell The Honourable Justice Quigg CORAM : L’honorable juge Richard L’honorable juge Bell L’honorable juge Quigg Appeal from a decision of the Provincial Court: May 6, 2011 (conviction) Appel d’une décision de la Cour provinciale : Le 6 mai 2011 (déclaration de culpabilité) History of Case: Historique de la cause : Decision under appeal: 2011 NBCP 18 Décision frappée d’appel : 2011 NBCP 18 Preliminary or incidental proceedings: September 6, 2011 Procédures préliminaires ou accessoires : Le 6 septembre 2011 Appeal heard: March 20, 2012 Appel entendu : Le 20 mars 2012 Judgment rendered: September 10, 2012 Jugement rendu : Le 10 septembre 2012 Reasons delivered: November 29, 2012 Motifs déposés : Le 29 novembre 2012

Reasons for judgment: The Honourable Justice Richard Motifs de jugement : L’honorable juge Richard Concurred in by: The Honourable Justice Bell The Honourable Justice Quigg Souscrivent aux motifs : L’honorable juge Bell L’honorable juge Quigg Counsel at hearing: For the appellant: Christian Michaud and Dale Briggs For the respondent: Norman J. Bossé, Q.C. Avocats à l’audience : Pour l’appelant : Christian Michaud et Dale Briggs Pour l’intimée : Norman J. Bossé, c.r. THE COURT The appeal is allowed in part. The convictions under s. 239(1.1) (

a) of the Income Tax Act are quashed and a verdict of acquittal is entered with respect to all counts. The appeal is dismissed with respect to the convictions under s. 6.1 of the Tax Rebate Discounting Act . LA COUR Accueille l’appel en partie. Les déclarations de culpabilité prononcées sur le fondement de l’ al. 239(1.1)

a) de la Loi de l’impôt sur le revenu sont annulées et un verdict d’acquittement est prononcé relativement à chaque chef d’accusation. L’appel est rejeté en ce qui concerne les déclarations de culpabilité prononcées sur le fondement de l’ art. 6.1 de la

Loi sur la cession du droit au remboursement en matière d’impôt .

English version of the judgment of the Court delivered by RICHARD J.A. I. Introduction [1] Rosaire Michaud was charged with multiple counts alleging offences under s. 6.1 of the Tax Rebate Discounting Act , R.S.C. 1985, c. T-3 and under s. 239(1.1)(

a) of the Income Tax Act , R.S.C. 1985, c. 1 (5 th Supp.). On May 6, 2011, a judge of the Provincial Court convicted Mr. Michaud of four out of 126 counts under the former legislation, and 134 out of 148 counts under the latter: 2011 NBCP 18 . On June 30, the judge sentenced him to a conditional sentence of two years less a day in addition to fines of $391,504.49 and $2,000.00, respectively. Mr. Michaud appealed the convictions on several grounds.

On September 6, 2011, a judge of this Court directed the appeal first proceed with the hearing of two of these grounds because they could be considered without the parties incurring the expense of a full transcript of the trial proceedings. These two grounds relate to the trial judge’s consideration of similar fact evidence. Specifically, Mr. Michaud argues the trial judge erred in raising on his own initiative, after all evidence was heard and final arguments made, the question of similar fact evidence, and then relying on this evidence to find the necessary mens rea to convict. In Mr.

Michaud’s submission that course was not open to the judge because the prosecution had neither informed the defence of its intention to rely on similar fact evidence nor asked the Court to consider it. In other words, the ground of appeal under consideration in this part of the appeal relates to the procedure for invoking the similar fact rule, and not to the substantive criteria for admission. Below I explain why, in my view, there is no strict procedural requirement for notice that would lead to the automatic exclusion of the evidence.

I add, however, that, when notice is not given, the evidence should not be admitted if to do so would compromise the fairness of the trial. [2] In a decision issued on September 10, 2012, we allowed the appeal in part. The convictions under s. 239(1.1)(

a) of the Income Tax Act were quashed and verdicts of acquittal were entered. The appeal was dismissed with respect to the convictions under s. 6.1 of the Tax Rebate Discounting Act . At the time, we indicated that reasons would follow. Here are those reasons. II. Background

[3] For the purposes of Mr. Michaud’s appeal on the two grounds currently under consideration, it is not necessary to undertake a detailed review of the facts that led to each of the 138 convictions. Suffice it to say that Mr. Michaud operated a tax discounting business from his home in Grand Falls, N.B., and that, in 2007, he filed, on behalf of 148 clients, false statements under the Income Tax Act , leading to the clients obtaining unentitled refunds, from which Mr. Michaud would get paid for his services.

The preparation of tax returns on behalf of these clients was part of an elaborate scheme orchestrated by others who recruited individuals to participate in the fraud. Those recruited were provided with false and fraudulent documents and each, at one point in the period between February 14 and April 26, 2007, was taken to Mr. Michaud’s office, often from other parts of the Province. In the typical case, Mr. Michaud immediately prepared a tax return based on the false information provided to him by the client, and, in most cases, filed it electronically. Mr.

