M. Ulrich Gautier - CRIMINAL LIABILITY FOR EXECUTIVES

Executives and managers are expected not to tread into the realm of the criminal law. While such conduct runs afoul of their functions and violates their mandate, they may do so unwittingly. The jurisprudence is replete with instances in which financial dealings have resulted in criminal prosecutions. The present chapter examines those cases.

When a crime is committed, the illegal nature of the act is usually obvious. Serious offences that violate the Criminal Code are readily identified. Illicit commercial practises may depart from this pattern. The line delimiting what is legal and what is not in this area is traced with less precision. Business dealings can fall within the purview of the criminal law in circumstances where its application would be unexpected. Transactions can be executed without intent to cause economic prejudice. Aggressive corporate strategies might be considered astute, not unscrupulous. Funds could be re-routed without deception and without loss. Shareholders may not consider themselves to be defrauded. Actions may be conducted candidly and without surreptitiousness. Monies can be restituted for unrealised projects with interest and compensation. Yet many of these situations have been characterised as being criminal by the courts. The following pages explain why and what to do to avoid such an adverse finding.

The pressures of the business environment and the reality of competition may cause steps to be taken that are illegal. What some might construe as being a bold transaction or a matter of economic survival could involve criminal elements. This chapter will sensitize executives and managers to the far-reaching limits of the criminal law. It will detail the various acts that are most prone to attract unwanted liability.

B. FORMS OF CRIMINAL LIABILITY

1. Parties to the offence

No one is guilty of a criminal offence without fault[1]. In addition, one must be a perpetrator or a participant in the commission of the offence, with the exception of the attempt to commit, which is an offence by itself[2]. Since a corporation acts through its officials, it may well be that the directing mind of a corporation is always a participant in the offence committed by the latter[3]. The Criminal Code provides for a number of ways to become involved in the commission of an offence: by actually committing the offence, by aiding and abetting the principal, by engaging oneself with others in a criminal activity with a common intention, by counselling another to commit an offence and by being an accessory after the fact[4].

Passive acquiescence, or what is called "mere presence", is not enough[5], unless the passive attitude contributes to the commission of the offence. Such was the case where a large group of strikers engaged in a human barricade to prevent access to a plant[6]. One can also aid or encourage by not getting involved in a situation where one has a legal obligation to do so[7].

Generally speaking, anyone who knowingly encourages or facilitates the commission of an offence or impedes its prevention is a party to the offence. While one commonly uses the expression "aiding and abetting", the two are different concepts and either of them is sufficient to engage criminal liability[8]. Whether liability for one's action lies through either concept, it must be accomplished "for the purpose of" aiding or abetting[9], which simply means "intentionally" as opposed to by accident[10]. There is no need to show that the accused desire the illegal end to occur[11]. One who is indifferent to the fact that his action aids or abets the perpetrator of an offence is therefore guilty[12]. The fact that the principal cannot be convicted is not a bar to a successful prosecution of other parties[13].

One can commit an offence by using an innocent agent.[14]. In Wood[15] the accused was the director of a company experiencing major financing difficulties. Wood obtained a loan from a friend secured by his company’s shares. Aware of the financial problems of the company, he then short-sold a number of these shares on behalf of his friend without the latter’s knowledge. When the company went bankrupt, his friend made a significant profit. Wood was charged with insider trading. Because the friend had not committed an offence, Wood was not guilty of aiding and abetting[16]. However, the court relying on the doctrine of innocent agent, found Wood guilty since he acted through his friend to commit the offence[17].

Section 21(2) imposes liability on persons who engage in criminal conduct with others for additional criminal acts that could be foreseen as likely to be committed in furtherance of the underlying offence[18]. One also becomes a party to an offence when counselling another to commit an offence or to become a party to an offence. Section 22(3) expressly states that "counsel" includes "procure", "solicit" or "incite". The counsellor is liable for any foreseeable offence committed as a result of the counselling[19] notwithstanding the offence was committed in a different way[20] or was never committed.[21]. The counselling must be more then just expressing a wish that an offence be committed - the acts or words must induce a person to commit the offence[22].

2. Attempts

An attempt to commit an offence is prohibited[23]. The Supreme Court has decided that one must intend to commit the completed offence[24]. It is immaterial that the offence be in fact committed. Mere acts of preparation are not attempts[25]. They become attempts when they are close to the accomplishment of the offence or when they offer a proximity to the realization of the illegal purpose[26]. The acts do not have to be illegal or morally wrong[27].

3. Conspiracy

"Conspiracy is an inchoate or preliminary crime, dating from the time of Edward I, but much refined in the Court of Star Chamber in the 17th century. Notwithstanding its antiquity, the law of conspiracy is still uncertain. It can, however, be said that the indictment for conspiracy is a formidable weapon in the armoury of the prosecutor. According to the cases, it permits a vague definition of the offence; broader standards of admissibility of evidence apply; it may provide the solution to prosecutorial problems as to situs and jurisdiction: see Director of Public Prosecutions v. Doot, [1973] A.C. 807."[28]

These words capture the reality of the conspiracy offence. The essence of the crime is the agreement between two or more persons to commit an offence. When the agreement is reached, a conspiracy is complete[29] and one cannot withdraw from it[30]. It is irrelevant that the object of the conspiracy is not achieved[31]. A person may become part of a conspiracy by aiding or abetting the conspirators [32]. The Supreme Court also decided that a conspiracy may be prosecuted in Canada even if the actual crime is committed in another country, as long as there is some important link with Canada[33].

4. Corporate liability for criminal offences

In 1985, the Supreme Court made an extensive analysis of corporate criminal liability in Canadian law[34]. The problem is complex and, by its own admission, the Supreme Court did not provide a definitive answer[35].

Because a corporation[36] cannot think or show a "state of mind", the common law traditionally considered that a corporation could not be convicted for a criminal offence. Necessarily, an individual will commit the crime and since the common law never applied the doctrine of vicarious liability to the criminal law, corporations had immunity[37]. This doctrine found application in civil law and the modern concept of corporate criminal liability flows from a decision of the House of Lords in a civil liability case[38].

In Canadian Dredge, the Supreme Court adopted a pragmatic approach[39] with the "identification theory" as a way to attribute the criminal intent to a corporation. The person who commits the offence must be the "alter ego" of the corporation, its "directing mind"[40]. The act must be within the area of the work assigned to that person having decisional authority in that sphere of corporate activity[41]. It must be determined whether the person has the express or implied decision-making power in a relevant sphere of corporate activity[42], or de facto control of the corporation[43]. Accordingly, there can be more then one directing mind in any one corporation[44]. The governing officers of the corporation do not have to be aware of the person’s actions and it is irrelevant that the actions infringe a specific corporate prohibition[45].

These principles have been applied by the courts in a variety of circumstances. In R. v. P.G. Marketplace and McIntosh[46], a used car business was convicted for a fraud committed by one of its sales representatives. The salesperson negotiated the purchase price of a car, then sold it at a higher price. Once the car had been sold, the salesperson renegotiated the original purchase price for a reduced rate based upon false representations, thereby procuring a greater profit for the company. The company allowed its sales representative to conduct such negotiations with clients subject only to the deals receiving the approval of directors or managers. The company benefited from the transactions and was convicted.

In R. v. Spot Supermarket Inc.[47], a chain food store was found guilty of theft because the supervisor calculated the sales tax in a manner that reduced the remittance to the revenue department. As the company delegated control of the accounting procedure to the supervisor, it’s criminal liability was established.

The criminal liability of the corporation will not be engaged if the directing mind acts wholly in fraud of the corporation unless the corporation, by design or result, benefits from the illegal action[48]. In Canadian Dredge, four accused corporations were charged with conspiracy to defraud arising out of the "bid-rigging" of dredging contracts. They conspired to award specific tenders to a certain company. The low bid would include compensation payments to co-operating high bidders or non-bidders. In some cases, sub-contracts would be granted in consideration for participation in the scheme. Although it was argued that some directing minds acted in fraud of their corporation, at least partially, the Supreme Court considered that they did not act wholly in fraud and that the corporations benefited from the scheme.

A recent Quebec Court of Appeal case illustrates this situation. In Les Forges du Lac Inc.[49], one of the three directing minds of the corporation diverted large sums of money from the company without the knowledge of the other two. Charged with tax evasion, the corporation tried to defend itself by claiming that the wrongdoer became the enemy of the corporation when the funds were diverted. The Court acknowledged the defence but dismissed the appeal from conviction since the corporation, by filling false or deceptive income tax returns, profited from the wrongdoing.

Although the notion of illegal profit is an important aspect of corporate criminal liability, non-profit corporations are not immune to criminal prosecutions. Corporations occupy a central role in society and must be accountable for their actions[50].

5. Corporate liability for regulatory offences

Before R. v. Sault-Ste-Marie[51], courts determined guilt according to two standards: offences requiring proof of mens rea (true crimes) and those that did not require any mental element, absolute liability offences, also called statutory offences.

The concept of absolute liability was developed with regard to public welfare offences and for the protection of certain social interests. When the law clearly so provides, liability flows automatically from the breach of the law –the actus reus– and there is no need to prove any particular state of mind –mens rea–[52]. These offences are found in sectors where society requires a high level of compliance with norms and regulatory legislation. It is not a defence if the impugned is the result of an accident[53]. It may well be that only the impossibility to comply with the law is exculpatory[54].

In Sault Ste. Marie, the Supreme Court accepted an intermediary offence, the strict liability offence. It rapidly became the rule[55]. As in the case of absolute liability, guilt flows from the commission of the act. However, the accused can show that he was not negligent by establishing due diligence on the balance of probabilities[56]. An honest belief in a set of facts that would render the act innocent is also a defence in the strict liability context[57].

With the proliferation of regulatory legislation, strict liability offers an alternative to the guilt without fault of the absolute liability offence. Treaties offer numerous examples of situations where due diligence was offered as a defence[58]. The more predicable the risk of a wrongdoing, the less applicable the defence of due diligence will be[59].

There are some difficulties in categorizing specific offences under the absolute or the strict liability regime. The possibility of imprisonment and absolute liability are incompatible[60]. Beyond that clear-cut criterion, courts will consider many factors such as the over-all regulatory pattern adopted by the legislature; the subject matter of the legislation; the severity of the penalty; and the precise language used[61].

C. THEFT AND SIMILAR OFFENCES

1. Fraudulent taking or conversion

Essentially, theft is committed when anything is fraudulently and without colour of right taken or converted with intent to deprive thereof the owner or person who has a special property or interest in it of the thing or his property or interest in it.[62] The intent may be to deprive the person of the property either temporarily or absolutely,[63] although this is not the only proscribed intent. The requisite intention may exist when there is intent to pledge the property or deposit it as security,[64] to part with it under a condition with respect to its return that the person who parts with it may be unable to perform,[65] or to deal with it in such a manner that it cannot be restored in the condition in which it was at the time it was taken or converted.[66] The offence is complete when, with intent so steal anything, a person moves it or causes it to become movable.[67] The directors, officers or members of a company can commit theft notwithstanding that what was alleged to have been stolen was stolen from that company.[68]

The word “anything” in the definition of theft includes intangible objects that are capable of being converted in some way that deprives the owner of his proprietary interest. This includes certain choses in action,[69] credit in a financial institution[70] or other types of money credit.[71] However, confidential information, including copyrighted information and information of commercial value, does not fall within this meaning. While a document containing confidential information can be stolen, the obtaining of this information without the authorisation, by duplication or otherwise, does not amount to theft.

The Supreme Court has held that confidential information is neither property for the purposes of the Criminal Code nor is it capable of being taken or converted in a manner that results in the deprivation of the victim, except in very rare and highly unusual circumstances. In Stewart v. The Queen, [72] an attempt was made to obtain surreptitiously the names, addresses, telephone numbers and other confidential information of employees whom a union was attempting to organise. Neither the offence of theft nor fraud had been made out. This information was not intended to have been dealt with in a commercial way. The only loss from the appropriation of the information was its confidentiality. There was no deprivation within the meaning ascribed to it in Olan.[73] However, had the information been in the nature of a trade secret or copyrighted material having commercial value intended to be exploited, then the ensuing risk of economic prejudice would amount to deprivation and the act would constitute fraud. This occurred in McVey v. United States of America[74] where the design and software information of a supercomputer was dishonestly appropriated. This action caused detriment to the economic interest of the victim and was fraudulent. The use of the secretly obtained information could facilitate the development of such a computer by a foreign competitor, thereby creating a threat to the victim in the world market.

