R. v. McGrath, 2014 NLCA 40

Date: 20141031 Docket: 12/91 Citation: R. v. McGrath , 2014 NLCA 40 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: KERI LYNN MCGRATH APPELLANT AND: HER MAJESTY THE QUEEN RESPONDENT Coram: Rowe, White and Hoegg JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador Trial Division (G) 201101G7154 2012 NLTD(G) 161 Appeal Heard: October 20, 2014 Judgment Rendered: October 31, 2014 Reasons for Judgment by Rowe J.A. Concurred in by White and Hoegg JJ.A. Counsel for the Appellant: Ernest Gittens Counsel for the Respondent: Frances Knickle Q.C.

Rowe, J.A.: [1] Keri Lynn McGrath appeals her conviction for fraud over $5000 contrary to s. 380(1)(

a) of the Criminal Code. The trial judgefound her guilty of having defrauded the Newfoundland and Labrador Brain Injury Association (NLBIA) of $38,356.60 between January30, 2009 and January 17, 2010. Ms. McGrath was at the time Executive Director of the NLBIA. [2] The convictions related to 51 transactions involving: (1) reimbursement of expenses that were not incurred; (2) salary payments in excess of those authorized; (3) bonuses to which Ms. McGrath was not entitled; and (4) mileage payments that were not authorized. [3] The trial lasted 12 days and involved testimony by nine witnesses, including Ms.

McGrath, representatives of the NLBIA andthe investigating police officer. There was also extensive documentary evidence, e.g. minutes of the NLBIA board of directors, chartsprepared by Ms. McGrath, bank and credit card records, etc.

ISSUES [4] The appellant raised four issues on appeal: (1) did the trial judge apply the proper legal test for fraud; (2) did the trial judge properly apply the doctrine of reasonable doubt, including the law set out in R. v. (W.)D., (SCC),[1991] 1 S.C.R. 742, and subsequent cases where the accused testifies; (3) did the trial judge intervene during the trial so as to create unfairness to the accused; and (4) was there failure to disclose documents such that the accused was denied the opportunity to make full answer and defence. ANALYSIS

(1) Legal Test for Fraud [5] Section 380(1)(

a) of the Criminal Code reads: 380.

(1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of thisAct, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service, (

a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of theoffence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars … [6] The Supreme Court of Canada dealt with the offence of fraud in R. v. Théroux, (SCC), [1993] 2 S.C.R. 5. McLachlin J. (as she then was) writing for the majority stated: … The prohibited act is deceit, falsehood, or some other dishonest act.

The prohibited consequence is depriving another of whatis or should be his, which may, as we have seen, consist in merely placing another’s property at risk. The mens rea would then consist inthe subjective awareness that one was undertaking a prohibited act (the deceit, falsehood or other dishonest act) which could causedeprivation in the sense of depriving another of property or putting that property at risk.

If this is shown, the crime is complete. … Toput it another way, following the traditional criminal law principle that the mental state necessary to the offence must be determined byreference to the external acts which constitute the actus of the offence…, the proper focus in determining the mens rea of fraud is to askwhether the accused intentionally committed the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiring theconsequences proscribed by the offence (deprivation, including the risk of deprivation).

The personal feeling of the accused about themorality or honesty of the act or its consequences is no more relevant to the analysis than is the accused's awareness that the particularacts undertaken constitute a criminal offence. This applies as much to the third head of fraud, “other fraudulent means”, as to lies and acts of deceit. Although other fraudulentmeans have been broadly defined as means which are “dishonest”, it is not necessary that an accused personally consider these means tobe dishonest in order that he or she be convicted of fraud for having undertaken them.

The “dishonesty” of the means is relevant to thedetermination whether the conduct falls within the type of conduct caught by the offence of fraud; what reasonable people considerdishonest assists in the determination whether the actus reus of the offence can be made out on particular facts. That established, it needonly be determined that an accused knowingly undertook the acts in question, aware that deprivation, or risk of deprivation, could followas a likely consequence. . . .