Michaud then issued the client a cheque drawn on his own account at a local financial institution. The client then left Mr. Michaud’s office, met up with one of the orchestrators of the scheme, went to the financial institution to cash the cheque, retained a portion of the funds and gave the balance to one of the ringleaders. On occasion, a client would simply sign over the cheque to the ringleader in exchange for a lesser amount. [4] There was no evidence Mr. Michaud was involved in orchestrating this tax fraud scheme. The trial judge found the ringleaders would never enter Mr. Michaud’s office with the clients.

Mr. Michaud would simply prepare the tax returns as part of the tax discounting business he had operated since 1986. The 148 false returns filed as part of this scheme were but a small faction (less than 6.5%) of the approximately 2,300 tax returns filed in 2007, on behalf of clients for the 2006 taxation year. Each client spent only a matter of minutes with Mr. Michaud, since the tax return was generally prepared from the paperwork the client provided. [5] The trial judge concluded the offences at issue were not strict liability offences, but rather offences for which mens rea had to be proven.

Turning first to the charges under s. 6.1 of the Tax Rebate Discounting Act , the judge noted they alleged Mr. Michaud had knowingly provided the Canada Revenue Agency with information, a document, or a copy of a document, which was false, misleading or incomplete. The judge found both the actus reus and the required mens rea in relation to only four of the 126 counts contained in the indictment alleging offences under s. 6.1 of the Tax Rebate Discounting Act. Parenthetically, Mr. Michaud was tried on an Information, not an indictment.

However, I will refer to the charging document as an indictment for the sake of simplifying the text because many of the cases cited below relate to matters tried on an indictment .

[6] Addressing next the alleged offences under s.239(1.1)(

a) of the Income Tax Act, the trial judge found the actus reus had beenproven for each of the 148 charges. The judge readily acknowledged that, if he lookedat each transaction in isolation, he would not be able to find Mr. Michaud had therequired mens rea. He held that, in the absence of evidence Mr. Michaud was aknowing participant in the tax fraud scheme, or of evidence he actually knew the fileddocuments were fraudulent, the mens rea would depend on the doctrine of wilfulblindness. Quoting the words of Charron J. in R. v.

Briscoe, 2010 SCC 13, [2010] 1S.C.R. 411, the judge recognized what follows: Wilful blindness does not define the mens rea required for particular offences.Rather, it can substitute for actual knowledge whenever knowledge is a component ofthe mens rea. The doctrine of wilful blindness imputes knowledge to an accused whosesuspicion is aroused to the point where he or she sees the need for further inquiries,but deliberately chooses not to make those inquiries. See Sansregret v. The Queen, (SCC), [1985] 1 S.C.R. 570, and R. v. Jorgensen, (SCC), [1995] 4 S.C.R. 55.

As Sopinka J. succinctly put it in Jorgensen (at para. 103),"[a] finding of wilful blindness involves an affirmative answer to the question: Did theaccused shut his eyes because he knew or strongly suspected that looking would fixhim with knowledge?” [para. 21] [7] The trial judge recognized the differencebetween recklessness and wilful blindness, noting Charron J.’s observation, based onthe views of Professor Don Stuart, that “the expression ‘deliberate ignorance’ seemsmore descriptive than ‘wilful blindness’, as it connotes ‘an actual process ofsuppressing a suspicion”’ (para. 30 of the trial judge’s decision, referring to para. 24of Briscoe).

In the final analysis, with this concept in mind, the trial judge reviewedeach count alleging offences under s. 239(1.1)(

a) of the Income Tax Act, and stated hewas left without any reasonable doubt that, in 134 instances, Mr. Michaud had beenwilfully blind to the fact he was filing tax returns prepared on the basis of falseinformation. In other words, the judge concluded that, in 134 cases, Mr. Michaudshut his eyes to this reality: he was being provided with false documents.

That was sobecause he knew or strongly suspected that “looking” would fix him with knowledge,and that he would then not be able to profit from the transaction. [8] During the evidentiary portion of the trial andeven in argument, no one made mention of the similar fact evidence rule. The casetook the twist that is now the subject of this appeal when, after reserving decision, thetrial judge wrote both prosecution and defence counsel, advising them it had come tohis attention that, according to R. v. Cote, 2003 NBCA 38, 257 N.B.R. (2d) 194 and R.v.

Stymiest, 2005 NBQB 445, 297 N.B.R. (2d) 137, he could only consider the evidence

relating to a particular count as evidence for that count, and not as evidence relevantto the determination of other counts, unless the evidence was admissible as similarfact. The judge inquired whether counsel wanted to make any further submission onthat point. [9] The parties filed written submissions, and ahearing was convened on March 30, 2011, during which the trial judge heardargument on the application of the similar fact evidence rule. The judge clarified thepurpose of his letter to counsel. He explained that, as he was organizing his materialsto write the decision, he recalled the case of R. v.

Paquet (R.) et al. (1999), (NB CA), 219 N.B.R. (2d) 130, [1999] N.B.J. No. 493 (C.A.) (QL), andthis caused him some concern regarding the similar fact evidence rule. At thehearing, counsel for the prosecution questioned whether, in the context of a casebefore a judge alone involving multiple counts of fraud where wilful blindness was theissue, this was truly a case of similar fact evidence. If it was, the prosecutioncontinued, the evidence should be considered as it clearly meets the test for admissionand there is little prejudice to the accused.