Theft is not limited to situations where there is an unlawful taking of the property. As the definition includes “conversion”, theft can be committed even in cases where the accused was initially in lawful possession of the property.[75] Conversion requires a manifest act inconsistent with the conditions or the terms of the initial lawful possession.[76] Passive possession is insufficient.

R. v. Milne[77] provides an illustration of theft by conversion. A company, by mistake, had paid twice for services that had been rendered. The recipient of the second cheque that had been issued in error was aware of the situation but nevertheless deposited the funds into his own company’s bank account. No theft could have occurred on the basis of an unlawful taking as the cheque was in the possession of Milne, through his company, without any taking on his part. However, when he knowingly drew out the resulting credit for his own benefit, he acted fraudulently and without colour of right, and with intent to deprive the person of the funds, thereby committing theft by conversion.[78]

The case of R. v. Nelson[79] is instructive even though a conviction for theft by conversion was set aside by the Ontario Court of Appeal. The accused was the directing mind of a marina. Clients ordered a new watercraft through the marina and traded in their old boat. The marina sold the trade-in and deposited the proceeds in its general account. Later, upon being informed that the model ordered was no longer available, they sought the return of their money. By this time, however, the marina had experienced financial difficulties and was placed into receivership. The customers never received the new boat and were unsuccessful in recovering their money. The prosecution contended that there was conversion of their property because the deposits from the trade-in sale were made into the general account which was subsequently depleted to the extent that the balance was inferior to the proceeds of the sale of the trade-in. To prove theft, the evidence would have to show that the customer’s property was converted fraudulently and without colour of right. The Court of Appeal, however, was unable to conclude that the directing mind of the marina did not have an intention of honouring its agreement either at the time that the contract was entered into or when it deposited into the general account the proceeds of the sale of the trade-in. The trade-in was transferred to the marina as part of a legitimate business transaction and the amount obtained from its sale belonged to the marina, not the customers. As a result, there was no conversion, a necessary element of the offence charged.

Examples of theft by conversion abound in the jurisprudence. In R. v. Mohan,[80] a real estate investor obtained funds from a client in order to complete a purchase. The funds were to be held in a trust and were to be used for closing the deal. Instead, they were applied towards legal bills and other debts and eventually they were fully dissipated. The court held that a conviction was properly registered. Similarly, in R. v. Hawrish,[81] there were allegations of theft and fraud against a venture capital promoter accused of stealing from subscribers to the venture capital fund. The subscribed funds had been used to repay a bank debt. The court found that the accused did not have an honest belief that he could use the funds for that purpose, and upheld the conviction. Finally, in R. v. Bates and Skidmore,[82] a conviction for theft by conversion was entered in the following circumstances. The accused were the sole directors of a corporation which made the acquisition of an aircraft subject to a chattel mortgage held by a bank. At one point, the identification of the aircraft was modified in order to hamper any eventual attempts by the lending institution to take repossession. The Court of Appeal concluded that the modification was made with intent to deceive and was manifestly inconsistent with the rights of the bank under the mortgage. Theft by conversion had been committed.

2. Fraudulent violation of fiduciary duties

A series of sections in the Criminal Code deal with instances of theft by persons who have been entrusted with special powers and obligations relating to the use or disposition of property.[83] These provisions are similar but not identical to the general theft section discussed earlier. The features that distinguish these offences consist of the absence of various elements usually found in theft, namely that there be a taking or converting, that the act be without colour of right, and that there be an intent to deprive.[84] The notion of fraudulent intent, however, remains common to all these forms of theft.

Theft can be committed by persons required to account for the proceeds or part of the proceeds of anything received from another person and fraudulently fail to do so.[85] A defined relationship between the parties must exist such as found in the case of employees, brokers, financial managers, lawyers, accountants, and other persons who are placed in possession of property and are governed by a fiduciary duty to deal with it in a predetermined manner. The offence occurs when the property is not used according to the terms of its acquisition and is fraudulently converted to another purpose. This element cannot be inferred merely from the failure to account within a reasonable time. The Supreme Court held in Washington State v. Johnson[86] that the failure to return the property may be consistent with a number of explanations other than fraud, and can be due to forgetfulness, error or inability. Furthermore, negligence is also insufficient to support a conviction as it is does not prove the moral turpitude to the necessary degree.[87]

The Criminal Code contains a specific provision for theft by persons holding a power of attorney for the disposition of real or personal property.[88] The essence of this offence lies in the fraudulent sale, mortgage, pledge, or other disposal of the property or any part of it, or the fraudulent conversion of the proceeds or any part of it contrary to the purpose for which it was entrusted under the power of attorney.

It is an offence to misappropriate money held under direction.[89] A person who receives that money or valuable security commits theft if it or its proceeds are fraudulently and contrary to the direction applied to another purpose or paid to another person. This section does not apply if a debtor/creditor account exists, unless the direction is in writing. The Supreme Court dealt with the import of this section in R. v. Skalbania.[90] The accused was the controlling mind of a company which received money from an investor to purchase shares of specified companies. The purchase of the shares eventually failed to materialise. Months later, the money was returned to the investor including interest as well as a sum for compensation. During the interim, however, the funds had been dispersed to a creditor of the company having no relation to the investment project for which they were injected. The Supreme Court held that the intentional and unmistaken application of funds to an improper purpose constituted theft.

Section 332 does not particularise the nature of the agreement nor the meaning of the term “direction”. Neither need be elaborate. In R. v. Légaré,[91] a broker received money from a client to purchase bonds that were to be issued at a future date. Prior to this date, the broker used the money to pay off debts of his company. At the time the bonds were issued, he was unable to redeem them from the bank. In examining whether there was criminal liability under s. 332, the Supreme Court noted that the section did not specifically relate to any particular kind of contract. It held that a simple confirmation of the sale of the bonds, their description, the yield, their price, as well as their delivery date was sufficient to constitute a direction to apply the sums to a particular purpose. The broker had breached his obligation towards the client by pledging the securities to the bank. The act was neither due to unforeseen events nor a case of simple negligence, but rather due to his own fault. The broker was an experienced businessman who acted with full knowledge of the situation when he disposed of the funds in a manner that was contrary to the directions under which he held them. The offence had been proven beyond a reasonable doubt.

The idea that a direction need not be particularly explicit was also acknowledged by the Supreme Court in Lowden v. R.[92] Expectations standing alone were not directions within the meaning of s.332, but if they were known to the recipient they could be tantamount to a direction. Whether there is a direction that the money be used for a particular purpose may be inferred from the surrounding circumstances.

3. Breach of trust, fraudulent concealment and computer offences

Section 336 of the Criminal Code creates the offence of criminal breach of trust by trustees for the fraudulent conversion of the object of a trust to an unauthorised use in contravention of the trust. The use of funds in a trust account without regard to which clients the funds were being held for could constitute an offence under this section. It is immaterial that all the clients received what they were entitled to and suffered no economic loss.[93] This does not mean that a director or manager of a company who misappropriates its property would contravene this provision on the basis that he was entrusted with the property. There must be an express trust, otherwise the offence is one of theft and not criminal breach of trust. For example, in Rosen v. The Queen,[94] the controlling mind of a construction company received mortgage advances for a building project that was undertaken. Substantial portions of these funds were subsequently “loaned” to other companies under his control. The Supreme Court concluded that he was not a trustee and was therefore not liable under this section. It added, however, that he could have been convicted as being a party to the offence by having caused the trustee company to breach its trust.

It is an offence to fraudulently destroy, cancel, conceal, or obliterate documents of title.[95] The fraudulent concealment or removal of anything is prohibited.[96] Finally, at sections 342.1 and following of the Criminal Code enumerate the various unauthorised uses of computers, including the unlawful obtention of computer services,[97] the illegal interception of computer functions,[98] the misuse of data,[99] the improper access to a password,[100] and the illicit possession of a device that can facilitate such misconduct.[101]

4. Criminal interest rates, illegal possession, and false pretences

The importance of an obscure provision in the Criminal Code concerning transactions involving credit has increased since the Supreme Court of Canada handed down judgments relating to criminal interest rates.[102] Under section 347 of the Criminal Code, it is an offence to receive or to enter into an agreement or arrangement to receive interest at an annual rate of more than 60 percent. The scope of the provision is considerable and is not confined to loans of money. It “applies to a very broad range of commercial and consumer transactions involving the advancement of credit, including secured and unsecured loans, mortgages and commercial financing agreements”.[103] An interest charge essentially means the cost incurred to receive credit and includes fixed payments for fees, commissions and penalties. It includes the expense for deferral of payment owing for goods, services, or benefits. The imposition of a penalty on customers for late payment of monthly bills may give rise to an illegal interest rate. In Garland v. Consumer’s Gas Co.,[104] a public utilities company charged five percent on monthly bills for late payments. Actuarial evidence showed that if the customer paid soon after the due date an excessive interest rate was being imposed. Even though the company neither encouraged late payments nor sought to profit from them, the penalty imposed violated s. 347 of the Criminal Code.

Possession offences may be another unexpected source of potential criminal liability. It is unlawful to possess any property or thing or proceeds thereof knowing that all or part of it was obtained by or derived from the commission of an indictable offence.[105] Knowledge and control of the property are essential ingredients of the offence.[106] If the possession is recent, an inference of guilt can be drawn.[107] Under suspicious circumstances, the deliberate failure to make appropriate inquiries about the source of the property is wilful blindness, which amounts in law to knowledge.[108] Illegal possession is not limited to personal possession. It may be established when a person knowingly has the property in the actual custody of another person,[109] or has it in any other place, whether or not that place belongs to or is occupied by him, for his use or benefit or of another.[110] Joint possession occurs where one of two or more persons, with the knowledge and consent of the rest, has anything in his custody or possession, and it is then deemed to be in the custody and possession of each and all of them.[111] Knowledge, consent and control are required elements of constructive possession.[112] To aid concealing or disposing of illegally obtained property is an also an offence[113] as is importing into Canada or possessing property that was illegally obtained abroad.[114]

Related provisions of the Criminal Code govern the acquisition of property through unlawful means. Obtaining anything or causing it to be delivered to another person by a false pretence is an offence.[115] A false pretence is a representation of a matter of fact that is known by the person to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it.[116] Exaggerated commendation or depreciation of the quality of anything is not a false pretence unless it is carried to such an extent that it amounts to a fraudulent misrepresentation of fact.[117] Specific forms of obtaining by false pretence or false statements are enumerated at section 362. (1)(b) of the Criminal Code and following. Obtaining credit by false pretence or by fraud is illegal.[118] It is an offence to make false statements in writing about the financial status or means or ability to pay of oneself or that of a company that he is interested in or acts for, in order to procure property or a pecuniary advantage.[119] It is illegal to knowingly have others act on the faith of such a false statement in order to procure such property or pecuniary advantage.[120] Finally, section 363 prohibits obtaining execution of a valuable security by fraud.

D. FRAUD

1. Fraudulent commercial transactions

Fraud encompasses a wide range of dishonest commercial dealings. It is defined at s.380 of the Criminal Code, which provides that every one who, by deceit, falsehood or other fraudulent means defrauds any person of any property, money or valuable security is guilty of an indictable offence.

The Supreme Court of Canada has rendered several important judgments on the interpretation of this provision.[121] Fundamentally, it has held that fraud is deliberate dishonest economic deprivation or risk of deprivation. “Fraudulently” means “dishonestly”, and to defraud means “to deprive a person dishonestly of something which is his or something to which he is or would or might but for the perpetration of the fraud be entitled.[122]

Dishonesty connotes an “underhanded design which has the effect of, or engenders the risk, of depriving others what is theirs”.[123] Dishonest conduct is that which ordinary, decent people would feel discreditable and at variance with straightforward or honourable dealings.[124] Negligence, mistakes, or bad investments are insufficient, nor does taking advantage of an opportunity to someone else’s detriment amount to fraud.[125] A further element is necessary. As the Ontario Court of Appeal stated in R. v. Doren,[126] “…it cannot be said that in every case where the trier of fact determines that conduct falls below the highest standard of straightforward or honourable dealings that that finding alone would be sufficient to make out a case of fraud of conspiracy to defraud. That imposes too high a standard against which to measure criminality”. Rather, there must also be the wrongful use of something in which another person has an interest in such a manner that reasonable decent persons would consider it to be unscrupulous.[127] Not every misrepresentation constitutes fraud. Criminal dishonesty extends further. As stated in R. v. Mugford,[128] what must be assessed is whether it can objectively be said that the person had been cheated out of money.