These doctrinal observations suggest that the actus reus of the offence of fraud will be established by proof of: 1. the prohibited act, be it

an act of deceit, a falsehood or some other fraudulent means; and 2. deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim's pecuniary interests at risk. Correspondingly, the mens rea of fraud is established by proof of: 1. subjective knowledge of the prohibited act; and 2. subjective knowledge that the prohibited act could have as a consequence the deprivation of another (which deprivation may consistin knowledge that the victim's pecuniary interests are put at risk). Where the conduct and knowledge required by these

definitions are established, the accused is guilty whether he actuallyintended the prohibited consequence or was reckless as to whether it would occur. (Pages 19-20.) [7] To simplify, for fraud the mens rea is the awareness by the accused that he or she is using dishonest means that could bringabout a deprivation and the actus reus is the use of dishonest means resulting in a deprivation. [8] In his decision, the trial judge reproduced s. 380(1)(

a) of the Criminal Code, then went on to state: [3] As with all criminal trials, the Crown must establish the guilt of the accused beyond a reasonable doubt. Throughout thisdecision I will use the word “prove”, however, it must always be read to mean “prove beyond a reasonable doubt”. [4] The two essential elements of the crime of fraud that the Crown must prove are: 1. a dishonest act, and 2. a deprivation. [5] The Crown must prove both the actus reus which is the existence of

an act and the mens rea which is the intention or state ofmind of the accused which accompanies the actus reus. In this case the Crown must prove that the accused transferred money from theNewfoundland and Labrador Brain Injury Association (“Association”) to herself. The Crown must also prove that the accused intendedto defraud the Association of that money. In other words, the Crown must prove that the accused knowingly undertook the dishonestacts of transferring the Association’s money to herself and that the accused was aware that deprivation would result from that conduct. [6] In R. v.

Theroux, (SCC), [1993] 2 S.C.R. 5 [at pages 19-20] McLachlin, J. (as she then was) in dealing with theintention of the accused in relation to the offence of fraud, stated: . . . The mens rea would then consist in the subjective awareness that one was undertaking a prohibited act (the deceit, falsehood or otherdishonest act) which could cause deprivation in the sense of depriving another of property or putting that property at risk.

If this isshown, the crime is complete. . . . [9] Counsel for the appellant maintained that the trial judge misstated the elements of the offence by failing to refer to thecomponent of mens rea wherein an accused is subjectively aware that his or her actions are dishonest. He referred to the followingpassage in paragraph 5 quoted above, where the trial judge wrote, “[T]he Crown must prove that the accused knowingly undertook thedishonest acts”.

Counsel argues that this statement shows that the trial judge failed to appreciate that the Crown had to prove that Ms.McGrath knew the acts she was committing were dishonest. This is an unduly narrow reading of what the trial judge wrote.

To thecontrary, I would read the passage to include that the accused must know that the acts in question were dishonest. [10] This is reinforced by the quotation by the trial judge from Théroux, which includes the following passage: The mens rea would then consist in the subjective awareness that one was undertaking a prohibited act (the deceit, falsehood or otherdishonest act) which would cause deprivation … . (Underlining added.

Paragraph 6 of the trial judge’s decision; Théroux at paragraph 24.) In this passage, the “subjective awareness” by the accused of a dishonest act is expressly referred to. [11] In his consideration of the various transactions (at paragraphs 29-37 of his decision) in certain instances the trial judge expresslystates that Ms.

McGrath was aware that she was committing a dishonest act. [12] For example, in paragraph 32, the trial judge wrote: I find that the accused knew that she was not entitled to the money that she transferred from the Association to herself for either “pay” or“back pay”. (Underlining added.) [13] In other instances, no such express finding was stated; but rather, it was implied.

For example, in paragraph 37 where Ms.McGrath transferred funds from the NLBIA to herself for office equipment, the trial judge wrote: … I find that the accused did not purchase these items [a computer, fax machine and printer] for the Association and was not entitled to

any reimbursement. The implication is inescapable; if the “purchase” never occurred (as the trial judge found), then Ms. McGrath must have been aware thattaking funds from the NLBIA as “reimbursement” was a dishonest act. [14] In the result, the trial judge’s decision shows, first, that he appreciated that the Crown had to prove the knowledge componentof the actus reus and, second, that his findings of fact were to the effect that the accused was “subjectively aware” that her acts weredishonest.

(2) Reasonable Doubt [15] Ms. McGrath testified, denying the charges against her. While the trial judge referred on several occasions to the requirementfor proof beyond a reasonable doubt, he made no reference to R. v. (W.)D., nor did he expressly ask the three questions set out at page758 of R. v. (W.)D. [16] To recall, Cory J. (for the majority) wrote at pages 757-58 as follows: … A trial judge might well instruct the jury on the question of credibility along these lines: First, if you believe the evidence of the accused, obviously you must acquit.

