J. 2000 SKQB 565 Q.B.G. A.D. 1998 No. 12 J.C.S. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: HER MAJESTY THE QUEEN and RICHARD JOSEPH LEIBEL J.A. Plemel for the Crown A.A. Fox, Q.C., and J.N. Korpan for the accused FIAT SMITH J. December 12, 2000 [1] This is an application by the accused for: (1) an order pursuant to s. 581(1) of the Criminal Code of Canada quashing Count #1 of the indictment as now amended on the ground that it applies to more than one single transaction; (2) an order pursuant to ss. 7 and 24(1) of the Canadian Charter of Rights and Freedoms and the common law doctrine of abuse of process that portions of the indictment as amended be quashed or stayed on the basis of the judgment of Klebuc J. in the trial of the former co-accused, Reginald Schafer; and, alternatively, (3) an order staying the proceedings on the grounds of unreasonable delay in bringing the accused to trial. (1) Does count of the indictment offend the “single transaction rule”? Count #1, as now amended, alleges that Richard Joseph Leibel: between the 13th day of October A.D. 1988 and the 26th day of March A.D. 1993 at the City of Saskatoon and elsewhere in the Province of Saskatchewan did by deceit falsehood or other fraudulent means, by using the funds of International Capital Corporation (ICC) to advance their personal business interests of Reginald Schafer and/or Richard Leibel over those of ICC, defraud the said Corporation and its preferred shareholders of money in excess of $1,000.00, contrary to s. 380(1)(a) of the Criminal Code by one or more of the following ways: (a) by using ICC’s funds in ways which did not conform with ICC offering memoranda, its promotional materials and/or the Immigrant Investor guidelines; (b) by allowing ICC funds in the amount of approximately $513,000.00 to be used by Trirak Industries Corporation, to the benefit of Richard Leibel and Trirak Industries and to the detriment of ICC and its preferred shareholders; (c) by allowing Fund Management Inc. (FMI) to become indebted to ICC; (d) by using ICC funds of approximately $378,852.28 to finance restaurant in San Antonio, Texas; (e) the diversion of funds from 590188 Saskatchewan Ltd. to one or more of the following: Giant Bay Resources Ltd., Giant Bay Investment Fund Inc., Trirak Industries Corporation, Acquisition Ventures Inc., Battlefords Aquatic Park General Partner Inc., ICC Supply and Willows Golf Corporation; (f) using approximately $1,695,000.00 to purchase of 5,500,000 shares of Giant Bay Resources Ltd; (g) the advance of ICC funds in the amount of approximately $2,250,000.00 to Giant Bay Resources Ltd.; (h) causing ICC funds referred to in paragraph (g) to be advanced to bank account in Malaysia; (i) postponing ICC’s mortgage and caveats on the Willows Golf Course in favour of Household Trust Mortgage in approximately November of 1990; (j) representing to ICC’s investors that 30% of their investment would be invested in Canadian Government Insured Certificates (GIC’s) and then using that portion of their investment in other ways. [2] Section 581(1) of the Criminal Code provides as follows: Each count in an indictment shall in general apply to single transaction and shall contain in substance statement that the accused or defendant committed an indictable offence therein specified. [3] Section 581(6) says: Nothing in this Part relating to matters that do not render count insufficient shall be deemed to restrict or limit the application of this section. [4] The accused argues that the particulars of count #1 itemized in subparas. (a) through (j) describe separate transactions, within the meaning of s. 581(1) and that count #1 of the indictment is therefore void. [5] have concluded that the accused cannot succeed on this point. The case law cited by both parties clearly establishes that the word “transaction” as it is used in s. 581(1) is to be interpreted broadly and flexibly, and that a single “transaction” may in this sense include a number of acts or incidents occurring over a period of time. “Transaction” as this word is used in s. 581(1) is not, therefore, synonymous with “incident” or “occurrence” and this is so even where separate incidents properly alleged under single count might also have been the subjects of separate counts, had the Crown so chosen. See R. v. Hulan, 1969 CanLII 306 (ON CA), [1970] C.C.C. 36 (Ont. C.A.), at 44, sexual abuse case where the abuse allegedly consisted of repeated acts over long period of time. In these circumstances the Court has power, under s. 590, to order that single count be divided where it is satisfied that the ends of justice require it. flexible interpretation of the requirement of s. 581(1) has been said to be reinforced as well by the qualifying words “in general” which suggest “a permissible relaxation of its terms extending to exceptional cases in which number of acts each in itself constituting an offence is capable of being treated as one transaction.” R. v. Canavan and Busby, 1970 CanLII 319 (ON CA), [1970] C.C.C. 15 (Ont. C.A.), at 18-19. [6] While it is true that we are here considering newly amended indictment, the substantive question raised by this application has in my view been determined three times before in these proceedings. similar application to quash was made with respect to the information that commenced the charges against this accused and his then co-accused, Reginald Schafer, and was rejected by Judge Goldstein who was then sitting as the trial judge in Provincial Court. The Crown had in that case provided particulars to the impugned count closely