To the extent the law required theprosecution to make a motion for the court to consider similar fact evidence, theprosecution made such a motion, arguing it could be made at this late stage in theprocess because the accused had testified and the defence had addressed all theevidence. According to the prosecution, there could be no prejudice to Mr. Michaud. In reply, Mr. Michaud argued the court could not “on its own motion” raise thequestion of similar fact evidence and where, as here, the matter was not raised attrial, it should not even be considered. Mr.

Michaud’s counsel contended the defencewould have been conducted differently had Mr. Michaud known the court would beconsidering similar fact evidence. Defence counsel also maintained the evidenceshould not be admitted as similar fact evidence because its prejudicial effectoutweighed its probative value. [10] The judge ruled on the similar fact evidenceissue as a preliminary question. He began by setting out the general rule, as expressedin R. v.

Cote, to the effect that, even in a multi-count indictment against a singleaccused, evidence relating exclusively to one count cannot be used in determiningother counts unless the evidence is admissible as similar fact evidence. [11] The judge acknowledged Mr. Michaud’sposition that the prosecution had never sought the admissibility of evidence relatingexclusively to one particular count as similar fact evidence to support other counts,much less given notice it would seek to invoke the rule. He also considered theprosecution’s contention that Mr.

Michaud knew from the outset the evidenceadduced at trial would be relied upon globally in assessing the question of whetherthere was proof of wilful blindness.

[12] In the end, the judge sided with the prosecution. He noted there had been no motion to sever the counts and stated that when the prosecution submitted detailed tables to show the chronology and details of all transactions, Mr. Michaud’s only objection was founded on the allegation these were made out of context, not that they would constitute inadmissible similar fact evidence. The judge inferred Mr.

Michaud had been aware from the outset the prosecution was seeking to have the evidence of all counts considered in support of each, and concluded no procedural unfairness ensued from the prosecution’s failure to make a formal request for the admissibility of similar fact evidence. The judge then considered the criteria for the admissibility of similar fact evidence as summarized in R. v. Handy , 2002 SCC 56 , [2002] 2 S.C.R. 908 , and concluded they had been met. [13] In his decision, the trial judge acknowledged that each transaction, viewed in isolation from the rest, would not have aroused in Mr.

Michaud the suspicion required to constitute wilful blindness. The judge acquitted Mr. Michaud of several counts, which related to some of the earlier transactions, but was satisfied on the criminal standard that Mr. Michaud had been wilfully blind with respect to 134 transactions. Accordingly, the judge convicted him of the corresponding counts under s. 239(1.1)(

a) of the Income Tax Act. [14] In the aftermath of the trial, Mr. Michaud brought a motion for mistrial, alleging unfairness resulting from the lack of prosecution notice of intent to invoke the similar fact evidence rule, and from the judge’s unprompted raising of the matter. The motion was dismissed. III. Issues on Appeal [15] Mr. Michaud raises four grounds of appeal, two of which are raised as alternative grounds. Because of the bifurcated hearing arising out of my colleague’s September 6, 2011, direction, the latter are not being considered at this point.

Those two grounds relate to the proper test to determine wilful blindness and to the weight the judge gave to certain facts in applying the test for the admissibility of similar fact evidence. For the purpose of the two grounds of appeal my colleague ruled should be determined first, I will presume the substantive criteria for the admission of similar fact evidence could be met. What is contested is the procedure leading to the admission of the evidence as similar fact evidence, at the instance of the judge, once all the evidence had been heard and final arguments made. According to both Mr.

Michaud’s Notice of Appeal and his written submission, the two grounds of appeal for preliminary consideration raise the

following questions: 1) Did the trial judge err in law by admitting as similar fact evidence in support of each of the counts the entirety of the evidence adduced at trial thereby violating the appellant’s right to be tried by an independent and impartial tribunal as provided in s. 11(

d) of the Canadian Charter of Rights and Freedoms ? 2) Did the trial judge err in law in hearing a motion for the admission of similar fact evidence once the trial was concluded, in violation of the accused’s right to be tried by an independent tribunal after a fair trial as provided in s. 11(

d) of the Charter ? [16] If either of those questions is answered affirmatively, Mr. Michaud raises a third question, which is whether the similar fact evidence should be excluded on application of s. 24(2) of the Charter. [17] As will be seen below, I will frame the appeal in markedly different terms. IV. Analysis A. Preliminary observations regarding the grounds of appeal [18] With respect, although the grounds of appeal and Mr. Michaud’s arguments, as framed, raise Charter issues, there is no need to resort to the Charter to determine this appeal.

In my view, the principal question, properly framed, is whether the admissibility of similar fact evidence is predicated upon proper notice of intention being given before the accused embarks on his defence. If so, the appeal should be determined on that basis. [19] I am not in the least persuaded that a judge who raises a question of law after arguments have been made but before decision is rendered enters the fray and demonstrates partiality. In my view, the proposition is absurd.