Second, if you do not believe the testimony of the accused but you are left in reasonable doubt by it, you must acquit. Third, even if you are not left in doubt by the evidence of the accused, you must ask yourself whether, on the basis of the evidence whichyou do accept, you are convinced beyond a reasonable doubt by that evidence of the guilt of the accused. . . . Nonetheless, the failure to use such language is not fatal if the charge, when read as a whole, makes it clear that the jury could not havebeen under any misapprehension as to the correct burden and standard of proof to apply: R. v.

Thatcher, supra. [17] In 2009, this Court reviewed and applied case law from the Supreme Court of Canada following on R. v. (W.)D. In R. v. G.R.P.,2009 NLCA 37, 287 Nfld. & P.E.I.R. 56, Wells J.A. (as he then was) wrote: [11] With respect to Mr. G.R.P.’s contention that “the trial judge failed to properly consider the test from R. v. W.(D.)”, the Crown, inresponse, relied on R. v. Y.(C.L.), 2008 SCC 2 , [2008] 1 S.C.R. 5. There Abella, J., at paragraph 7, wrote: However, and significantly, this Court has also consistently confirmed that these steps need not be religiously followed orarticulated.

Cory J. made this very clear in W. (D.): … the failure to use such language is not fatal if the charge, when read as a whole, makes it clear that the jury could not have been underany misapprehension as to the correct burden and standard of proof to apply. [p. 758] He reiterated this caveat in R. v. S. (W.D.), (SCC), [1994] 3 S.C.R. 521, when he said, at p. 533, that the W. (D.)procedure was not meant to be followed “word for word as some magic incantation”.

The key is whether the correct burden and standardof proof were applied, not what words were used in applying them. [12] The common sense in that approach is obvious. However, where a trial judge’s description of the R. v. W.(D.) principle is lessthan clear, it raises a red flag. An appellate court should then be alert to assessing carefully the application of the burden and standard ofproof to ensure that the trial judge applied them correctly. . . . [15] The Supreme Court of Canada was dealing with an appeal involving issues similar to the issues in this appeal in R. v.

Dinardo,2008 SCC 24 , [2008] 1 S.C.R. 788. There, delivering the judgment of the Court, Charron, J. wrote: [23] … the assessment of credibility will not always lend itself to the adoption of the three distinct steps suggested in W. (D.); it willdepend on the context. What matters is that the substance of the W. (D.) instruction be respected.

In a case that turns on credibility, suchas this one, the trial judge must direct his or her mind to the decisive question of whether the accused’s evidence, considered in thecontext of the evidence as a whole, raises a reasonable doubt as to his guilt. … (Underlining in the original.) See also R. v. Phelan, 2013 NLCA 33, 337 Nfld. & P.E.I. R. 64, at para. 17. [18] Did the trial judge properly apply the doctrine of reasonable doubt?

That depends on whether (as this Court held in G.R.P.), ineffect, the trial judge dealt with the three questions set out in R. v. (W.)D. [19] Did the trial judge “believe the evidence of the accused”? It is clear that the judge did not. [24] The accused testified over a three day period. She is a college graduate and has a great deal of “real world” experience. She isnow 41 years old. It was obvious that she is a bright and intelligent woman. Nevertheless, I found her testimony to be very problematic. Occasionally, she was non-responsive to questions from both her own counsel and Crown Counsel.

Her answers to other questions wereoften vague and evasive. When confronted by evidence that was contrary to her testimony, the accused would immediately recant andchange her testimony to conform. The explanations that the accused gave for the transfers of money from the Association to herself

were often different from the reasons she set out in her Spreadsheet (February 2010) and different again from many of the reasons contained in her Response (April 2010). On several occasions the accused had two different explanations for the same expense item and/or money transfer.

On other occasions, when the monetary amount did not match her testimony, the accused would embark upon an explanation that was remarkable for its complexity. [25] Having considered the testimony of the accused, her demeanour and the other evidence, I have come to the conclusion that she is both an unreliable and an untruthful witness . (Underlining added.) [ 20 ] Cory J. wrote: “if you do not believe the testimony of the accused but you are left in reasonable doubt by it, you must acquit”. As noted, in his assessment of credibility of the accused, the trial judge concluded that Ms.

McGrath was “both an unreliable and an untruthful witness”. The trial judge accorded no credibility to anything that she said. In effect, he expressed the view that she sought to mislead the court as she had misled the NLBIA. It is clear from the trial judge’s reasons that Ms. McGrath’s testimony did not give rise to a reasonable doubt.

