R. v. Nicholson, 2011 ONCJ 564

COURT FILE NO.: 2811 998 DATE: October 26, 2011 Citation: R. v. Nicholson , 2011 ONCJ 564 ONTARIO COURT OF JUSTICE (Central East Region) B E T W E E N: ) ) Her Majesty The Queen ) ) ) F. Stephens, Counsel for the Crown ) ) ) - and - ) ) ) Joel Nicholson ) ) ) B. Crothers, Counsel for Mr.

Nicholson ) ) ) ) ) HEARD: May 30, June 2 &3, July 20, 2011 JUDGMENT BELLEFONTAINE, J: [1] These are my reasons for judgment in the matter of Joel Nicholson who is charged with four counts in relation to the preparation of false certificates of default prepared over a four-year period as part of the routine duties he performed as the Collections Supervisorer for the Region of Durham. Based on the false certificates, over 120 individuals improperly had their wages or assets seized in an amount of approximately $175,000.00, which was distributed by the Court to the Region of Durham.

The charges are: 1. that with intent to mislead, he fabricated false certificates of default intending that they be used as evidence in existing or proposed judicial proceedings; 2. that he willfully attempted to obstruct or pervert the course of justice by signing the false certificates of default; 3. that by knowing the certificates of default were false he uttered them as forged documents by having them delivered to the Small Claims Court office and causing that court to act on them as if they were genuine; and, 4. that by using the false certificates of default, he knowingly put the financial interests of others at risk thereby committing fraud over $5,000.

Counsel have narrowed the issue in this case to whether the metal element required for criminality has been proven beyond a reasonable

doubt. [3] I have considered all of the evidence and all of the arguments in this matter. If I don’t mention any particular piece of the evidence or any particular argument raised it is not a reflection of my not having considered it. Issues of credibility do not play a significant role in this decision. Mr. Nicholson has not testified. I do, however, have in evidence statements that were conceded to be voluntary from Mr. Nicholson to Ms. Angela Rae. As the statements can be used both against Mr.

Nicholson and for him, his denials of wrongdoing by just following the approved procedures is defence evidence for me to consider. To the extent that any issues of credibility have arisen, I have applied the provisions of R. v. W.D. I have as well applied our basic principles that everyone is presumed innocent until their guilt has been proven beyond a reasonable guilt, that the burden rests on the Crown throughout to prove that doubt, and that there is a very high burden in a criminal case to establish an individual’s guilt as required pursuant to R. v. Starr and R. v. Lifchus .

I have particularly not drawn any adverse inference from Mr. Nicholson not having testified. He is not required to do so, and the burden rests on the Crown throughout to prove his guilt beyond a reasonable doubt. There is no burden on him to establish his innocence. [4] The facts in the matter are as follows: Before 2001 the Province downloaded the operation of the local Provincial Offences Courts and the fine income derived there- from to the Region of Durham. The Provincial Offence Court office was established within the Regional offices.

The function of collecting the unpaid fines ordered by the Provincial Offences Court was tasked to the Region’s Finance Department. [5] In February 2001, Mr. Nicholson was hired to act as Collection Co-Ordinator. He had worked in the credit and collections industry for approximately 20 years. His work included preparing documents for Court and testifying in Small Claims court as a witness. There is no evidence of him having any legal or paralegal training and none was required for the position.

Sometime after he commenced his employment with the Region he was promoted to Provincial Offences Collections Supervisor where he supervised approximately seven employees. In the very detailed 17-page job description filed as Exhibit Number Two, there is scarcely a mention of Small Claims Court or legal proceedings other than post judgment collection procedures. [6] Established collection procedures were in place. When court-ordered fines were unpaid beyond the time granted for payment by the Court, the collection staff would take steps to locate the debtor and pursue him for payment.

If employment or assets could be identified for a debtor, a certificate of default signed by the Provincial Offences Court clerk would be obtained from the Provincial Offences Court and filed with the Small Claims Court as permitted by s.68(1) of the Provincial Offences Act to make the garnishee and the writ of seizure and sale provisions of the Small Claims Court available. Ultimately affidavits would be prepared confirming the fine had not been paid and filed with Small Claims Court to garnishee the individual’s wages or seize their bank accounts. [7] Around 2002 Mr.