Whether certain conduct falls within these parameters and amounts to fraud is determined upon an objective assessment of the facts. The standard of reference is what a reasonable man would consider to be a dishonest act.[129] Where it is alleged that the offence was committed by “other fraudulent means”, the existence of such means is determined by what reasonable people consider to be dishonest dealings. However, where the allegations are that the fraud was committed by deceit or falsehood, it is unnecessary to undertake such an inquiry. What needs to be decided is simply whether the situation was represented to be a certain character when in reality, it was not.[130]

It is not necessary that the perpetrator personally consider the means to be dishonest in order that there be a conviction for fraud.[131] It need only be established that the acts were knowingly undertaken with the awareness that the deprivation or risk of deprivation could follow as a likely consequence.[132] The subjective belief that the conduct is not dishonest does not afford a defence.[133]

The belief that no financial loss will occur is irrelevant. In R. v. Théroux,[134] the directing mind of a residential construction company falsely represented to prospective buyers that their deposits were insured. He was convinced that the project would be completed. Nevertheless, he was found guilty on the basis that the falsehoods were made knowingly and deliberately and they gave rise to deprivation. The Court noted, however, that the requirement of intentional or deliberate fraudulent action excluded mere negligent misrepresentation or a sharp business practise. A carelessly made statement, even if it is untrue, will not amount to an intentional falsehood. Nor will seizing any business opportunity constitute fraud unless it is motivated by intent to deprive by cheating or misleading.[135]

Similarly, an intention to repay will not negate fraud if the conduct involves dishonest deprivation.[136] In R. v. Zlatic,[137] a businessman obtained supplies on credit or in return for post-dated cheques. The money he obtained from the sale of these goods was gambled away. As these funds represented the means by which the creditors would be repaid, the scheme was fraudulent. It was not a defence to believe that the winnings would allow the creditors to be paid. An intent to make restitution would at most be relevant at sentencing.[138] The right to use the funds is not unrestricted right. The acceptance of the goods with no concern for payment and their ensuing diversion to a non-business notoriously risky enterprise resulted in their wrongful use. Thus a corporate officer using the company’s funds for unwise business purposes would not commit fraud. However, the diversion of these funds to private purposes having nothing to do with the business could be fraudulent. To demarcate the limits of when innocent conduct becomes criminal is not always evident particularly when financial pressure becomes acute. The question will generally be resolved by the court’s characterisation of the intent. As stated in R. v. Milec,[139] there must be:

“a finding that the accused was not simply scrambling to save a crumbling business but that he also knew that he was acting fraudulently in the course of doing so. The reality of commercial life mandates that the line between acts directed to the preservation of the business, even if desperate, and acts which are fraudulent, be meticulously drawn”.[140]

Having legal title to the funds that were unlawfully squandered does not vitiate a finding of guilt. The courts look to the substance of the matter rather than the form. The essential is whether there existed a dishonest commercial practise which deprived others of their financial interest or placed them at risk. The importance is how the property was obtained and what was done with it, not the title.[141]

2. Other fraudulent means

While most frauds involve either deceit or falsehood, such proof is not essential to support a conviction for fraud.[142] The words “other fraudulent means” in s. 380 encompass all other means which can properly be stigmatised as dishonest.[143] They need not involve fraudulent misrepresentation, as dishonesty of any kind is sufficient.[144] Thus, the persons who control a company can defraud it even in the absence of deceit.[145]

An illustration of these principles is found in the case of R. v. Lemire.[146] The charge was having defrauded the public through the submission of fictitious expense accounts. Lemire was a public servant. An increase in his salary had been approved by the government but for political reasons it could not be paid out immediately. His superiors suggested to him to submit fictitious expense accounts to compensate in the interim for the difference. Lemire did not believe that his actions were dishonest. The Supreme Court held that it was irrelevant whether the persons who verified the expenditures were deceived or not by the accounts submitted. These documents were the necessary means used to obtain the payments and without them the payments would not have been made. As they were presented with the knowledge that they were false, a fraud on the government had been committed.

To constitute fraud, it is not essential that the victims were lied to or duped. There is no requirement that they be induced to their detriment into a course of action by dishonest representations. The victims may be totally unaware of the commission of the act in question, yet still be the object of a fraud. In R. v. Kirkwood,[147] an electronics company sold and rented counterfeit videotapes. The owner was charged with defrauding those who held the distribution rights and copyrights. Notwithstanding the absence of a relationship with the accused, these persons could be defrauded of money earned or to be earned.

3. Risk of deprivation

The courts have been reluctant to attempt to provide an exhaustive definition of fraud. As seen, there are two necessary elements, namely “dishonesty” and “deprivation”.[148] The latter element is satisfied on proof of detriment, prejudice or risk of prejudice to the economic interests of the victim, caused by the dishonest act. It is not essential that there be actual loss, nor that such loss be intended. The imperilling of an economic interest is sufficient even though no actual loss was suffered[149] and the defrauder made no profit.[150] The Supreme Court in Olan[151] cited with approval the English Court of Appeal in R. v. Allsop[152] as correctly formulating the law on the issue of economic loss in fraud. In that case, the court stated that “economic loss may be ephemeral and not lasting, or potential and not actual; even a threat of financial prejudice while it exists may be measured in financial term.”[153] Interests which are imperilled are of less value than when they are secure.

4. Various forms of fraud

Fraud can be perpetrated in a wide variety of ways and circumstances. For example, it may involve the deliberate taking of an impermissible risk with property which could cause financial detriment or prejudice to another.[154] Thus the directors of a company could commit fraud by knowingly using its assets in a manner detrimental to the best interests of the company.[155] Similarly, the use of the company’s assets for personal purposes rather than for the bona fide benefit of the company can be fraudulent.[156] Fraud can be perpetrated upon a company by the person who owns or controls it.[157] Although not limitative, it may occur through the non-disclosure of important facts, the exploitation of the weakness of another,[158] the unauthorised diversion of funds, and the unauthorised arrogation of funds or property.[159]

An example of a case involving the unauthorised diversion of funds is Olan,[160] which pertained to a complex takeover transaction. The new, post-takeover board of directors had transferred the target company’s blue chip securities portfolio into valueless investment vehicles. The purpose behind this transfer was to have the cost of the takeover be paid with the funds from this portfolio. The Supreme Court did not consider decisive that the portfolio was the means to finance the takeover, nor that the transfer to the new investment was worthless. Some latitude was granted for business operations and the inherent risk involved. However, a conviction for fraud was confirmed on the basis that the transfer of assets was for personal ends and not for the legitimate business purposes of the target company.

There are many other examples where the courts have similarly qualified the diversion of funds. In R. v. Geddes,[161] a businessman accepted money as advance payment from a client for the future delivery of a product. The money was deposited into a bank account that was already overdrawn. The funds were used to pay outstanding debts. The undertaking for the customer was not honoured. It was argued that this failure was due to negligence because the intention to comply with the commitment was manifest throughout. The defence was rejected on the basis that the use of the purchaser’s money for personal obligations was not inadvertent. In R. v. Gaetz,[162] the accused operated a business which borrowed funds from the bank. Initial instalments were made according to the terms of the loan. However, the bank was supposed to be fully repaid once a certain event materialised. When that moment arrived, the business was in financial difficulty, and instead of the bank being repaid, the payments continued as if the event had not occurred. The withholding of the payment and subsequent diversion caused prejudice to the bank’s economic interest and was held to be unlawful.

In R. v. Currie; R.v.Bruce,[163] the accused were in the business of investing funds in a certain company, but diverted them to another company without notice to the investors and without authorisation. This action was dishonest and fraudulent. In R. v. Black and Whiteside,[164] the accused was the sole or controlling shareholder in several public and private companies. Some of the latter companies had cash flow problems. Monies from the public companies were transferred to the private companies. This unauthorised diversion of funds was not for the benefit of the public companies and constituted fraud.

Stripping the assets of a company can be fraudulent even though the shareholders do not consider themselves as having been defrauded. The corporation is a distinct entity from its shareholders. Where receivables are improperly transferred from the company to another party without consideration in order to finance a leverage buyout, the resulting prejudice to the economic interests of the company may amount to fraud.[165]

The deliberate failure to disclose material information could lead to a conviction for fraud. In R. v. Wagman,[166] the accused was the president of real estate development companies. He arranged for a mortgage company to advance the balance of funds under construction loans to his companies on the basis that the new homes had been purchased. The homes had, however, been “purchased” by persons acting as trustee for his companies and were not bona fide purchasers. The non-disclosure of this important element rendered the developer guilty even though the institution suffered no loss.

Mere negligence or inadvertence in omitting to reveal the relevant information is not fraudulent. Where the omission is calculated to mislead, an offence occurs.[167] In R. v. Émond,[168] a businessman did not disclose his own hidden profit in a transaction that he presented to investors. The purpose of suppressing this information was to conceal the true value of the property and mislead the prospective buyers into believing that the acquisition was a better opportunity than it was in reality. This dishonest act coupled with the resulting potential for loss constituted fraud.

5. Fraudulent transactions relating to securities, documents and property

A series of provisions in the Criminal Code relate to illegal actions involving securities. S.380 (2) creates an offence to fraudulently affect the public market price of stocks, shares, merchandise or anything that is sold to the public. Similarly, the fraudulent manipulation of stock exchange transactions, commonly known as “wash trading”, is prohibited at s. 382. This includes security transactions where no change in the beneficial ownership takes place. It may involve matching the purchase and sale orders of substantially the same size at substantially the same time and price. The unlawfulness occurs if these transactions are carried out with intent to create a false or misleading appearance either of active public trading or with respect to the market price of the security.

Gaming in stocks or merchandise is proscribed by s. 383 of the Criminal Code. It targets the participation in a contract or agreement for the transfer or delivery of stocks, goods, wares or merchandise without the intention that such transfer or delivery transpire. When coupled with the intent to gain or profit by the rise or fall in price of these items, the offence is complete. Finally, s. 384 creates an offence for a broker to reduce stock for his own account. This provision prohibits the sale of shares that were bought and carried on margin to any account in which the broker, the firm, a partner, the company or a director have an interest. The sale must have the intended effect of reducing the amount of those shares in the hands of the broker or under his control below the amount that should be carried for all customers.

It is an offence to induce persons to invest in a company on the basis of a false prospectus. S.400 of the Criminal Code prohibits making, circulating, or publishing a prospectus, statement or an account that is knowingly false in a material particular with that intent.

The fraudulent disposal of goods on which money was advanced is contrary to s. 389 of the Criminal Code. Under s. 392, it is unlawful to dispose of property to defraud creditors.

E. FORGERY AND FALSE DOCUMENTS

1. Forgery

Forgery is defined as knowingly making a false document, with the intent that the document be used or acted on as genuine to anyone’s prejudice, or that, the document should induce a person, by the belief that the document is genuine, to do or to refrain from doing anything.[169] The offence is committed as soon as the document is made with the requisite prohibited knowledge and intent.[170] The document need not be complete,[171] nor does it need to purport to be a document that is binding in law if the purpose of the document’s creation was that it be acted upon as a genuine document.[172]

Making a false document covers a range of activities and includes altering a genuine document in any material part, making a material addition to a genuine document (adding a false date, attestation, seal or other thing that is material) and making a material alteration in a genuine document (by erasure, obliteration, removal or in any other way).[173]

The Criminal Code defines a document as any paper, parchment or other material on which anything is marked that is capable of being read by a person, a computer system or other device.[174] A credit card is a document, but trade-marks on articles of commerce are not.[175]

The definition of a false document is far reaching and covers documents which might not otherwise be included in the definition of forgery. [176] A document is a false document if it purports to be made by, or on behalf of, a person who does not exist, or, a person who did not make or authorise its making.[177] Also covered by the definition is a document made by or on behalf of a person who purports to make it but is false in some material particular.[178] Finally, a document will be a false document if made in the name of an existing person with the fraudulent intent that it pass as being made by another.[179]

Inventory sheets containing false information with respect to the very matters which they purport to certify and are false in a number of material particulars have been held to be false documents in R. v. Gaysek.[180] A photocopy of a falsified cheque was held to be a false document.[181]

Criminal liability attaches to the author of a false document who knowingly creates such a document. In R. v. Paquette,[182] the accused was convicted for falsely attesting that a power of attorney had been sworn to before him.