In the present case, the trial judge noted he had not been formally asked to consider similar fact evidence, and invited counsel to address the question whether he could nevertheless do so. This is a question of law. Both parties received proper notice and were afforded an opportunity to file written submissions and make oral

arguments. In my view, the characterization of how the similar fact issue came to be argued as going to the partiality of the judge or to the fairness of the trial is preposterous, as is the reliance on cases that can easily be distinguished. [20] Mr. Michaud relies on R. v. Shumka , [1985] B.C.J. No. 675 (B.C. Co. Ct) (QL) , a case where, after the prosecution had closed its case and the defence had elected to call no evidence, the trial judge, on his own motion, admitted a document that had been only marked for identification, and then declared the Crown's case concluded. On appeal, Millward Co. Ct.

J. quashed the conviction on the grounds the trial judge had “departed from the even-handed independence and impartiality required of a trier of a criminal cause” (para. 11). One of the reasons given was that the judge had “on his own initiative, and without any opportunity to the accused person or his counsel to make submissions on the point , [taken] upon himself to admit the certificate in question” (para. 11) (Emphasis added). Evidently this is not what happened in the present case.

The trial judge informed counsel of a concern on a question of law regarding the use he could make of evidence already properly adduced before him, and afforded both parties ample opportunity to make submissions on the point. [21] While I am able to distinguish Shumka , this should not be interpreted as an endorsement of the County Court’s decision. I note that Shumka appears to have been cited only once. In R. v. Park , 2009 ABQB 470 , [2009] A.J.

No. 846 (QL) , Ouellette J. reviewed Shumka and other cases and concluded that “where the admissibility is clear and the evidence has been adequately addressed by the relevant witness or witnesses, the weight of authority is that the failure to make the evidence a formal exhibit is a matter of form only and does not undermine an otherwise proper conviction” (para. 19). [22] The other case upon which Mr. Michaud relies in support of his contention he was not judged impartially is F.Y. v. R. , 2011 NBCA 86 , 378 N.B.R. (2d) 37.

That was a case where the Court found that the judge had “demonstrated a closed mind on the subject of a conditional sentence before having heard from the appellant” (para. 8). It has no application whatsoever in the present case. [23] For these reasons, I would not give effect to the first ground of appeal. For the same reasons, I would not accede to the arguments relating to judicial impartiality or independence raised in the second ground of appeal.

Nevertheless, the arguments made at the hearing of the appeal focused more on the question whether fairness requires notice to be given before the similar fact evidence rule can be invoked, than on any alleged Charter violation. In my view, the

matter should be decided on that basis. The question of fairness is predicated onthere being a rule of law establishing procedural criteria, including notice, before anyuse can be made of evidence relating to one count across all counts in a multi-countindictment. If there is such a rule and if the procedural criteria for admission weremet, there was no error, and trial fairness was not affected. On the other hand, ifthere is such a rule and the criteria were not met, the judge erred in law and theconviction cannot stand, regardless of any s. 11(

d) Charter violation. [24] Before addressing the question of notice inapplying the similar fact rule, one must consider the more fundamental question ofwhether the rule even applies in the circumstances of this case. It is the prosecution’scontention that it does not. In disposing of the appeal, I will therefore focus on thefollowing questions: 1) Is the similar fact evidence rule triggered in this case? 2) If so, was there a requirement for the prosecution to give notice of its intent to askthe judge to consider the evidence across all counts? 3) If so, what consequences flow from the failure to give notice? B.

The similar fact evidence rule in multiple-count matters tried by judge alone [25] The first question that arises in this appeal, as Ihave framed it, is whether the similar fact evidence rule is triggered in a case of amultiple-count indictment tried by judge alone. The prosecution argues it is not. Idisagree. [26] The origin of the similar fact evidence rule andits rationale are discussed in R. v. B. (C.R.), (SCC), [1990] 1 S.C.R.717, [1990] S.C.J. No. 31 (QL), and again in R. v. Handy. Handy stands as themodern starting point for the application of the rule. For the purpose of this appeal

there is little value in detailing the reasons for those decisions. Briefly stated, the ruleprovides that proffered similar fact evidence of a discreditable nature ispresumptively inadmissible unless the prosecution can show on a balanceof probabilities that the probative value of the evidence outweighs the potential formisuse. The misuse would include improper conclusions regarding either anaccused’s character or his/her propensity to commit the offence.

Exception to thispresumptive inadmissibility is justified where it is shown “that the deficit of probativevalue weighed against prejudice on which the original exclusionary rule is predicatedis reversed.” In those situations, “[p]robative value exceeds prejudice, because theforce of similar circumstances defies coincidence or other innocent explanation”(para. 47 of Handy) [Emphasis added]. [27] Admittedly, the vast majority of “similar fact”situations arise when the prosecution proffers evidence of discreditable conduct thatis not covered by the indictment.

In those situations, the trial judge must determinewhether the evidence can be adduced before the trier of fact. That is not, however,the situation in the present case. The prosecution is allowed to join one or morecounts arising out of different transactions in the same indictment, although anaccused can apply for severance. When deciding whether to sever the counts, thejudge often has to consider whether the evidence stands to be admitted across allcounts on application of the similar fact evidence rule. If so, there would be littlevalue in severing the counts.

Where severance is not ordered in a multi-countindictment, the evidence relating to each individual count is admitted, but it isadmitted solely for the purpose of determining whether proof has been made of thatparticular count. The evidence cannot be considered across all counts unless it isruled admissible for such purpose on application of the similar fact evidence rule. Drapeau C.J.N.B. makes this abundantly clear in R. v. Cote, supra: In R. v.