Nicholson was asked to have his Provincial Offences Act Collection Group collect arrears for the Region’s Social Housing Unit. These arrears had accrued as a result of tenants not paying rent or damaging their unit. Mr. Nicholson tasked one of the experienced collection clerks to prepare the procedure protocol for the collection of the Social Housing arrears which she did, using the existing Provincial Offences Act procedure manual and forms as her template at Mr. Nicholson’s instruction. [8] The new procedures were extensively circulated and reviewed not only by Mr. Nicholson but also by Mr.

Nicholson’s immediate supervisors and the Senior Manager above them. They were also on occasions circulated to Managers in the Social Housing Group. Mr. Nicholson circulated between 12 and 14 versions of the procedure over a period of two years to his senior managers. At least one of Mr. Nicholson’s emails to his supervisors in August of 2003 (Exhibit 3-2) raised a number of legal issues for inquiry. It should be noted that the Region has a Legal Department which could be consulted with his Supervisor’s approval. Although no formal sign-off by his Supervisors is documented, the procedures were acted upon and Ms.

Cermak agrees someone would have approved its implementation. Although Ms. Cermak denies any recollection of having approved the implementation of the Social Housing Collection Program, all of the other managers indicate that it would have been her position to do so. Mr. Nicholson’s October 20, 2004 email at Exhibit 3-10 which was sent to Ms. Cermak and to several other senior mangers confirms that at a meeting on September 23, 2004 the Social Housing collection program was put in place and that all tenant accounts were to be forwarded to POA Collections immediately.

I am prepared to find that Senior Management of the Region approved the implementation of the Social Housing Collection Procedures based on the latest draft of the procedures which have been filed with the Court. ( See Exhibit 8-9 for the August 16, 2004 version and Implementation Timetable and Exhibit 8-10 which appears to be the final process document dated March 7, 2005.) [9] Cheques for disbursements were issued for Social Housing files and monies collected over a period of years commencing the end of 2004 or early 2005.

Reports on the success of the collection efforts were submitted to the Region’s Finance Committee by the Director of Finance as early as March 16, 2005. [10] There were flagrant legal problems with the procedures put in place, due to adopting the Provincial Offences Act fine collection procedures and forms, to collect the social housing arrears as was done. They were manifest in the Social Housing Collection policy

throughout its many drafts. Where the P.O.A. process starts with a judicial order for the payment of money, no court application thatcould result in a court order for payment was provided for in the social housing process and is required before the Small Claims Courtcollection process can be initiated. The P.O.A. s.68 certificate of default forms were false and misleading when social housinginformation was slotted into the same form.

For example the form states “A fine of ….” was imposed, but clearly unpaid rental arrearsor damage claims are not a “fine.” Similarly, the form goes on to state “was imposed by the Court” but no Court was involved at thisstage of the collection of the Social Housing arrears and the dollar amount owed was simply the amount the bookkeeping staff at SocialHousing told the collections department was owing. The forms also contain a file number on an Ontario Court of Justice form but nocourt was involved to produce a court file number.

The number inserted was simply an internal account number for the tenant. [11] The procedures also referred to using “civil enforcement” to collect the Social Housing arrears being a term used in the Provincialoffences Act for the s.68 procedure for collecting unpaid fines.

This is a procedure and term which is not applicable to the collection ofthe Social Housing arrears which have nothing to do with fines and nothing to do with the Provincial Offences Act and demonstrates onthe face of the many circulated drafts of the Social Housing collections procedures that an improper process was being utilized. [12] It is apparent from Mr. Nicholson’s statements to Ms.

Rae, if accepted, along with those of the other Collection Department staffand all of the managers involved, that none of them were aware that an improper procedure was proposed and implemented. [13] Under Canadian criminal law a crime must not only be committed but the crime must be committed by an individual with therequisite mental intention. The required mental intention may be specified for the particular crime or left unarticulated for more generalrules to apply. Other than extremely rare cases, the law requires subjective advertence to the criminality for the mental element to bemade out.

Counsel have agreed that the first three offences in this case require a specific articulated intent described in the sections andthat for Mr. Nicholson to have the necessary mental element to support a conviction, he must have committed the crimes with theparticular state of mind required by the charging section. For the fabricating evidence charge he would have to have specifically intendedto mislead the judicial proceedings.