In R.v. Delorme,[183] a notary agreed to receive a cheque from a potential buyer who told him the cheque was not valid. The buyer asked the notary not to deposit the cheque in a trust account and to issue a letter addressed to “whom it may concern” stating he had done so. The buyer claimed the letter would be used to show the building owner the seriousness of the offer. In fact, the letter was used to secure a bank loan on which the buyer eventually defaulted. Although the bank was not the intended victim, criminal fault ensued because the accused knew the buyer intended to cause a third party, the owner of the building, to act upon a false document he had prepared.

Forgery is established whether or not the creator of the false document intends to personally use the document and even if the intended victim is not the actual victim.[184] The intent to cause prejudice to a party, although it may be avoided, is sufficient to justify a conviction on a charge of forgery.[185] In R. v.Cowan,[186]an attorney was liable for endorsing and cashing, to his own benefit, a cheque payable to a third party without the latter’s consent. However, endorsing a cheque made payable to a third party will not attract criminal liability if the third party to whom the cheque is destined authorises the endorser to do so.[187]

A conviction for forgery will stand where the accused causes an innocent third party to unknowingly make a false document. Where the agent is innocent of any complicity in the crime the act of such agent is deemed to be the act of the perpetrator.[188]

2. Uttering a forged document

Fundamentally, the law regarding the uttering of a forged document seeks to prohibit the use of what is known to be a false document as though it were genuine.[189] The place where the document is forged is not a material consideration.[190]

There is some controversy with respect to the notion of what constitutes a forged document. In coming to terms with this notion the courts have been asked to decide if liability ensues only when it is established the document was created under the terms and conditions provided for in section 366 of the Criminal Code relating to the offence of forgery,[191] or, if it is sufficient that a person use what they know to be a false document whether or not it was created with the knowledge and intent required by the defining section ?[192] We suggest the latter view is the correct approach and the least likely to attract unwanted scrutiny in business dealings. The rational is simple, it is prohibited to knowingly use a false document in order that it be acted upon as genuine and the fact that it may have been created by a third party who did not have a criminal intent is immaterial.[193]

Mere preparation to utter a forged document is not an offence.[194] A conviction for uttering a forged document requires evidence that an accused began uttering a forged document or that he dealt with or acted upon a forged document as though it were a genuine document. In R. v. Valois, false bills were prepared by the accused as part of a scheme to justify a series of payments made to a third party. The Court found that all the parties involved were aware of the false bills and therefore no one had been misled as to the nature of the documents. In these circumstances the accused was immune from liability because the bills had been prepared for an eventual future use that never materialised.[195]

3. Other offences relating to forgery

A series of lesser known offences that resemble forgery and that deal with very specific matters are enumerated in the Criminal Code. We will attempt to briefly outline some of the more relevant prohibitions found in these provisions.

It is an offence to make, use or possess paper, that is used, or resembles paper that is used, to make exchequer bill paper, revenue paper or paper used to make bank notes without lawful authority or excuse.[196]

The Criminal Code also provides for offences relating to: counterfeit proclamations or other official documents;[197] the counterfeiting of stamps and marks;[198] the damaging of official registers and election documents[199] and specific offences relating to registers.[200]

4. Falsification of books and documents

With respect to books and documents used by enterprises in the ordinary course of business, in government dealings or with the public generally, the Criminal Code outlines a set of specific prohibitions. If done with the intent to defraud,[201] it is an offence to alter, or to omit a material particular from a valuable security or document.[202] Falsifying, with the intent to deceive, an employment record by any means, including the punching of a time clock, is an offence.[203] Criminal liability is triggered against anyone who, being entrusted with the receipt, custody or management of any part of the public revenues, knowingly furnishes a false statement or return of, any sum of money they may have collected or been entrusted with, or, any balance of money in their control.[204]

It is an offence to attempt to induce persons to advance moneys to a company by means of a false prospectus.[205]It is unlawful to attempt, by means of a false prospectus, statement or account, be it written or oral, to: induce persons to become shareholders or partners in a company;[206] deceive or defraud members, shareholders or creditors of a company,[207] or, induce any person to entrust or advance anything to, or enter into any security for, the company.[208] The statement must knowingly be false in some material particular and made with the intent to defraud.[209]

Section 401 (1) of the Criminal Code prohibits obtaining or attempting to obtain carriage by false or misleading information of anything into a country, province or other place, whether in Canada or not, where the importation or transportation of it is unlawful.[210] In addition to any sanction that may be imposed under the sentencing provisions of the Criminal Code for such an offence, the court may direct the forfeiture of anything by means of or in relation to which the offence was committed.[211]

Persons that are traders or involved in business are required to keep books of account to show or explain the transactions they are involved in if they owe over one thousand dollars and are unable to pay creditors in full.[212] Those who are able to account for their losses and show that their failure to keep books of account was not intended to defraud creditors will not be liable.[213] Furthermore, those involved in trade or business will not be criminally liable if the failure to keep books of account occurred five years prior to their inability to pay creditors.[214]

5. Forgery of trade marks and trade descriptions

A trademark is forged when a person makes or reproduces in any manner, without the proprietor’s consent, a trademark or a mark so nearly resembling it as to be calculated to deceive,[215] or when a person falsifies a genuine trademark.[216] Forging a trademark brings on criminal liability when it is done with the intent to deceive or defraud the public.[217]

Passing off wares or services as being those actually ordered or required, is prohibited when it is done with the intent to deceive or defraud the public or any person, whether ascertained or not.[218] It is also prohibited, in association with wares or services, to falsely make use of any one of a series of enumerated descriptions with a fraudulent intent towards the public or any person whether ascertained or not.[219]

Making, possessing or disposing of a die, block, machine or other instrument, designed or intended to be used in forging a trademark is an offence.[220] It is a defence if the person demonstrates having acted in good faith in the ordinary course of their business or employment.[221]

It is unlawful to deface, conceal or remove a trademark or the name of another person fraudulently from anything without consent.[222] The same is true of a manufacturer, dealer, trader or bottler who, without consent and with fraudulent intent, fills any bottle or siphon that bears a trade-mark or name of another person with a liquid commodity.[223]

It is an offence to sell, expose, advertise, possess for the purpose of selling, used, reconditioned or remade goods that bear a trade-mark or trade-name of another person, without making full disclosure with regards to the condition of the goods.[224]

F. BRIBERY AND CORRUPTION

The idea of a corrupted government immediately brings to mind many countries but certainly not Canada. In Hinchey, the Supreme Court observed that the Criminal Code, by keeping temptation away, helped to control corrupted practices [225]. Under the headline of Corruption and Disobedience, the Code covers a wide range of illegal conduct.[226]. Although the Code places a greater risk on the civil servant or the elected official, criminal liability is engaged through participation[227].

1. Secret commissions

The agent must always act in the best interests of the principal and the Criminal Code[228] aims at protecting the agency relationship, so important in the conduct of any business[229]. An offence is committed when one, corruptly, gives or offers to an agent –or agrees to do the same– any advantage[230] as consideration for influencing the business of the principal. The offence is also made out when the perpetrator is the agent who demands, accepts, offers –or agrees to do the same– from any person any advantage to the same effect[231].

The prosecution needs to prove that the accused acted knowing the three following elements: the existence of an agency relationship, the existence of an advantage given with intent to influence the business of the principal[232] and the corruption aspect. Corruption is an essential element since the offence requires an additional element beyond the taking of a benefit as consideration for influencing the affairs of the principal[233].

The decision of Kelly illustrates the basic situation[234]. Kelly was a director of a company offering financial planning services. He became involved with another company selling apartments as tax shelters. Unbeknownst to his clients, Kelly received a substantial but standard commission for selling units to them. Because of the recession in the real estate market, some clients became dissatisfied with the investment and learned about the commissions. Kelly was charged and the main issue in his trial was whether there was corruption. Because the commissions were secret and the accused had acted knowingly to influence the client’s business, he was found guilty.[235].

For the agent, corruption results from the failure to disclose the benefit in an adequate and timely manner. The person giving the benefit must do so with the intention that the agent not discloses it[236]. The deal between the agent and the third party need not to be corrupt[237]. The offence is committed even if the agent does not have a specific principal when the offer is made. One may also be convicted when the agent has no intention to go along with the offer[238]. The same is true when the agent has no power, due to his rank or mandate, to influence his principal[239] or because his decisions need approval by other individuals[240].

The agent must disclosure the nature of the benefit, the source and the best approximation of the amount of that benefit[241]. There is no pre-set delay but disclosure must be as soon as possible[242].

Finally, section 426(4) states that an employee is the agent of his employer so that this offence may be committed in numerous situations. It has been decided that this section is also aimed at civil servants[243] and elected officials[244].

2. Corruption

Section 119 prohibits two distinct conducts. Firstly, anyone holding a judicial office[245] or being a Member of Parliament or of a legislature, is barred from corruptly offering services in return for a bribe. Secondly, individuals are liable when attempting to corrupt or bribe a Member of Parliament or other designated persons.

The bribe may take many forms such as money, office, place or employment to the benefit of this official or another person. How it is used is not relevant and it offers no defence that the monies were spent on "non-reimbursable expenses" incurred as a Member of Parliament[246]. The prosecution must prove that it was given in respect of anything done or omitted or to be done or omitted by the recipient in an official capacity[247]. In that regard, there should be no distinction between legislative and administrative acts[248].

In Yanakis, the accused was a Member of Parliament. Evidence showed that he secretly accepted money from a consultant town planner while the government operated a funding program from which the consultant received benefits. Yanakis was acquitted because the prosecution failed to prove that he did anything in his official capacity in exchange for the money received[249].

In Arseneau, the Supreme Court had to determine if a "Minister" was also a "Member of a Legislature" for the purpose of this section. The majority answered affirmatively stating that, in the absence of evidence to the contrary, one must be a Member of the Legislature before being appointed Minister[250]. The dissent was concerned that a more specific offence was directed at the conduct of a minister.[251].

The Supreme Court distinguished sections 119 and 121. The former attracts greater punishment because of the element of corruption and the fact that the individual is acting in an official capacity as a member of a legislature.[252]

While corruption is not defined in the Criminal Code and there are no clear guidelines[253]., secrecy surrounding the relation and payment is a strong indication of a corrupt intent. The amount paid, the form of payment, and the very nature of the initial transaction are aspects to be considered[254].

3. Frauds on the government

Section 121 of the Canadian Criminal Code provides for offences aimed at preventing any form of bribe in relation with government, hence preserving the integrity of our democratic system[255] and the integrity of both civil servants and government officials[256]. The law addresses the appearance of integrity[257] and encompasses a wide variety of situations.

A government employee or official includes the occupier of any function in the government or its agencies[258]. The test to determine if an agency is part of government, other then an explicit mention in the law[259], rests on the nature and degree of control which the Crown exercises over it[260].

The words "cooperation, assistance or exercise of influence" are omnipresent in this section. "Influence" covers all intervention that may affect the decision of government dealings[261]. Cooperation, assistance or exercise of influence are alternative means of committing the offence[262]. While the act of bringing people together with government officials to discuss business is not a criminal offence, it may well become so if they intend to influence dealings with the government and a benefit is awarded for that service[263].

The notion of benefit[264] covers many realities[265], even standard remuneration[266]. The prosecution must prove its existence and that a civil servant or government official profited from it[267]. Courts will take into account a number of criteria such as, but not limited to: its nature, the manner in which it was made, prior relationship between the parties, the employee's function with the government, the nature of the dealings, the connection between the last two and the state of mind of the persons involved [268]. The subjective state of mind of the beneficiary is merely one factor to consider[269]. The benefit must have the capacity of influencing the dealings and jeopardising the government’s integrity[270]. This test is intended to exclude insignificant courtesy gifts. However, the conduct might fall within the section if it occurs at a high frequency over an extended period of time[271]. In Hinchey, the Supreme Court referred to a tax law decision to conclude that a benefit is considered as such when it is a "material economic advantage"[272].

Finally, the prosecution must prove the accused knew the receiver to be a government employee or official. If the evidence cannot sustain such knowledge, the accused is entitled to an acquittal unless he has been wilfully blind to that fact[273].

It is prohibited to, directly or indirectly, give or offer a benefit to an official, or to a third party for the benefit of an official, in consideration for the official's influence in connection with government dealings, whether or not, in fact, the official is able to provide that help.[274] An official is prohibited from demanding, offering or accepting any such benefit.[275]

It is an offence to corrupt a government employee in order to influence dealings with the government[276] or, being an official, to undertake, for consideration, to act on another person's behalf in conducting business with the government[277]. The prosecution must prove knowledge of all the circumstances in which it occurred.