Paquet (R.) et al. (1999), (NB CA), 219 N.B.R. (2d) 130(C.A.), at para. 25, the Court observed that it was "settled law that, in a trial on amulti-count indictment against several accused, the trial judge must delineate for thejury what evidence it is legally entitled to consider for the purposes of determiningwhether the Crown has proven the guilt of a particular accused in respect of eachcount against him or her". Needless to say, that time-honored rule applies to a multi-count indictment against a single accused.

When evidence relating to one count is notadmissible as similar fact evidence on the other counts in the indictment, the trialjudge must make plain to the jurors that they must refrain from using that evidencein determining the other counts. The trial judge must also instruct the jurors thatthey are required to consider each count separately. See R. v. M.(B.) (1998), (ON CA), 130 C.C.C. (3d) 353 (Ont.C.A.), at para. 41, and ProfessorG.A. Ferguson and Justice J.C.

Bouck, Canadian Criminal Jury Instructions, vol. 1,looseleaf (Vancouver: The Continuing Legal Education Society of British Columbia,1994), at para. 4.61, sub-paragraph 10. [para. 5]

[28] Recently, in R. v. Johnson , 2011 O N SC 195 , [2011] O.J. No. 317 (QL) , Hill J., noting that similar fact evidence is “presumptively inadmissible and is only ‘exceptionally’ admitted where the Crown discharges its burden of establishing the case for admission” also pointed out that “the test for admission is the same whether the evidence is extrinsic or arises from the proof of other counts in the indictment” (para. 131). I agree. [29] The bulk of cases on the similar fact evidence rule arise out of jury trials.

These cases involve situations where the trial judge is first required to determine admissibility and then to give proper instructions to the trier of fact as to the use that can be made of the evidence. The jury must be instructed not to reach improper conclusions on the basis of the accused’s character or propensity. Moreover, in a multi-count indictment, another danger the instructions seek to avoid is a conviction based on the number of counts in the indictment as opposed to a proper assessment of the strength of the evidence in support of each count.

However, the situation is somewhat different in non-jury trials because trial judges know not to reach a verdict on the basis of an accused’s character or propensity and know how to assess the evidence on any particular count. This said, one should nevertheless not confuse the matter of limiting instructions with admissibility.

Even in a judge alone trial, where the potential for misuse is significantly diminished, if not entirely nil, the rules of admissibility nevertheless apply Therefore, in a multi-count indictment, before evidence relating exclusively to a particular count can be considered across all counts, it must meet the criteria for admissibility as similar fact evidence. This is because the evidence on the particular count, by its very nature, relates to discreditable conduct. [30] This case is a perfect illustration.

The conduct alleged in each count under the Income Tax Act relates to the filing of fraudulent documents: clearly discreditable conduct. The judge was being asked to find culpable mens rea for a particular count on the basis of evidence establishing only the actus reus of the other counts, there being no independent proof of mens rea for any one of the counts.

In such a case, since the proffered evidence relates to discreditable conduct, the evidence relating to one count is presumptively inadmissible across all counts unless the prosecution shows on a balance of probabilities that, on application of the criteria set out in Handy , the evidence is admissible across all counts. That criteria requires to the judge to: (1) determine the probative value of the evidence; (2) assess the prejudice to the accused; and, (3) weigh the probative value versus the prejudice.

To determine the probative value of the evidence, the judge must consider a number of factors, such as the potential for collusion, the issue in question at trial, the similarities and dissimilarities between the facts charged and the similar fact evidence, the strength of the evidence that the similar acts actually occurred. Assessment of the prejudice takes into account both moral prejudice and reasoning prejudice. In the end, the trial judge must decide, considering society’s interest in

getting at the truth, and the interest of both society and the accused in a fair process, whether the probative value outweighs the prejudice: see Handy , at paras. 98-152. [31] This is the very approach the trial judge followed in ruling on the admissibility of the evidence across all counts. In my view, he was quite right to recognize the need to apply the similar fact evidence rule. [32] As stated earlier, one of the grounds of appeal that is not considered in this portion of the bifurcated appeal relates to whether the trial judge erred in applying the test. Mr.

Michaud does not contend the judge applied the wrong test; only that he placed undue emphasis on some factors. For the purpose of the grounds of appeal under consideration, I accept the evidence proffered on each count was substantively admissible across all counts. Thus, the questions addressed below focus only on any procedural prerequisites for admissibility. C.

The requirement for notice [33] To summarize, I am of the view the trial judge was correct in ruling the evidence adduced at trial for a particular count was not admissible across all counts unless the evidence met the test for admissibility of similar fact evidence. Mr. Michaud certainly agrees with that position. What he does not agree with is that similar fact evidence could be admitted without notice to him, at least before he embarked on his defence.