For the obstruct justice charge, he would have to have specifically willfully intended to circumventthe Small Claims Court process and for the uttering forged document count, he would have to have known the certificate was false in amaterial particular and in a way that would not be detected by the Small Claims Court staff and cause them to act on it as genuine. The Crown has properly submitted that there was no specific articulated intent for the count of fraud and that a different analysis needs to be conducted for this offence.

The Supreme Court of Canada has set out precisely the essential elements of the offence of fraud that the prosecution must prove in R. v. Zlatic (1993) (SCC), 79 C.C.C. (3d) 466: where they state: “The elements of the offence of fraud are discussed in a general fashion in R. v. Theroux, S.C.C. No. 22249. For the purposes of this case, it suffices to state that the actus reus of fraud will be established byproof 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 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 consist in 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 actually intended the Prohibited consequence or was reckless as to whether it would occur. [14] The Supreme Court has clearly rejected the requirement for a specific intention to put others financial interests at risk for the offence of fraud and held that recklessness as to that occurring is sufficient. It is noteworthy however, that recklessness in Canadian law still requires some lesser subjective intention. [15] The discussion by Kent Roach in “Criminal Law 3 rd Edition” Irwin Law 2004 p.162 sets out the parameters of “recklessness”.

Reckless is a lower form of mens rea than intent, purpose, willfulness, or knowledge, but in Canada it is still a form of subjective mens rea. in Canadian criminal law, a person acts recklessly if he or she has adverted to or become aware of the risk of the prohibited conduct. In Sansregret , the Supreme Court stressed the importance of distinguish- ing recklessness from negligence: In accordance with well-established principles for the determination of criminal liability, recklessness, to form a part of the criminal mens rea , must have an element of the subjective.

It is found in the attitude of one who, aware that there is danger that his conduct could bring about the result prohibited by the criminal law, nevertheless persists, despite the risk. It is, in other words, the conduct of one who sees the risk and who takes the chance. Recklessness requires subject advertence to the prohibited risk and can be distinguished from negligence, which requires only that a reasonable person in the accused’s circumstances would have recognized the risk. [16] To establish any of these offences on our facts, the Crown must in my view, establish beyond a reasonable doubt that Mr.

Nicholson knew the approved procedure wrongfully omitted the obtaining of a court judgment before the Small Claims Court collections procedures were initiated, or had turned his mind to the possibility that a court proceeding and judgment was required and took a chance on whether one was required or not. In the absence of such knowledge, he would not have been aware of the wrongfulness of using the Certificates of Default to intend to use them to mislead the Court by signing the false certificates to support the fabricating evidence charge.

Similarly, in the absence of knowledge of the appropriate legal steps, he would have not been intending to avoid them to obstruct or pervert the court process.

In the absence of knowing different procedures applied to the tenancy debts and what the proper legal process was, he would not have known the false information in the certificates was material. [17] The Crown makes a compelling argument that given his experience in collections, which included attending court, and the responsibilities of his position, that any competent person would be aware of the need to obtain a Small Claims Court order before initiating their collection procedures. (See

Section 20 of the Small Claims Court Regulation, O.R. 258/98 .) Indeed many lay people would be well aware of the need to “sue them” or “take them to court” before collection steps could be taken through the Small Claims Court. The Crown does concede however that I cannot take judicial notice of the level of legal knowledge that a person in his position would possess. I consider that concession to be fair. Individuals functioning at a clerical level may perform the same tasks many times per day for many years without knowing the legal framework that they function within. Similarly, being a witness in court doesn’t

necessarily entail a knowledge of why you are there or the legal process that you are a part of. As well, a large and important part of the collection function, tracing debtors and pressuring them to pay outside of the court processes, may so dominate the job that knowledge of little used court processes may not be essential in an individual’s employment setting.

The varied aspects of the job and the division of labour within different work environments may allow some individuals in the field to have lots of expertise in some aspects of collection while remaining woefully ignorant of other aspects. [18] Notwithstanding the logical inference that can be drawn from Mr. Nicholson’s experience other evidence supports the defence position that the admitted wrongs here were innocently committed with an absence of knowledge of the pre-requisite court proceedings. Mr. Nicholson had no legal training and none was provided by the Region.