The illegal relation does not have to be corrupt[278]. While the employee's position within government is irrelevant[279], the benefit given as consideration for the influence is relevant[280]. Courts will assess whether or not the benefit exceeds the true value of the services obtained because this may be important in deciding whether it is in consideration of an exercise of influence[281].

Any person who, having dealings of any kind –which are not necessarily commercial dealings[282]– with the government, confers an advantage to an official or to a third party for the benefit of an official, with respect to those dealings commits an offence.[283] It is a defence, however, if the official or employee has the written consent of his superior[284].

The accused must have the intention to confer the benefit in relation with dealings with government. In Cooper, the accused offered paid weekends in Florida to a government official and his wife. Although Cooper argued in defence the trips were provided out of friendship, he was convicted[285]. The combination between dealings with the government and offering a benefit to an official almost irresistibly leads to a conviction[286].

Under section 121(1)(c), a government employee who willingly receives a gift of any kind from a person who has ongoing dealings with the government is guilty of an offence[287]. This section seems virtually limitless, but by offering the simple defence briefly discussed above, the legislator wanted to counterbalance the wider net this section offers[288].

In Hinchey, this section was construed to narrow down its scope as follows. Firstly, it concerns ongoing commercial dealings at the time of the offence[289]. Secondly, the advantage of any kind is not synonymous of "whatever amount" but rather it must be construed as to encompass different forms of benefits[290]. Value is one of the concerns. The prosecution must prove that the employee profited, thus excluding trivial or reciprocal gifts from criminal sanctions[291]. If the benefit arises out of a long friendship and there is no relation between the employment and the nature of the dealings, the situation does not fall within the ambit of the section[292]. However, a connection between the gift, the employment and the nature of the dealings will result in a conviction[293].

The gift need not be offered in exchange of any influence or in regard of certain dealings[294] or that the receiver intended to exercise some undue influence[295]. The prosecution does not have to show a corrupt relation[296] or ill motive on the part of the employee, nor do any consequences have to be proven[297].

4. Breach of trust

A breach of trust targets officials[298] including municipal officials [299]. Someone who is not an official can be liable by being a party to the offence.

This is a codification of the common law offence of misbehaviour in office and misfeasance in public[300]. It encompasses a very wide range of actions[301]. Courts have construed the section to mean an act that constitutes fraud or breach of trust committed in the general context of the execution an official's duties. The official must act with full knowledge of all circumstances. The existence of the breach of trust is analyzed objectively[302]. Secrecy can prove guilty intent[303].

Dishonesty or corruption is not a necessary ingredient of the infraction[304]. The act must be more then mere negligence that would get the attention of civil prosecution[305]. A mere technical administrative indiscipline, even if deliberate, is not sanctioned[306]. What is innocent for the ordinary citizen may become criminal for the official since the breach of trust only requires the official to " do an act which is either contrary to the duty imposed on him by statute, regulation, his contract of employment or administrative directive and which resulted in a direct or indirect personal benefit to him. It is not important that this act caused prejudice to the State which employed the official. "[307]

The actions of the official must be in furtherance of private ends[308]. An official cannot occupy a parallel function to his government position[309]. Lack of profit from the illegal act is not a defence, although this may be a mitigating factor on sentencing[310].

Courts have insisted on the seriousness of this offence. Contrary to other offences mentioned above, the law does not provide for the defence of assent by a superior. It is not necessary that it be committed in relation to dealings with government[311]. The norm to abide by will vary depending on the function exercised by the accused[312].

5. Other similar offences

It is an offence for any one to give or offer a reward to a minister or an official in exchange for influence in any dealings or an appointment to an office.[313] It is illegal for any one having or pretending to have influence within the government to offer or agree to a reward for any person[314] in exchange for influence.[315]

Bypassing a legitimate government tender process is prohibited. An individual who, having made a tender, pays a third party as consideration for the withdrawal of a tender commits an offence.[316] Similarly, it is unlawful for an individual to offer to withdraw a tender in consideration for an advantage.[317]

Electoral corruption is governed by section 121(2) of the Criminal Code. In order to obtain or retain a contract with the government, it is unlawful to donate directly or indirectly to a person any valuable consideration for the purpose of promoting a candidate or a political party with intent to influence the outcome of a federal or provincial election.

Finally, section 123 provides for additional offences relating to the affairs of municipal officials. For the purpose of the section, the municipal official is a person occupying a position implicating duties of authority under a municipal government[318].

6. Corruption of foreign public officials

On February the 14, 1999, Canada proclaimed in force the Corruption of Foreign Public Officials Act[319] which created a crime for bribing a foreign public official in the course of business. The Act provides for heavy fines for corporations and a maximum of five years jail term for individuals. It results from a Convention signed by Canada and other member and non-member countries of the Organisation for Economic Co-operation and Development in December 1997. Each signatory government committed to make it a crime to bribe foreign public officials in international business transactions.

The new law considers a "business" any kind of trade or profession carried on in Canada or elsewhere for profit[320]. It seeks to prevent the bribing of any public officials that perform some duty for a foreign state[321]. It may be said that the legislation carries a number of flaws that will make it very difficult to manage, in particular the part on possession and laundering of proceeds of crime or the various exceptions specified.

It is clear the Act creates three offences: bribing, possession of proceeds of that crime and laundering of proceeds of crime. The bribing offence at section 3 is a one-way influence peddling offence, meaning that a foreign public official may ask for a bribe with impunity, save for punishment under local laws, but it is a crime to, directly or indirectly give, offer –or agree to do the same– an advantage of any kid to a foreign public official or any person for the benefit of a foreign public official, to obtain or retain business.

It is not a bribe when payment is made to expedite or secure the performance of any act of a routine nature such as the issuance of a permit to qualify a person to do business, the processing of official documents, the provision of services normally offered to the public or the provision of services normally provided as required. Not included in those exceptions a decision to award new business or to continue business[322].

The second and third offences relate to the possession[323] and laundering[324] of proceeds obtained or derived, directly or indirectly, from the bribing of a foreign public official. A charge of possession requires knowledge that all or part of the proceeds derives from the commission of one of the offences mentioned. The laundering offence simply requires such a belief. The Act by making these offences "enterprise crime offences"[325], incorporates the mechanisms described under the proceeds of crime legislation.

G. PROCEEDS OF CRIME

1. The scope

Laundering the proceeds of crime occurs, essentially, when one uses or deals with, in any way, property or proceeds of any property with the intent to conceal or convert that property or those proceeds, knowing or believing that all or part of that property or of those proceeds was obtained or delivered directly or indirectly as a result of the commission in Canada, or elsewhere, of an enterprise crime offence or a designated substance offence.[326]

An enterprise crime offence is one that is enumerated in Section 462.3 of the Criminal Code and covers a wide spectrum of criminal activity. The examples that follow are by no means exhaustive and only serve to illustrate the scope covered by the legislation. The list includes crimes such as bribery, theft, unlawful possession, fraud, fraudulent manipulation of stock exchange transactions, secret commissions, laundering proceeds of crime, offences committed in relation to a criminal organisation, offences against certain sections of the Excise Act, the Customs Act, and the Competition Act.[327]

Proceeds of crime are any property, benefit or advantage, obtained or derived as a result of the commission of an enterprise crime or a designated substance offence. [328] Liability results whether or not the property, benefit or advantage is obtained in Canada notwithstanding that the offence may have been perpetrated outside Canada.[329]

“Property” is defined by the Criminal Code in the broadest possible terms to include, real and personal property of every designation, deeds and instruments relating to, or evidencing, the title or right to property or giving a right to recover or receive money or goods.[330] It includes property that was originally in the possession of a third party and any property into which or for which it was converted or exchanged and anything acquired at any time by the conversion or exchange is included in the definition.[331]

The case of R. v. Montour,[332] serves to illustrate the possible consequences for blameless citizens who associate with people involved in money laundering. In that case, a partnership came to an agreement with a third party whereby in return for the right to exploit a tobacco factory on their land the partners would share part of the profits with the third party. For over three years the partnership exploited the tobacco factory without ever paying the required excise tax while nonetheless respecting their agreement of profit sharing. The court held the profits were proceeds of crime and while it was agreed the third played no part in the criminal activity it could not be allowed to profit from the crime committed by the partnership.

Similarly, in Manitoba (Attorney General) v. Petersen,[333] the mortgage on a home had been paid, in part, with proceeds of crime. The home was destroyed by fire and the issue arose as to whether the widow, of the accused who had paid for part of the mortgage with the proceeds of crime, should be entitled to the insurance proceeds. The court decided the widow would be gaining an indirect benefit from the proceeds of crime if she was allowed to retain the portion of the insurance proceeds that would have been attributed to the holder of the mortgage had the balance not been paid with the proceeds of crime.

For the purpose of establishing criminal liability proceeds must be the result of an enterprise crime offence and there must be knowledge that the proceeds are the result of an enterprise crime offence.[334] Knowledge should not be taken to mean awareness of all the circumstances. Knowledge will be presumed when there is failure to inquire into particular circumstances with the knowledge or strong suspicion that doing so would cause one to acquire the “unwanted” knowledge.[335] This is an application of the doctrine of wilful blindness.

2. Special search warrants

Special provisions are made for the issuance of search warrants with respect to money laundering. A judge may issue a warrant to authorise the search and seizure of property in any place if satisfied that there are reasonable grounds to believe that any property will be found, in respect of which an order for forfeiture may be made or in respect of which an enterprise crime offence is alleged to have been committed.[336]

A warrant issued in one province may be executed anywhere in Canada if the warrant is confirmed by a judge in the province where the warrant is to be executed.[337]

A special feature of this provision allows for the judge issuing the warrant to seize property to require that those who may have a valid interest in the property subject to seizure be heard, unless the judge is satisfied that in doing so, before issuing the warrant, the property or its value is at risk.[338]

3. Restraint order

The Attorney General may make an ex parte application for a restraint order, in writing and supported by an affidavit, in respect of property stemming from an enterprise crime for which a forfeiture order may be made.[339]

A judge may issue a restraint order, if satisfied there are reasonable grounds to believe that property may be subject to forfeiture on the basis that it results from an enterprise crime and may make an order to protect the value and integrity of the property.[340] An order may prohibit anyone from disposing of, or otherwise dealing with, the property in any manner other than specified in the order.[341]

As with special warrants the restraint order issued in one province may be executed anywhere in Canada if the order is confirmed by a judge in the province where it is to be executed.[342] In addition, a judge making a restraint order is authorised to require that those who may have a valid interest in the property subject to the restraint order be heard, unless the judge is satisfied that in doing so, before issuing the order, the property or its value is at risk.[343] In this respect, the judge is required to rely on the allegations in the affidavit in support of the restraint order and there is a duty on those making the ex parte applications to disclose all the material evidence to the court.[344]

Restraint orders must be served on the person to whom the order is addressed.[345] They must be registered against the property in accordance with the relevant provincial laws.[346] The order remains in effect until it is revoked or varied, it ceases to be in effect, or, an order of forfeiture or restoration is made.[347] It is an offence to contravene or fail to comply with a restraint order that has been properly served.[348]

In Serrano v. Canada,[349] the court held that a restraint order was not a seizure within the meaning of section 8 of the Charter and therefore not subject to the constitutional protection afforded against unreasonable search and seizures.