Implicitly, the trial judge has dealt with Cory J.’s second point in R. v. (W.)D. [ 21 ] The third point in R. v. (W.)D. is: [E]ven if you are not left in doubt by the evidence of the accused, you must ask yourself whether, on the basis of the evidence which you do accept, you are convinced beyond a reasonable doubt by that evidence of the guilt of the accused. [ 22 ] The trial judge sets out in paragraphs 29-37 his findings leading to Ms. McGrath’s conviction.

I will reproduce those paragraphs as they are not lengthy: i Reimbursement of Expenses [29] The reimbursements claimed by the accused included petty cash and money paid to third parties on behalf of the Association. The accused had been instructed to keep all receipts for reimbursements. She was unable to provide any receipts because there were none. I find that all the money transfers made by the accused from the Association to herself for reimbursement expenses were fraudulent transactions. ii.

Salary [30] The accused testified that many of the transfers of money to her from the Association bank account were for “pay or back pay”. The transfer amounts for pay were not consistent. The amounts were always different and were taken at different times of the month. The accused claimed that some transfers were for gross salary and that others were for net salary. [31] I find that the evidence of O’Brien was truthful.

He testified that the accused had received approximately $27,000.00 in salary for the year of 2009 which was all the remuneration that she was entitled to receive from the Association. [32] I find that the accused knew that she was not entitled to the money that she transferred from the Association to herself for either “pay” or “back pay”. iii. Bonuses [33] The accused testified that, even though she was a salaried employee, she was entitled to receive a ten percent bonus in relation to all government grants and major fundraising projects.

The evidence disclosed that on several occasions the accused brought up the issue of bonuses with some of the Executive Board members. However, neither the Association nor any of its Executive members ever agreed that the Association would pay her bonuses. I find that the accused knew that she was not entitled to any money that she called “bonuses”. iv. Personal Cheques [34] The accused transferred three sums of money from the Association to herself for amounts that she claimed that she had paid to creditors on behalf of the Association.

The transfers included $1,000.00 for Steers Insurance, $200.00 for the Board of Trade and $1,216.50 for Landmark Management Limited. I find that the accused did not make any payments to these creditors. It was later discovered that the accused had written out her personal cheques to these creditors, however, those cheques to the creditors were not delivered or acted upon in any way. v. Mileage [35] The accused transferred $2,096.00 from the Association to herself for “mileage”. The transfers were by Association cheques (numbers 36, 42 and 59) and a direct deposit money transfer.

The accused testified that the Association agreed to pay her at the rate of thirty-eight cents a kilometer for the use of her motor vehicle. That would mean that the accused had driven a total of 5515 kilometers on Association business between April and September of 2009. That would be an extraordinary distance for an office job employee. [36] Regardless, I accept the testimony of O’Brien during which he stated that there was no agreement by the Association to pay the accused any amount for mileage. vi.

Computer Equipment [37] The accused made a direct deposit from the Association bank account to herself on April 29, 2009, in the amount of $1,600.00. She testified that it was a reimbursement to her for the purchase for the Association of a computer, fax machine and printer. The accused could not provide receipts or any documentation for these purchases. O’Brien testified that the Association did not receive these items. I find that the accused did not purchase these items for the Association and was not entitled to any reimbursement.

[23] The foregoing particulars were “rolled up” by the trial judge in his verdict set out in paragraphs 38-39: [38] The Executive members of the Association were volunteers who were not able to devote the time that was necessary to properlysupervise the “day to day” operations of the Association. For several years the accused had demonstrated that she was a very competentand reliable employee. The Executive had complete confidence and trust in the integrity of the accused and permitted her unfetteredaccess to the Association bank account. The accused betrayed the confidence that the Association had in her.

She treated theAssociation’s bank account as if it were her own. [39] I find that the Crown has proven, beyond a reasonable doubt, that the accused transferred $38,356.60 from the Association toherself knowing that she was not entitled to take that money. The accused is guilty of fraud contrary to section 380(1)(

a) of the CriminalCode of Canada. [24] From the foregoing, it is clear that the trial judge applied the third item in Cory J.’s list in R. v. (W.)D., in that on the basis ofthe evidence he did accept (referred to in paragraph 22 of this judgment and in paragraphs 23, 31, and 36 of his decision), he waspersuaded beyond a reasonable doubt that Ms. McGrath had committed the offence. His reasons, while brief, show the parties why hedecided as he did, provide public accountability and permit effective appellate review.