He supports his position with the following excerpt from David Watt, Watt’s Manual of Criminal Evidence, (Toronto: Carswell, 2011): The argument concerning admissibility as evidence of similar acts may be made: i. At the outset of trial proceedings, where an issue is raised whether the counts may properly be tried together; and/or ii. At the conclusion of [the prosecution’s] case. In every event, fairness would seem to require a determination of admissibility before [the accused] embarks upon his/her defence. [pp. 527-528]

Reference can also be made to John L. Gibson’s Criminal Law Evidence, Practice and Procedure , looseleaf (Toronto: Carswell, 1988), where, commenting on this same issue, he states that “[i]n the absence of a jury, it is preferable that the prosecutor alert the defence in advance of its intention to rely on similar fact reasoning” (p. 56A- 3). [34] In my view, support for these statements is found in the rationale for such an approach: it is the prosecutor who knows how he/she will argue the case and it is only fair that the defence be fully informed of the case it has to meet.

The very fact that the rule regarding similar fact evidence places an onus of proof on the prosecution supports the notion of an “application” for consideration of similar fact evidence and fair notice. The dearth of cases establishing or applying procedural criteria for application of the similar fact evidence rule is indubitably because notice is regularly given. For example, in R. v.

Dubé , 2011 NBCP 30 , 379 N.B.R. (2d) 275, another recent prosecution of multiple counts alleging the filing of fraudulent tax returns, Duffie P.C.J. noted, at para. 84, that, at the outset of trial, the prosecutor had announced his intention to rely on the similar fact evidence rule. [35] There is also jurisprudential support for the understanding that an “application” or notice is expected. In R. v. Last , 2009 SCC 45 , [2009] 3 S.C.R. 146 , the Supreme Court was discussing the severance of counts.

Writing for the Court, Deschamps J. observed as follows: In the case at bar, an issue facing the trial judge at the time of the severance hearing was the fact that the Crown indicated that it wanted to wait until the conclusion of its evidence before making a similar fact evidence application. There is no procedural rule requiring the Crown to bring the similar fact evidence application at the time of the severance application: see D. Watt, Watt's Manual of Criminal Evidence (2009), at s. 34.02.

Given that the assessment of the similar fact evidence application can be a difficult task, in many cases such an assessment may be best done once all of the Crown's evidence has been tendered. [para. 34] While not expressly endorsing a notice requirement, Last does contemplate a Crown application for the determination of admissibility. [36] In Johnson, Hill J. notes:

In the instance of a multi-count indictment involving different complainants wherethe prosecution seeks count-to-count admissibility of what is submitted to be similarfact evidence, the parties are frequently content to deal with the admissibility issuenot as a pre-trial application but rather at the conclusion of all of the Crown'sevidence: R. v. Last (2010), 2009 SCC 45 , 247 C.C.C. (3d) 449 (S.C.C.) atpara. 34. In some trials, agreement is reached to argue the admissibility question atthe end of the case: see for example, R. v. U.C., 2009 ONCA 367, at para. 19. [para.130] [37] In R. c.

Charbonneau, 2005 QCCA 1054, [2005] J.Q. no 16277 (QL), Côté J.A. held it was sufficient that the prosecution hadraised the issue of similar fact evidence at the end of its case. [38] Fraud cases are often tried by multi-countindictments, and a review of these types of cases illustrates the practice of a Crownapplication for the court to consider similar fact evidence across all counts: Stymiest,R. v. Kirk, (ON CA), [2004] O.J. No. 3442 (C.A.) (QL) at para. 7,and R. v. McNamara et al. (No. 1), (ON CA), [1981] O.J. No. 3254(C.A.) (QL) at para. 158, aff’d (SCC), [1985] 1 S.C.R. 662, [1985]S.C.J. No. 28 (QL).

Admittedly, there are fraud cases where evidence was consideredacross all counts without reference in the reasons for decision to a Crownapplication: R. v. Shead, [1996] M.J. No. 466 (Q.B.) (QL), and R. v. Wuckert, [1999]M.J. No. 260 (Q.B.) (QL), sentence varied with no reference to similar fact evidence[2000] M.J. No. 159 (C.A.) (QL).

In addition, there is one case where an appellatecourt specifically stated that, where evidence is only used to show the context in whichthe crimes took place, the evidence can be used for all counts without being admittedas similar fact evidence: R. v. deKock, 2009 ABCA 225, [2009] A.J. No. 628 (C.A.)(QL). [39] The deKock case involved theft and fraudarising from situations where a number of the appellant's customers had paid formerchandise they never received.

There had been no formal Crown application touse “similar facts” across all counts and the defence had not agreed to the use of theevidence in this manner. After the trial judge considered the evidence across allcounts, the case made its way to the Court of Appeal. In this respect, that caseresembles the present one. However, there is a striking difference between the two. In deKock, the Court of Appeal considered the issue more as a “‘pooled evidence’case than a ‘similar fact evidence’ case”, which, as I understand it, relates to the usethat can be made of the evidence and not to its admissibility (see R. v.

Powell, 2010ONCA 105, [2010] O.J. No. 542 (QL) at paras. 42-43). In reaching the conclusion thatthere was no error or unfairness in the trial judge’s approach, the Alberta Court ofAppeal noted the accused himself had, during argument, invited the trial judge to

consider the totality of the evidence. [40] In fraud cases where wilful blindness is invoked, case law shows the totality of evidence is only considered after it is concluded the evidence meets the standard for similar fact evidence (see R. v. Poonai , [2007] O.J. No. 126 (Ont. S.C.J.) (QL) and R. v. Winter , [2008] N.J. No. 158 (N.L.P.C.) (QL) ). [41] While there is support for the view that notice of the Crown’s intention to rely upon similar fact evidence should be given to the defence, there is also jurisprudential support for the proposition that failure to give notice is not necessarily fatal. In R. v.