4. Applications for review of warrants and restraint orders

Persons who have an interest in property that is seized under a special warrant or is subject to a restraint order may apply to a judge for permission to examine the property or, if some requirements are satisfied, for an order to have all or part of the property returned under such conditions as the court deems appropriate.[350]

A judge may order the return of all or part of the property seized under a warrant or subject to a restraint order if certain conditions are satisfied.[351] The applicant must demonstrate that no one else is the lawful owner of, nor is lawfully entitled to, the property and that the applicant has no other assets or means to meet reasonable living expenses and reasonable business and legal expenses.[352] The judge may also grant the return of all or part of the property if the applicant enters into a recognizance.[353]

Property seized under warrant or subject to a restraint order may be returned to the owner if the court is satisfied the warrant or restraint order should not have been made with respect to the particular property.[354] Finally third parties who demonstrate lawful ownership of the property will successfully retrieve their property from the seizure or restraint order if they establish they are innocent of any wrongdoing.[355]

Under this provision, a judge is not called to reconsider the issuance of the warrant or restraint order unless presented with relevant evidence of fraud, non-disclosure or new evidence not presented to the judge who issued the initial warrant or order. [356]

5. Expiration of special warrants and restraint orders

Property that has been seized under a special warrant or that is subject to a restraint order may not remain under seizure or restraint order for a period exceeding six months unless proceedings are instituted which may result in the forfeiture of the property or a judge grants an extension of the detention.[357]

6. Forfeiture provisions

The property of a person convicted of an enterprise crime offence shall be forfeited if the sentencing judge is satisfied on a balance of probabilities that any property is proceeds of crime and that the enterprise crime offence was committed in relation to that property.[358] Independent of such a finding the court may nevertheless order its forfeiture if it is proven beyond a reasonable doubt that the property is proceeds of crime.[359]

An order for forfeiture of property will be rendered even if the property is registered in the name of a third person,[360] if used as a ruse to facilitate the laundering of proceeds of crime or paid for with proceeds of crime.[361] However not all property somehow connected to a criminal act will be subject to forfeiture. In some circumstances fines may be imposed in lieu of forfeiture.[362]

Before a forfeiture order is rendered, a court may set aside any conveyance or transfer of property that occurred after it was seized or was subjected to a restraint order unless the conveyance or transfer was for valuable consideration to a person acting in good faith.[363]

7. Third party considerations with respect to forfeiture

The forfeiture of property derived from proceeds of crime may implicate third parties who have a valid interest in the property and have no involvement whatsoever in any criminal wrongdoing. Thus, before a forfeiture order is made with respect to property found to be proceeds of crime, a court may require notice to and the hearing of any person who appears to have a valid interest in the property.[364]

Where the court is satisfied that any person who is lawfully entitled to any property that would otherwise be forfeited, is innocent of any complicity or collusion in relation to a proceeds of crime offence, the court may order the return of the property or part thereof to that person.[365]

Innocent third parties would be well advised to establish their legitimate claim to property that may be forfeited at this stage of the proceedings before the court orders the forfeiture of the property. When an innocent third party is successful at retrieving the property from the forfeiture order, the court will order the return of part or all of the property to the innocent owner and impose a fine on the offender instead of the forfeiture of the property.[366]

Nonetheless, and notwithstanding a forfeiture order rendered with respect to a specific property, innocent third parties can apply for relief from forfeiture by filing a notice with the court within thirty days after the forfeiture.[367] The date for the hearing shall be set not less than thirty days after the filing of the application for relief from forfeiture[368] and the Attorney General is entitled to a fifteen day notice prior to the hearing date.[369]

The person applying for relief from forfeiture must establish an interest in the forfeited property and innocence with respect to any complicity or collusion in relation to a proceeds of crime offence that resulted in the forfeiture.[370] The court may then make an order declaring that the applicants interest in the property is not affected by the forfeiture and furthermore, declaring the nature and extent of the interest in the forfeited property.[371] Both the applicant and the Attorney General may appeal the order of the judge with respect to the relief from forfeiture application.[372]

Where a judge has declared the applicant’s interest in a property, the Attorney General shall, if the period with respect to an appeal has expired, or if an appeal from the order has been determined, direct that the property or part of the property be returned to the applicant or direct that an amount equal to the value of the interest of the applicant, as declared in the order, be paid to the applicant.[373]

The application for relief from forfeiture will not necessarily result in the return of the property under forfeiture because the forfeiture order is not rescinded as a result of such an application.[374] At this stage of the process the judge must “decide whether the innocent third party should suffer so that the goal of divesting the offender of his or her ill-gotten gains can be achieved, or whether that goal should be tempered so as to permit vindication of the innocent third party’s legitimate interest in the forfeited property.”[375] Hence our suggestion that innocent third parties should not neglect attempting to retrieve their property before a forfeiture order is made.[376]

Finally, innocent third parties whose property interests may be adversely affected by a seizure pursuant to a warrant or a restraint order may apply to a judge to have the property returned, the restraint orders lifted and an recognizances annulled where it is determined the property is no longer required for any purpose with respect to investigations, evidence or court proceedings.[377]

[1] Reference re: Section 94(2) of the Motor Vehicle Act, [1985] 2 S.C.R. 486.

[2] Section 24 and 463 of An Act respecting the criminal law, R.C.S. 1985, v. C-46, as amended [hereinafter the Criminal Code or Cr. C.].

[3] R. v. Fell, (1981) 64 C.C.C. (2d) 456, 461 (Ont. C.A.); R. v. Canadian Dredge and Dock Co., [1985] 1 S.C.R. 662, 685.

[4] Sections 21, 22, 23, 463 and 464.

[5] R. v. Dunlop and Sylvester, [1979] 2 S.C.R. 881, 891, 905.

[6] R. v. Mammolita, (1983) 9 C.C.C. (3d) 85.

[7] R. v. Nixon, (1990), 57 C.C.C. (3d) 97, 114 (B.C.C.A.)

[8] R. v. Greyeyes, (1996) 109 C.C.C. (3d) 437, par. 27 (C.A.S.) affirmed [1997] 2 S.C.R. 82; R. v. Meston (1975), 28 C.C.C. (2d) 497, 503-504 (Ont. C.A.)

[9] Greyeyes, supra, note 8; R. v. Curran, (1977) 38 C.C.C. (2d) 151 (Alta. C.A.).

[10] R. v. Pretty, (1982) 66 C.C.C. (2d) 43, 53 (Alta. C.A.).

[11] R. v. Hibbert, [1995] 2 S.C.R. 973, par. 27 and 31.

[12] Hibbert, id., par. 31 and 32.

[13] Section 23.1: For greater certainty, sections 21 to 23 apply in respect of an accused notwithstanding the fact that the person whom the accused aids or abets, counsels or procures or receives, comforts or assists cannot be convicted of the offence.

[14] R. v. Woods (1994) 88 C.C.C. (3d) 287 (Ont. Ct. Gen. Div.) (sub nom. R. v. Plastic Engine Technology Corp.), leave to appeal denied at (1994) 89 C.C.C. (3d) 499 (Ont. C.A. in chamber); R. v. Berryman (1990), 57 C.C.C. (3d) 375

[15] R. v. Woods, supra, note 14 .

[16] Prudential Exchange Co. v. Edwards, [1939] S.C.R. 135.

[17] R. v. Woods, supra, note 14 , 311-312.

[18] Hibbert, supra, note 11, par. 42 ; R. v. Jackson (1991) 68 C.C.C. (3d) 385, 421 (Ont. C.A.) affirmed at [1993] 4 S.C.R. 573 but see R. v. Logan, [1990] 2 S.R.C. 731, 741 where the Supreme Court explains that some offences require subjective foresight either as a principal or as a party.

[19] Section 22(2) Cr.C.

[20] Section 22(1) Cr.C.

[21] Section 464 Cr. Code.

[22] R. v. Dionne, (1987) 38 C.C.C. (3d) 171 9 (N.B.C.A.), leave to appeal refused 38 C.C.C. (3d) vi.

[23] 24(1) and 463 of the Criminal Code..

[24] R. v. Quinton, [1947] S.C.R. 234, 236 ; R. v. Ancio, [1984] 1 S.C.R. 225.

[25] Ancio, id., 247; R. v. Cline, (1956) 115 C.C.C. 18, 29 (Ont. C.A.)

[26] R. v. Deutsch, [1986] 2 S.C.R. 2, 23; R. v. Detering, [1982] 2 S.C.R. 583, 586 ; Cline, supra, note 25 , 29.

[27]Cline, supra, note 25 , 29.

[28] R. v. Cotroni, [1979] 2 S.C.R. 256, 276.

[29] R. v. Cotroni, [1979] 2 S.C.R. 256, 276.

[30] R. v. O'Brien, [1954] S.C.R. 666.

[31] R. v. Trudel, (1984) 12 C.C.C. (3d) 342, 347 (Que. C.A.).

[32] R. v. McNamara et al. (No. 1), (1981) 56 C.C.C. (2d) 193, 453 (Ont. C.A.)

[33] R. v. Rowbotham, [1993] 4 S.C.R. 834, 835.

[34] Canadian Dredge, supra, note 3.

[35] Canadian Dredge, supra, note 3, 676.

[36] Section 2 of the Criminal Code defines "everyone" to include corporation.

[37] Canadian Dredge, supra, note 3, 674.

[38] Lennard's Carrying Co. v. Asiatic Petroleum Co., [1915] A.C. 705.

[39] Canadian Dredge, supra, note 3, 692.

[40] Canadian Dredge, supra, note 3, 682.

[41] Canadian Dredge, supra, note 3, 684.

[42] Rhône(The) v. Peter A.B. Widener (The), [1993] 1 S.C.R. 497, 521.

[43] R. v. Church of Scientology of Toronto, (1997) 116 C.C.C. (3d) 1, 88 (Ont. C.A.).

[44] Canadian Dredge, supra, note 3, 693.

[45] Canadian Dredge, supra, note 3, 685.

[46] R. v. P.G. Marketplace and McIntosh, (1979) 51 C.C.C. (2d) 185 (B.C.C.A.).

[47] R. v. Spot Supermarket Inv., (1979) 50 C.C.C. (2d) 239 (Que. C.A.).

[48] Canadian Dredge, supra, note 3, 714.

[49] R. v. Les Forges du Lac Inv., (1997) 117 C.C.C. (3d) 71 (Que. C.A.).

[50] Church of Scientology, supra, note 43, 73.

[51] R. v. City of Sault Ste. Marie, [1978] 2 S.C.R. 1299.

[52] Canadian Dredge, supra, note 3, 674.

[53] Sault Ste. Marie, supra, note 51.

[54] City of Montreal v. Dany Danechrad, no. 500-36-000059-942. June 23, 1994, Quebec Superior Court.

[55] R. v. Nickel City Transport (Sudbury) Limited, (1993) 82 C.C.C. (3d) 541 (Ont. C.A.).

[56] Canadian Dredge, supra, note 3, 674 ; Sault Ste. Marie, supra, note 51.

[57] See . R. v. Pontes, [1995] 3 R.C.S. 44, par. 32.

[58] CÔTÉ-HARPER, RAINVILLE, TURGEON, Traîté de droit pénal canadien, Ed. Yvon Blais, 4e edition, 1998, pp. 604-619.

[59] R. v. Rio Algom Ltd., (1988) 46 C.C.C. (3d) 242 (Ont. C.A.).

[60] R. v. Wholesale Travel Group inv., [1991] 3 S.C.R. 154 ; Motor Vehicle Act, supra, note 1.

[61] Nickel City Transport, supra, note 55, 550.

[62] Section 322(1) of the Criminal Code.

[63] Section 322(1)(a) of the Criminal Code.

[64] Section 322(1)(b) of the Criminal Code.

[65] Section 322(1)(c) of the Criminal Code.

[66] Section 322(1)(d) of the Criminal Code.

[67] Section 322(2) of the Criminal Code.

[68] Section 328(e) of the Criminal Code.

[69] Stewart v. The Queen (1988), 41 C.C.C. (3d) 481 (S.C.C.).

[70] R. v. Scallen (1974), 15 C.C.C. (2d) 441 (B.C.C.A.).

[71] R. v. Hardy (1980), 57 C.C.C.(2d) 73 (B.C.C.A.).

[72] Supra, note 69 .

[73] R. v. Olan, Hudson, and Harnett (1978), 41 C.C.C. (2d) 145.

[74] (1990), 52 C.C.C. (3d) 34 (B.C.C.A.).

[75] Section 322(4) of the Criminal Code.

[76] A. MEWETT, M. MANNING, Mewett and Manning on Criminal Law, 3^rd ed. (Toronto: Butterworths, 1994) at page 814.

[77] (1992), 70 C.C.C. (3d) 481 (S.C.C.)

[78] See also R. v. Smith (1993), 84 C.C.C. (3d) 160 (S.C.C.), and R. v. Johnson (1978), 42 C.C.C. (2d) 249 (Man. C.A.).

[79] (1998), 120 C.C.C. (3d) 1.

[80] (1994), 25 W.C.B. (2d) 481 (Alta. C.A.).

[81] (1994), 21 W.C.B. (2d) 207 (Sask. C.A.), affirmed [1995] 1 S.C.R. 856.

[82] (1989), 94 A.R. 238.

[83] Sections 330, 331, and 332.

[84] W.H. HOLLAND, The Law of Theft and Related Offences (Scarborough: Carswell, 1998), at 204.

[85] Section 330 of the Criminal Code.

[86] (1988), 49 C.C.C. (2d) 546.

[87] R. v. Pidlubny (1978), 2 C.R. (3d) 35 (Ont. C.A.).

[88] Section 331.

[89] Section 332 of the Criminal Code.

[90] (1998), 120 C.C.C. (3d) 216.

[91] (1977), 36 C.C.C. (2d) 463.