Linda Beaver who drafted the initial procedure had also worked in collections for many years in the same organizations as Mr. Nicholson and was equally oblivious to the need for an initial Small Claims Court proceeding and judgment, and drafted the procedures accordingly. Similarly, Mr. Preston was also working in collections and was oblivious to the problems in the Social Housing procedures. [19] Mr. Nicholson circulated the draft procedure among his supervisors and managers in other departments and senior management, all of whom had extensive business experience and could also easily have spotted the error.

As well it could be expected that the matter would at some point be referred to the Legal Department for review. It makes no sense that he would intentionally circumvent the court process in a procedure when that omission could be readily noticed and which would call into question his competence for the position. [20] Mr.

Nicholson had also suggested that the Legal Department be consulted ( See Exhibit 8-3) which again supports his lack of knowledge of the proper legal procedures on the basis that he would not encouraged having them involved with the improper process had he known of it. [21] Of significance is the unusual nature of P.O.A. collections which has an unusual genesis much apart from the normal Small Claims Court procedures that Mr. Nicholson would have been used to in his previous employment. As he stated to Ms.

Rae “I didn’t have a clue about P.O.A. when I started.” The idiosyncratic nature of the collection of fine money owed to the Region and the special procedures for collecting it under the P.O.A. appear to have been generalized in the Social Housing collections to a view that all monies owed to the Region could be collected in that fashion as opposed to recognizing that it was only fines accruing under the Provincial Offences Act that could be collected using the special procedures. It is here that Mr. Nicholson’s lack of legal training assumes some significance.

While the Crown points to some aspects of his resume and job review as establishing his legal experience, these type of documents often involve some level of self-aggrandizement. Apart from the obvious flaws in the Social Housing procedures, a number of the questions raised in his emails raised significant concerns with the depth of his legal knowledge.

For example in Exhibit 3-2 several questions are asked supporting his lack of knowledge of the legal processes involved. [22] Also significant is the focus during the procedure development of business processes and information flows to produce a quick and efficient process from a work flow and accounting perspective. While perhaps understandable given the collection unit’s placement within the Finance Department, legal considerations received little attention. This approach can also be seen in Mr. Nicholson’s 17 page job description review where legal aspects of the position are barely mentioned and Ms.

Cermak’s email message ( Exhibit Number 7) expressing a reluctance to have the Legal Department involved in the wording of collection notices being sent to clients. [23] Powerfully supporting the defence position is the absence of any motive for Mr. Nicholson to knowingly circumvent the Small Claims Court procedures for obtaining a court order that monies are owed. The Crown concedes that there was no financial gain for Mr. Nicholson to take the short cut mandated by the Social Housing Collection procedure. His salary did not depend on it.

No commissions or bonuses were associated with him more quickly collecting the monies involved. While the Crown submits that his reputation within the bureaucracy would be enhanced by the quicker and more efficient collection that resulted from the truncated process such personal aggrandizement is too tenuous on the evidence to be a motivating factor.

The Social Housing portfolio was so insignificant in the overall context of the Provincial Offence arrears that were collected, that marginal efficiencies in collecting it would not meaningful enhance his reputation. [24] Any advantages to his efficiently collecting on the Social Housing front would pale in relation to the embarrassment he would suffer by knowingly proposing and implementing a procedure which demonstrated a lack of basic understanding of the overall Small Claims Court process.

I do not consider his signing the document as the Clerk of the Court or subsequently swearing the affidavits in support of garnishment to add to the strength of the Crown’s case. It is clear from the documentation filed that Mr. Nicholson had been appointed a Clerk of the Court in 2001. He appears to have abided carefully by the request that he not act as a Clerk of the Court for Provincial Offence matters. Both he and Ms. Cermak appeared to consider his appointment as a Clerk of the Court to be otherwise valid. [25] I am mindful that the inquiries made by Mr.

Nicholson in Exhibit 3-2 make it likely that he was aware of potential limitations on the civil enforcement process, which makes his being criminally reckless more likely than not. However, considering all of the evidence and all of the arguments in this matter, I am prepared to find that there is a reasonable doubt that Mr. Nicholson never subjectively turned

his mind to a requirement that a Small Claims court order be obtained prior to using the Small Claims Court collection processes, or was reckless in that regard, and accordingly the Crown has not met the burden on them of establishing a requirement that he has intentionally or recklessly committed any of the charges before the Court. Accordingly there will be an acquittal in this matter. P.L. Bellefontaine Justice