T.B.L. , [2003] O.J. No. 1502 (C.A.)(QL) , testimonies relating to independent counts were allowed to be considered for both counts as similar fact evidence in a jury trial, even though the defence had only been given notice at the pre-charge conference. On appeal, the accused argued the late notice prejudiced his defence.

He maintained that, had timely notice been given, he might have altered his defence strategy, claiming that “he might have moved for severance and if unsuccessful, he might have focused more intensely on the dissimilarities in the complainants’ evidence or alternatively, on the likelihood of collusion” (para. 8). In a brief endorsement, the Ontario Court of Appeal refused to give effect to this argument: First, we reject the underlying premise that the Crown was obliged to give the defence advance notice of its intention to use the complainants' evidence as similar fact evidence.

As a matter of law, the defence knew or should have known that this possibility existed from the outset. Absent an express undertaking from the Crown not to use the evidence in this fashion (of which there was none here), the defence cannot claim that it was misled. Accordingly, we reject the submission that lack of notice occasioned prejudice to the defence and resulted in an unfair trial. Second, even if timely' notice had been given, we doubt that it would have altered the defence strategy in any meaningful way. A severance motion would almost certainly have failed.

The dissimilarities in the complainants' evidence were obvious and more intense cross-examination would have accomplished little. The essence of the defence was that the complainants and their immediate family members had conspired together to "get" the appellant and their evidence was the product of collusion. This theme was pervasive throughout the trial and it is fanciful to think that it would have received more attention had the defence been alerted to the similar fact issue. Accordingly, we would not give effect to the first branch of the appellant's argument. [paras. 10-11]

[42] What I discern from a review of academic writings, the commonly accepted practice, and the jurisprudence is this: (1) for the sake of fairness, there is a clear expectation that the prosecutor will apply, or give notice of intention, to have the Court consider similar fact evidence; (2) the prosecution’s application is made, or the notice of intention is given, in a timely fashion and, at the very latest, as the prosecution closes its case; and (3) except where agreement is reached to argue the admissibility question at the end of the case, the determination of admissibility is made before the accused embarks on his or her defence. [43] The rationale for requiring timely notice and timely adjudication of the similar fact issue is obvious; it avoids unfairness to the accused by unequivocally disclosing the case he or she has to meet.

In all but rare cases, the prosecution knows from the outset of trial whether it might apply to have evidence considered as similar fact evidence. Thus, there is nothing onerous about requiring the prosecution to inform the judge and the defence of its intention at the outset of trial. Such an approach has the dual advantage of alerting the defence to the case it may have to meet and of allowing the judge to begin focusing on the admissibility criteria set out in Handy as the proceeding unfolds.

This said, there might be situations where an unexpected development in the course of the prosecution’s case makes similar fact evidence relevant or admissible where it had not otherwise been contemplated.

However, it is difficult to envision any situation where the prosecution would not, at the very latest upon closing its case, recognize the need to ask the Court to consider similar fact evidence. [44] Obviously, any claim of unfairness, such as those made in this case and in T.B.L. , would be avoided with the implementation of a rigorous procedure requiring both timely notice and adjudication of the similar fact issue before the defence embarks upon his/her defence. However, as in most matters, some flexibility must be built into the procedural requirements for the admissibility of similar fact evidence.

There are cases, as T.B.L. illustrates, where the failure to give notice and to determine the matter of similar fact evidence before the accused embarks on his/her defence will be of no consequence. [45] In my view, the propositions in academic writings and case law, together with the generally accepted practice, regarding notice and adjudication of similar fact issues before an accused embarks on his/her defence, can be reconciled with T.B.L. and, for that matter with deKock, by the rejection of a strict procedural rule requiring the prosecution to always give advance notice of its intention to use certain evidence as similar fact evidence.

I cannot rationalize an inflexible rule of law that would automatically exclude such evidence for the mere

failure of the prosecution to follow the usual procedure. Oversights happen! On the other hand, there is no need to cite authority for the proposition that courts must react where trial fairness may have been compromised.

Thus, in my view, where timely notice is not given and where adjudication of a similar fact issue is not sought until after an accused embarks on his/her defence, similar fact evidence should not be admitted where it is shown that the lack of notice, or the late adjudication of the issue, has occasioned prejudice to the defence and resulted in an unfair trial. [46] I believe that timely notice, together with adjudication of a similar fact issue before an accused embarks on a defence, is already the norm throughout the country. In my view, there is a sound basis for this practice.

It is the prosecution that knows if a similar fact evidence issue will be raised and it is only fair that it advise the defence at the earliest opportunity and only fair that, in the absence of an agreement to defer the matter until the very end of trial, the issue be determined before an accused embarks on his/her defence.