[92] (1982), 68 C.C.C. (2d) 531.

[93] Hammerling v. The Queen (1982), 1 C.C.C. (3d) 353 (S.C.C.).

[94] (1985) 16 C.C.C. (3d) 481 (S.C.C.).

[95] Section 340 of the Criminal Code.

[96] Section 341 of the Criminal Code.

[97] Section 342.1(1)(a).

[98] Sections 342.1(1)(b) and 430(1.1).

[99] Section 342.1(1)(c).

[100] Section 342.1(1)(d).

[101] Section 342.2.

[102] Garland v. Consumers’ Gas Co. (1999), 129 C.C.C. (3d) 97 and Dancorp Developments Ltd. v. Metropolitan Trust Co. of Canada et al. (1999), 129 C.C.C. (3d) 129.

[103] Garland v. Consumers’ Gas Co., Ibid., at p. 108.

[104] Garland v. Consumers’ Gas Co., Ibid.

[105] Section 354 of the Criminal Code.

[106] R. v. Beaver (1957), 118 C.C.C. 129 (S.C.C.).

[107] R. v. Kowlyk (1988) 43 C.C.C. (3d) 1 (S.C.C.).

[108] R. v. Hayes (1996), 104 C.C.C. (3d) 316 (Que. C.A.); and R. v. Hewitt (1986), 32 C.C.C. (3d) 54 (Man. C.A.).

[109] Section 4.(3)(a)(i) of the Criminal Code.

[110] Section 4.(3)(a)(ii) of the Criminal Code.

[111] Section 4.(3)(b) of the Criminal Code.

[112] See R. v. Terrence (1983), 4 C.C.C.(3d) 193 (S.C.C.), and R. v. Roan (1985), 17 C.C.C. (3d) 534 (Alta. C.A.).

[113] Section 358 of the Criminal Code.

[114] Section 357 of the Criminal Code.

[115] Section 362.(1)(a) of the Criminal Code.

[116] Section 361.(1) of the Criminal Code.

[117] Section 361.(2) of the Criminal Code.

[118] Section 361.(1)(b) of the Criminal Code.

[119] Section 361.(1)(c) of the Criminal Code.

[120] Section 361.(1)(d) of the Criminal Code.

[121] Olan, supra, note 73 ; R. v. Théroux (1993), 79 C.C.C. (3d) 449; R. v. Zlatic (1993), 79 C.C.C. (3d) 466.

[122] Scott v. Metropolitan Police Commissioner (1974), 17 C.C.C. (2d) 355 (House of Lords) at p.839, as cited in Olan, supra, note 73 .

[123] Zlatic, supra, note 73 , at p. 478.

[124] Ibid.

[125] Ibid.

[126] (1982), 66 C.C.C. (2d) 448 at 452.

[127] Zlatic, supra, note 121 , at p. 478.

[128] (1990), 58 C.C.C. (3d) 172 (Nfld. C.A.).

[129] Théroux, supra, note 121 , at p. 457.

[130] Ibid.

[131] R. v. Gatley (1992), C.C.C. (3d) 469 (B.C.C.A.); R. v. Long (1990), C.C.C. (3d) 156 (B.C.C.A.).

[132] Théroux, supra, note 121 ; Zlatic, supra, note 121 .

[133] Lafrance v. The Queen (1974), 13 C.C.C. (2d) 289 (S.C.C.); R. v. Lemire, infra, note 29; Olan, supra, note 73 .

[134] Supra, note 121 .

[135] At p. 464.

[136] Olan, supra, note 73 .

[137] Supra, note 121 .

[138] Olan, supra, note 73 .

[139] (1997), 110 C.C.C. (3d) 439 (Ont. C. A.).

[140] At pp. 444, 445.

[141] Zlatic, supra, note 121 .

[142] Ibid

[143] See also Cox and Paton v.The Queen, [1963] S.C.R. 500.

[144] Scott v. Metropolitan Police Commissioner, supra, note 122 .

[145] Olan, supra, note 73 .

[146] [1965] S.C.R. 174.

[147] (1983), 35 C.R. 97 (Ont. C.A.)

[148] Olan, supra, note 73 .

[149] Théroux, supra, note 121 .

[150] Ibid., at p.458.

[151] Ibid.

[152] (1976), 64 Cr. App. R. 29, at pp. 31,32.

[153] At pp. 31,32, as quoted in Olan, supra, note 73 , at pp. 1182,1183.

[154] R. v. Sinclair, [1975] A.C. 819.

[155] Ibid.

[156] Olan, supra, note 73 .

[157] R. v. Shaw (1983), 4 C.C.C. (2d) 348 (N.B.C.A.).

[158] R. v. Wendel and Ballan (1993), 78 C.C.C.(3d) 279 (Man. C.A.).

[159] Zlatic, supra, note 121 ,at p. 457.

[160] Supra, note 73 .

[161] (1979), 52 C.C.C.(2d) 230 (Man. C.A.).

[162] (1994), 84 C.C.C. (3d) 351 (S.C.C.), dismissing the appeal from the Nova Scotia Court of Appeal, reported at (1993), C.C.C. (3d) 445.

[163] (1984) 5 O.A.C. 280.

[164] (1983), 5 C.C.C. (3d) 313 (Ont. C. A.).

[165] R. v. Ruhland (1998), 123 C.C.C. (3d) 262 (Ont. C. A.).

[166] (1981), 60 C.C.C. (2d) 23 (Ont. C. A.).

[167] J. GAGNÉ, P. RAINVILLE, Les infractions contre la propriété: le vol, la fraude et certains crimes connexes, (Cowansville: Yvon Blais, 1996) at pp. 164 and following.

[168] (1997), 117 C.C.C. (3d) 275 (Que. C. A.).

[169] Section 366(1) Cr. C.

[170] Section 366(2) Cr. C.

[171] R. v. Ead (1906), 13 C.C.C. 348

[172] Section 366(3) Cr. C.

[173] Section 366(4) Cr. C.

[174] Section 321 (document) Cr. C.

[175] Section 321 (document) Cr. C.,

[176] R. v. Gaysek, [1971] S.C.R. 888, p. 893.

[177] Section 321 (false document) Cr. C.

[178] Section 321 (false document) Cr. C.

[179] Section 321 (false document) Cr.C.

[180] R. v. Gaysek, [1971] S. C. R. 888.

[181] R. v. Nuosci (1992), 69 C.C.C. (3d) 64 (Ont. C.A.) (Leave to appeal to S.C.C. denied, 71 C.C.C. (3d) p. vii.) See also R. v. Sebo (1988), 42 C.C.C. (3d) 536(Alta. C.A.) (Leave to appeal to S.C.C. denied, 93 A.R. 240n).

[182] R. v. Paquette, [1979] 2 S.C.R. 168

[183] R. c. Delorme, (September 20, 1996, C.Q.Mtl, 500-01-7245-944)

[184] R. v. Paquette, [1979] 2 S.C.R. 168

[185] R. v. Hannah, (1919) 31 C.C.C. 159 (Sask.C.A.).

[186] R. v.Cowan, [1962] S.C.R. 476

[187] R. v. Bennett (1982), 67 C.C.C. (2d) 250 (Ont. C.A.) (Leave to appeal S.C.C. denied 45 N.R. 179). R.v.Raymond (1992), R.L. 366 (Que. C.A.). R. v. Kingston (1972), 6 C.C.C. (2d) 371 (Ont. C.A.)

[188] R. v. Berryman (1990), 78 C.R. (3d) 376 (B.C.C.A.).

[189] Section 368(1) Cr. C. ; R. v. Sebo (1988), 42 C.C.C. (3d) 536 (Alta. C.A.), at p. 546.

[190] Section 368(2) Cr. C.

[191] R. v. Hawrish (1987), 32 C.C.C. (3d) 446 (Sask.C.A.).

[192] See R. v. Lapoint (1984), 12 C.C.C. (3d) 238 (Que. C.A.), R. v. Keshane (1985), 20 C.C.C. (2d) 542 (Sask. C.A.) (Leave to appeal to S.C.C. denied, loc. cit., (1974) S.C.R. ix), R. v. Sebo (1988), 42 C.C.C. (3d) 536 (Alta. C.A.).

[193] R. v. Sebo (1988), 42 C.C.C. (3d) 536 (Alta. C.A.), at p. 546.

[194] R. v. Valois, [1986] 1 S.C.R. 278.

[195] R. v. Valois,pp.282-283.

[196] Section 369 Cr. C. Provides for a reverse onus provision on the accused. We abstain from commenting on the constitutional validity of this and other reverse onus provisions, our objective is to inform the reader of possible criminal liability that attaches to certain activities and not to deal with peripheral legal issues that may arise in the prosecution of such cases.

[197] Section 370 Cr. C.

[198] Section 376Cr. C.

[199] Section 377 Cr. C.

[200] Section 378 Cr. C.

[201] Berthiaume v. Dutremblay (1945), R..L. 486 (Que. S.P.).

[202] Section 397 (1) a) and b) Cr. C.

[203] Section 398 Cr. C.

[204] section 399 Cr. C.

[205] R. v. Cox, [1963] S.C.R. 500.

[206] Section 400 (1) a) Cr. C.

[207] Section 400 (1) b) Cr. C.

[208] Section 400 (1) c) Cr. C.

[209] R. v. Harcourt (1929), 52 C.C.C. 342 (Ont. C.A.); R. v. Fichte, (1984), 37 Sask. R 126 (Sask. C.A.).

[210] Section 401 (1) Cr. C.

[211] Section 401 (2) Cr. C.

[212] Section 402 (1) Cr. C.

[213] Section 402 (2) a) Cr. C. Our comment, supra, regarding reverse onus provisions applies here as well.

[214] Section 402 (2) b) Cr. C.

[215] Section 406 (a) Cr. C.

[216 ] Section 406 (b) Cr. C.

[217] Section 407 Cr. C.

[218] Section 408 (a) Cr. C.

[219] Section 408 (b) Cr. C.

[220] Section 409 (1) Cr. C.

[221] Section 409 (2)Cr. C. Our comment, supra , regarding reverse onus provisions applies here as well.

[222] Section 410 (a) Cr. C.

[223] Section 410 (b) Cr. C.

[224] Section 411 Cr. C.

[225] R. v. Hinchey, [1996] 3 S.C.R. 1128, par. 13 to16.

[226] Sections 118 to 125 Cr.C.

[227] See sections 21 and 22: aiding, abetting and counselling an offence.

[228] Section 426 Cr.C.

[229] R. v. Brown (1956), 116 C.C.C. 287, 289; R. v. Kelly, [1992] 2 S.C.R. 170, 185 and R. v. Arnold, [1992] 2 S.C.R. 209.

[230] We will use that specific term although the Code uses "…reward, advantage or benefit of any kind …".

[231] Section 426(1)a) Cr.C. Subsection (1)b) makes it an offence to give to an agent –or for an agent to use–, with intent to deceive the principal, any receipt, account or other writing in which the principal has an interest and that is containing a false, erroneous or defective statement intended to mislead the principal.

[232] R. v. Holt, (1987) 3 W.C.B. (2d) 318 (Ont. Dist. Ct.).

[233] See Kelly, supra, note 229, at page 188 where the Supreme Court rejected this approach found in the English case law such as Cooper v. Stade (1858), 6 H.L.C. 740 and R. v. Gallagher (1985), 16 A. Crim. R. 215 (Vict. C.C.A.).

[234] Kelly, supra, note 229.

[235] Kelly, supra, note 229, at page 186.

[236] Kelly, supra, note 229, at page 188-189; R. v. Krawec, [1993] O.J. No. 232 (Ont. Ct. (Gen. Div.)).

[237 ] Kelly, supra, note 229, at page 192.

[238] R. v. Wile, (1990) 58 C.C.C. (3d) 85, 94 (Ont. C.A.).

[239] R. v. Balestra, (1991) 13 W.C.B. (2d) 307, 308 (Ont.Ct. (Prov. Div.))

[240] R. v. Gentile, (1993) 81 C.C.C. (3d) 541 (Ont. Ct. (Prov. Div.)).

[241] Kelly, supra, note 229, at page 190 and page 206.

[242] Kelly, supra, note 229, at page 191. This approach is vague and leaves room for arguments. Concurrent reasons of Judge McLaclhin would have put more stringent criteria.

[243] R. v. Atkinson (No. 1), (1981) 57 C.C.C. 489 (N.B.C.A.).

[244] Gentile, supra, note 240 .