When his decision is read as a whole, his reasonsare intelligible and logically connected to his verdict. Accordingly, they meet the test of sufficiency. (R. v. R.E.M., 2008 SCC 51,[2008] 3 S.C.R. 3, paras. 11 and 25. See also Gallant v. Brake-Patten, 2012 NLCA 23, 321 Nfld. & P.E.I.R. 77, paras. 110-111 and124.) Interference During the Trial [25] Counsel for the appellant argued that by his various interventions. the trial judge had caused unfairness to the accused. Crowncounsel readily agreed that the trial judge had spoken from the bench on numerous occasions.

However, she went on to state that thetrial judge’s questions had been for legitimate points of clarification. [26] Appellant’s counsel failed to bring to the Court’s attention anything that the judge said that could reasonably be seen as causingunfairness to the accused. To the contrary, the trial judge’s interventions were either to ensure he was referring to the correct exhibits orto ensure that he had understood a witness’s testimony. Such questions are not improper. See R. v.

Brouillard, (SCC),[1985] 1 S.C.R. 39. [27] While a sphinx-like demeanor may be in many cases a safer approach for a trial judge, variations in how trials are conductedare part of human nature. No unfairness was shown by the appellant’s counsel in this case.

(4) Disclosure [28] During her cross-examination, Marina White, a member of the NLBIA board of directors, indicated that she had “boxes” ofNLBIA materials and that she had disposed of other NLBIA materials. [29] Ms. White testified that the materials she had disposed of were things like promotional materials. She further testified that thematerials she still had were not relevant to the matters at issue in the trial.

Thereupon, Defence counsel indicated that he did not intend topursue this further. [30] However, Crown counsel took the position that the disclosure issue having been raised, it needed to be resolved. Crowncounsel suggested that the investigating officer should be recalled to give further information. Defence counsel agreed. [31] Upon being recalled, the investigating police officer testified that he had viewed the materials at Ms. White’s home andconcluded there was nothing relevant to his investigation of Ms. McGrath.

Accordingly, he did not take the materials into hispossession. [32] Following his cross-examination of the officer, Defence counsel indicated that he was “absolutely finished” with the issue. Even then Crown counsel suggested to the judge that as the materials were still available, the officer should obtain them from Ms. Whiteso that counsel, if they so wished, could satisfy themselves that the materials were indeed not relevant. [33] The materials were obtained by the investigating officer. Crown counsel reviewed them and indicated that they preceded theperiod to which the charges related.

In light of this, Defence counsel advised the trial judge that he agreed that the material was notrelevant and that he did not want to review the materials himself. [34] Before this Court, Defence counsel was asked what it was that was not disclosed that should have been. Defence counsel gaveno clear answer. [35] I am mindful that the obligation to make full disclosure rests with the Crown, including an obligation to preserve evidence sothat it can be disclosed. This obligation operates in all cases and does not require a request by Defence counsel to trigger it. See R. v.Taillefer; R. v.

Duguay, 2003 SCC 70, [2003] 3 S.C.R. 307 and R. v. Dixon, (SCC), [1998] 1 S.C.R. 244. [36] I am no less mindful that it can be unfair to say to Defence counsel, “what is it you are looking for”, when it may be impossiblefor Defence counsel to know what it is that hasn’t been disclosed. [37] All that said, the obligation to disclose, logically, must relate to materials that are relevant, in that it is such materials that anaccused needs in order to be able to make full answer and defence. [38] The evidence in this case was that the materials in Ms. White’s possession were not relevant.

Therefore, the fact that they werenot included with the “disclosure package” does not affect Ms. McGrath’s legal rights under s. 7 of the Charter. It bears repeating, aswell, that in the course of the trial, the undisclosed materials were made available to Defence counsel, who accepted that those materials

were not relevant. [ 39 ] Crown counsel argued before this Court that in the absence of an objection or an application by Defence counsel at trial, appellant’s counsel should be permitted to raise the disclosure issue on appeal only with leave of the Court. In this regard, Crown counsel referred to R. v. O’Keefe , 2012 NLCA 25 , paras. 24-27 and R. v. Aisthorpe , 2006 NLCA 40 , 257 Nfld. & P.E.I.R. 1. [ 40 ] While it is important to adhere to proper procedure, I am not inclined to dispose of the disclosure issue on a procedural basis.

The record is adequate to properly adjudicate the issue and so, if needed, I would grant leave to the appellant to argue the issue in this appeal. [ 41 ] That said, based on the foregoing, the ground of appeal relating to disclosure is without merit and must fail. CONCLUSION [ 42 ] The appeal is dismissed. ____________________________________ M. H. Rowe J.A. I Concur: __________________________ C. W. White J.A. I Concur: __________________________ L. R. Hoegg J.A.