While I decline, as did the Ontario Court of Appeal in T.B.L. , to recognize this practice as a strict rule of law, I certainly allow, as I believe the Ontario Court did, that, in situations where prejudice to the defence can be shown, the similar fact evidence should be rejected on the basis of untimely notice or late adjudication of the issue. [47] In my view, the situation is the same whether the issue of similar fact evidence is raised by the prosecution at the end of trial, by the trial judge in the course of argument, or, as in this case, by the trial judge after arguments.

If there is no prejudice, there is no unfairness. If there is prejudice, the evidence should be rejected. Or, as in this case, the evidence being already admitted, it should not be considered across all counts. D. Application to the present case [48] Having rejected Mr. Michaud’s contention that the absence of notice automatically results in the rejection of similar fact evidence such that the judge could not consider the evidence across all counts, it is now necessary to examine his contention that it occasioned prejudice to his defence. [49] I start with the premise, as in T.B.L. , that as a matter of law Mr.

Michaud should have known from the outset of the possibility the prosecution would invoke the similar fact evidence rule and ask the court to consider the evidence across all counts. One would certainly have expected that in the circumstances of this case. I admit that, at first blush, it appeared this ground of appeal might have met the same fate as the one in T.B.L. However, upon closer scrutiny of the arguments Mr. Michaud made in support of the rejection of the

similar fact evidence, I found cause to reconsider. [50] First, the prosecution argued it had no intention to make a motion for consideration of the evidence across all counts because it did not consider the similar fact rule applicable in this case. In fact, even when the judge raised the issue, the prosecution argued it was not necessary. Thus, nothing during trial alerted the defence the similar fact rule would be raised. Secondly, and more importantly, at one point during the trial, the prosecution tendered tables compiling details of the various transactions for which Mr. Michaud had been charged.

As the trial judge points out in his decision, Mr. Michaud objected to the admission of these on the grounds they failed to provide the entire context in which the transactions occurred. Moreover, and perhaps determinatively, is the fact that when Mr. Michaud testified, the judge requested the defence not go through each of the almost 2,300 transactions he had done in the time frame in question, but that he rather lump many of those together. Since no one was suggesting that all evidence would be considered across all counts, the defence acquiesced.

When the judge later raised the similar fact issue, the defence reminded the judge (actually it did so in the motion for a mistrial) that its presentation of the evidence had clearly been designed to answer only the case that was presented by the prosecution, which was evidence relating to each individual count, and not one where the evidence would be considered across all counts. [51] I see merit in the defence position.

This was a case invoking the concept of wilful blindness, and the context in which the transactions that were the subject matter of the charges occurred was critically important if the court was to consider the evidence across all counts. The 148 transactions identified in the indictment constituted only a small fraction of the tax returns Mr. Michaud prepared for clients in the early months of 2007. As the defence argued, if the judge was going to rely on these to say Mr.

Michaud should have known something was amiss, he should have been given the entire picture, and not just the one depicted in the prosecution’s tables. How many transactions occurred between the various ones that form the basis for the charges is a question that would have been relevant. How many of these involved individuals with legitimate documents from the same employers as those in the false documents is another. If a judge is going to infer wilful blindness from similarities in a series of transactions, the defence should be given every opportunity to place the transactions in full context.

Here, it is clear the defence was discouraged from doing that, and it acquiesced because no one was arguing the evidence would be considered across all counts. In those circumstances, I find prejudice to the defence. This is not a situation like T.B.L. , where the defence strategy would not have been altered in any way. In fact, as the defence forcefully argued, its strategy was indeed altered, and the judge did not benefit from seeing the entire context in which the small percentage of transactions that form the subject matter of the charges occurred.

[52] In my view, the judge erred in holding the late admission of the evidence as similar fact evidence did not prejudice the defence and result in an unfair trial. In my view, it did. As a result, the judge erred in considering the evidence across all counts. For those reasons, I would allow the appeal with respect to the convictions under s. 239(1.1)(

a) of the Income Tax Act. Those convictions should be quashed. The judge unequivocally held that, but for his ruling on the similar fact evidence and his consequential consideration of the evidence across all counts, he would have acquitted. In these circumstances, I think it only proper that the convictions be quashed and a verdict of acquittal be entered with respect to all those counts. [53] This leaves four counts under s. 6.1 of the Tax Rebate Discounting Act with respect to which convictions were entered .

The trial judge did not rely on similar fact evidence to arrive at these verdicts because wilful blindness was not the basis upon which he found the requisite mens rea . The reasoning above, therefore, does not affect these convictions. Moreover, the two grounds of appeal that were severed and that stand to be heard later would have no impact since they relate to wilful blindness and to the weight put on certain factors in determining the similar fact issue. Thus, these four convictions would be unaffected by the second portion of the appeal, which is rendered moot by the disposition set out below.

It follows that I would dismiss the appeal as it relates to those four convictions. V. Disposition [54] It is for these reasons I agreed to allow the appeal with regard to the convictions under s. 239(1.1)(

a) of the Income Tax Act , for which a verdict of acquittal has been entered with respect to all counts, and to dismiss the appeal with respect to the convictions under s. 6.1 of the Tax Rebate Discounting Act . ___________________________ J. C. Marc Richard, j.c.a.

______________________________ B. Richard Bell, j.c.a. ______________________________ Kathleen A. Quigg, j.c.a.