[245] Section 120 also deals with various bribes in relation to the administration of criminal justice. We will not extend on that aspect since we would digress from the object of this paper.

[246] R. v. Yanakis, (1982) 64 C.C.C. (2d) 374, 402 (Que. C.A.).

[247] Yanakis, id., 406.

[248] R. v. Bruneau, [1964] 1 C.C.C. 97 (Ont. C.A.) ; R. v. Arseneau, [1979] 2 S.C.R. 136, 150.

[249] Yanakis, supra, note 246, 405-406.

[250] Arseneau, supra, note 248, 149.

[251] Section 121(d) and (e) Cr. C. Arseneau was also charged with that offence and acquitted.

[252] R. v. Martineau, [1966] 4 C.C.C. 327, 332 (S.C.C.); Arseneau, supra, note 248, 151.

[253] Yanakis, supra, note 246 , 402-403.

[254] The Quebec Court of appeal approved this reasoning in Yanakis, supra, note 246 , taken from a fraud case in R. v. Reid, [1969] 2 C.C.C. 21 (Ont. C.A.).

[255] Hinchey, supra, note 225 , par. 14.

[256] R. v. Giguère, [1983] 2 S.C.R. 448, 462 and 464 where the Court stated: «It is clear that the right to contract with government is not something to be bought with under-the-table payments. It is equally clear, in my view, that access to government officials is not something to be bought.»

[257] Hinchey, supra, note 225, par. 16 and 23.

[258] Sections. 2 and 118 Cr. C.

[259] See Doré v. Canada (A.G.), [1975] 1 S.C.R. 756.

[260] R. v. Achtem, (1979) 52 C.C.C. (2d) 240, 247 (Alta. C.A.). See the case of R. v. Reid, [1982] 3 W.W.R. 77, 95 (Man. Prov. Ct.); see also McKinney v. University of Guelph, [1990] 3 S.C.R. 229.

[261] Giguère, supra, note 256, 461-462.

[262] Giguère, supra, note 256, 464.

[263] Giguère, supra, note 256 , 461 and 463; R. v. Cleary, (1993) 17 W.C.B. (2d) 116 (N.S.Co.Ct.(Crim. Div.))

[264] We will generally use the term "benefit" albeit the Code uses the terms "loan, commission, reward, advantage and benefit".

[265] Hinchey, supra, note 225 , par. 48.

[266] Doré, supra, note 259, 780.

[267] Hinchey, supra, note 225, par. 66. See Reid, supra, note 260, 83 where the Court concluded that the mere possibility that it could have benefited to a civil servant would not suffice.

[268] R. v. Greenwood, (1991) 67 C.C.C. (3d) 435, 450 (Ont. C.A.); R. v. Rouleau, (1984) 14 C.C.C. (3d) 14 (Que. C.A.).

[269] Greenwood, supra, note 268, 451; Hinchey, supra, note 225, par. 63

[270] Greenwood, supra, note 268, 458.

[271] Hinchey, supra, note 225, par. 63.

[272] Hinchey, supra, note 225, par. 64, referring to Hoefele v. The Queen, 94 D.T.C. 1878, 1880 (T.C.C.).

[273] R. v. Grondin, [1993] A.Q. no 1215 (C.A.). In criminal law, "wilful blindness" is triggered where a person who becomes aware of the need for some inquiry prefers to stay in ignorance, then it is the equivalent of knowledge.

[274] Section 121(1)a)(i) of the Criminal Code.

[275] Section 121(1)(a)(ii) of the Criminal Code.

[276] Hinchey, supra, note 225 , par. 21

[277] R. v. Cogger, [1997] 2 S.C.R. 875, par. 16.

[278] Cogger, id., par. 31.

[279] Cogger, supra, note 277, par. 22.

[280] Doré, supra, note 259, 779.

[281] Doré, supra, note 259, 780. As we will see, the fact that the services rendered are paid at true value does not prevent it from being illegal under s.121(1)(c).

[282] Hinchey, supra, note 225, par. 50.

[283] Section 121(1)(b).

[284] The legislator has provided for this defence under sections 121(1)(b) and 121(1)(c) of the Criminal Code.

[285] R. v. Cooper, [1978] 1 S.C.R. 860, 875.

[286] Starr v. Houlden, [1990] 1 S.C.R. 1366; also see Greenwood, supra, note 268, 442.

[287] In R. v. Ogilvie, [1993] R.J.Q. 453, 460, (1994) 81 C.C.C. (3d) 125 (Que. C.A.), the Court decided that the dealings must be something more then past or occasional dealings with government.

[288] Hinchey, supra, note 225, par. 37.

[289] Hinchey, supra, note 225, par. 51.

[290] Hinchey, supra, note 225, par. 53 and 57.

[291] Hinchey, supra, note 225, par. 66 and 67.

[292] Greenwood, supra, note 268, 451 ; Hinchey, supra, note 225, par. 68.

[293] R. v. Chrétien (1990) 26 Q.A.C. 241, 246. Greenwood, supra, note 268, 450.

[294] Doré, supra, note 259, 779.

[295] Greenwood, supra, note 268, 450 and 457.

[296] Greenwood, supra, note 268 , 459; Leblanc, 419; Chrétien, supra, note 293.

[297] Hinchey, supra, note 225, par. 19 and 22.

[298] Section 122 of the Criminal Code.

[299] Section 123 of the Criminal Code. R. v. Sheet, [1971] S.C.R. 614.

[300] R. v. Leblanc, [1979] C.A. 417, confirmed at [1982] 1 S.C.R. 344; R. v. Arnoldi, [1892] 23 O.R. 201 et R. v. Campbell, [1967] 3 C.C.C. 250 (Ont. C.A.).

[301] R. v. Lippé, (1996) 111 C.C.C. (3d) 187 (Que. C.A.).

[302] Lippé, id., 205; R. v. Power, (1993) 82 C.C.C. (3d) 73, 79 (N.S.C.A.).

[303] Lippé, supra, note 301 , 205.

[304] R. v. Leblanc, [1979] C.A. 417, 419; R. v. Perreault, (1992) 75 C.C.C. (3d) 425, 440 (Que. C.A.); Chrétien, supra, note 293.

[305] R. v. Hébert, [1986] R.J.Q. 236, 239 (C.A.).

[306] Perreault, supra, note 304 , 443, but see R. v. McMorran, (1948) 91 C.C.C. 19 (Ont. C.A.) where the Court decided that civil negligence may become criminal for a civil servant.

[307] Lippé, supra, note 301 ,, 203.

[308] R. v. Perreault, (1992) 75 C.C.C. (3d) 425, 443 (Que. C.A.), repeated in Lippé, supra, note 301 , 204.

[309] Lippé, supra, note 301 .

[310 ] R. v. Cyr, (1987) 9 Q.A.C. 107.

[311] Rouleau, supra, note 268 , 20; R. v. Trudeau, [1988] A.Q. No 2001 (C.A.).

[312] Chrétien, supra, note 293; Power, supra, note 302 .

[313] Section 121(1)(e) of the Criminal Code.

[314] The term person includes a political association, as it was the case with the Nova Scotia Liberal Association, in R. v. Barrow, [1987] 2 S.C.R. 694.

[315] Section 121(1)(d) of the Criminal Code.

[316] Section 121(1)(f)(i) of the Criminal Code.

[317] Section 121(1)(f)(ii) of the Criminal Code.

[318] R. v. Krupich, (1991) 13 W.C.B. (2d) 332; 116 A.R. 67 (Alta. Prov. Ct.).

[319] S.C. 1998, v. 34. [Hereinafter, the "Act"].

[320] Section 2, definition of "business"

[321] Section 2, definition of "public official"

[322] Section 3(4) and (5) of the Act.

[323] Section 4 of the Act.

[324] Section 5 of the Act.

[325] Section 9.

[326] Section 462.31(1) Cr. C. Section 368(1) Cr. C. R. v.Tejani [1999], O.J. No. 3182.

[327] Section 462.3 “enterprise crime offence” Cr. C.

[328] Section 462.3 “proceeds of crime” Cr. C.; R. v. Shalala (1998), N.B.R. (2d) 298, para. 222-3.

[329] Section 462.3 “proceeds of crime” Cr. C.

[330] Section 2 “ property” (a) Cr. C.

[331] Section 2 “ property” (b) Cr. C. R. v. 170888 Canada Ltd. (1999), 135 C.C.C. (3d) 367 (Que. C.A.), p. 371.

[332] R. v. Montour, [1998], O.J. 192

[333] Manitoba (A.G.) v. Petersen (1993), 17 W.C.B.(2d) 130 (Man. Q.B.).

[334] U.S.A. v. Dynar, [1997] 2 R.C.S.462, p.482. The word “believing” was added to the definition of the laundering proceeds of crime section by the Criminal Law Improvement Act, 1996, S.C. 1997, c. 18.

[335] R. v. Hayes (1996), 104 C.C.C. (3d) 316 (Que. C.A.) p. 325-6; R..v. Tejani [1999], O.J. No.3182. See also R. v. Jorgensen, [1995] 4 S.C.R. 55.

[336] Section 462.32(1) Cr. C.

[337] Section 462.32(2.2) and (2.2) Cr. C.

[338] Section 462.32(5) Cr. C.

[339] Section 462.33 (1) (2) Cr. C.

[340] Section 462.33 (3) Cr. C.

[341] Section 462.33 (3) (a) Cr. C. R. v. Cazzetta, (1999), J.Q. no. 3066, (Que. S.C.) at par. 81.

[342] Section 462.33 (3.01) Cr. C.

[343] Section 462.33 (5) Cr. C.

[344] R. v. Derksen (1998), 126 C.C.C. (3d) 554 (Sask. C.A.).

[345] Section 462.33 (8) Cr. C.

[346] Section 462.33 (9) Cr. C.

[347] Section 462.33 (10) (a – c) Cr. C.

[348] Section 462.33 (11) Cr. C.

[349] Serrano v. Canada (1992), 73 C.C.C. (3d) 437 (Ont. Gen. Div.).

[350] Section 462.34 (1) Cr. C.

[351] Section 462.34 (4) Cr. C.

[352] Halpert v. Canada (Attorney General) (1998), B.C.J. No. 304. Section 462.34 (4) (c) Cr. C. A special hearing is held to determine matters with respect to reasonable legal expenses, s. 462.34 (5) (5.1) (5.2) Cr.C.

[353] Section 462.34 (4) (a) Cr. C.

[354] Section 462.34 (6) (a) Cr. C.

[355] Section 462.34 (6) (b) Cr. C.

[356] R. v. Fremanco Ltd., (1995), 135 Nfld. & P.E.I.R. 327; R. v. Derksen (1998),126 C.C.C. (3d) 554 (Ont. Gen. Div.).

[357] Section 462.35 (2) (3) Cr. C.

[358] Section 462.37 (1) Cr. C.

[359] Section 462.37 (2) Cr. C.

[360] R. v. Viandante (1995), 106 Man. R. 266.

[361] R. v. Rosenblum (1999), 130 C.C.C. (3d) 481 (B.C.C.A.).

[362] Section 462.37 (3) (4) Cr. C. See also, R. v. Rosenblum (1999), 130 C.C.C. (3d) 481(B.C.C.A.); R. v. Garoufalis, (1999),131 C.C.C. (3d) 242 (Man.C.A.).; R. v. S avard (1998), 126 C.C.C. (3d) 569 (Que. C.A.).

[363] Section 462.4 Cr. C.

[364] Section 462.41 (1) Cr. C. The notice requirements are provided at 462.41 (2) Cr. C.

[365] Section 462.41 (3) Cr. C.

[366] R. v. 170888 Canada Ltd., (1999), 135 C.C.C. (3d) 367, (Que. C.A.) pp. 373-4; See also R. v.Wilson (1994), 86 C.C.C. (3d) 464, (Ont. C.A.) pp. 472-5.

[367] Section 462.42 (1) Cr. C.

[368] Section 462.42 (2) Cr. C.

[369] Section 462.42 (3) Cr. C.

[370] Section 462.42 (4) Cr. C.

[371] Section 462.42 (4) Cr. C.

[372] Section 462.42 (5) Cr. C.

[373] Section 462.42 (6) Cr. C.

[374] R. v. 170888 Canada Ltd. (1999), 135 C.C.C. (3d) 367, (Que. C.A.) p. 374.

[375] R. v.Wilson (1994), 86 C.C.C. (3d) 464 (Ont. Gen. Div.), at p. 475.

[376] See comments made with respect to section 462.41 Cr. C.

[377] Section 462.43 Cr. C.

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