similar to those at issue under the amended indictment now before me. Following that ruling, the two accuseds re-elected to be tried by judge and jury. The applicant then brought motion to quash what was essentially the same count in the Court of Queen’s Bench. This application was rejected by Matheson J., who held that the particulars of the fraud then alleged were not separate “transactions”, but “a series of acts, during the specified period of time, alleged to constitute the means by which the named victims were defrauded as alleged.” An appeal of this ruling to the Saskatchewan Court of Appeal was dismissed without written reasons. Count #1 considered by Judge Goldstein and then by Matheson J. was similar to Count #1 as now drafted except that it contained sub-paragraphs to the count rather than the 10 which now appear in the amended indictment. [7] Subsequently, following the separate trial and conviction of Reginald Schafer, the Crown amended the indictment against the applicant to charge, inter alia, what is now count #1, but without enumerating particulars. The applicant then applied to me, as trial judge, to quash the then unparticularized count #1 on this same basis, that it violated the single transaction rule or, alternatively, to order that the Crown provide particulars. The argument in support of the application to quash was again based on the requirement of s. 581 and relied on the assumption that the Crown would be calling evidence, as it had in the Schafer trial, about some or all of the same incidents particularized in the earlier indictment and now particularized in the within indictment. On that application, I dismissed the application to quash count #1, indicating that I did not believe that the application raised a question substantively different from that already determined by Matheson J., but ordered the Crown to provide particulars (as it now has done in the amended indictment) and indicated to counsel that once particulars were supplied, I would consider an application to order the indictment separated pursuant to s. 590, if the accused could show, for example, that it would be prejudicial to put the complex indictment to a jury. [8] It is my view that the application now before me raises substantively the same question as that previously considered and determined adversely to the applicant first by Judge Goldstein, then by Matheson J. (appeal to the Court of Appeal dismissed) and finally by myself in my fiat of September 11, 2000. [9] conclude that count #1 does not allege more than one “transaction”, within the meaning of s. 581(1), but, rather, particularizes in the alternative various ways in which the accused is alleged to have defrauded the investors of ICC by using the funds of ICC to advance his own interests or the interests of Reginald Schafer. The application to quash count #1 of the indictment on this basis is therefore dismissed. (2) Should some or all of the charges against the accused Richard Leibel be stayed on the grounds of abuse of process? [10] The applicant advances two considerations which he says together would support judicial stay in relation to certain of the matters alleged in the amended indictment on the grounds of abuse of process. One of these is an “understanding” that the applicant says it had with the Crown that the charges against Leibel would be reviewed by the Crown after the Schafer trial in light of any findings made by the trial judge in that case. The other related argument is that certain of the express findings of the trial judge in the Schafer trial raise issues of res judicata or issue estoppel in relation to the matters now alleged against Leibel. These considerations combined would lead to abuse of process, it is argued, were the Crown permitted to proceed against Leibel in relation to particular allegations of which, it is alleged, he was exonerated in the Schafer judgment. [11] The legal relevance of each of these considerations requires further discussion, for neither fits neatly into the principles established by legal precedent. The position of the Crown is that it is not bound in this proceeding by any factual or legal determinations made by the trial judge in Schafer. will return to this discussion below. It is first necessary, however, to provide some factual background of the circumstances giving rise to this application. will then examine the extent to which the Schafer judgment can, in any case, be said to provide support for the argument, for, if, on proper reading, the findings of the trial judge in Schafer do not exonerate Leibel, (in the sense that finding of guilt in relation to particular allegation against Leibel in the current indictment would be inconsistent with the findings of the trial judge in Schafer) then the argument fails at that point. [12] The applicant Richard Leibel was originally charged jointly with Reginald Schafer and the two were committed to stand trial before judge and jury after preliminary inquiry that concluded on December 8, 1997. After Leibel retained his present counsel, in 1998, he applied to sever the charges against the two accused. This application was ultimately successful. It is common ground that the Crown then took the position that it made more sense to proceed with the Schafer trial first, and, further, that it preferred to await the outcome of that trial before proceeding with the Leibel trial. According to Crown counsel, it was agreed that it would be beneficial to both the accused and the Crown to have the benefit of the judgment in the Schafer matter before proceeding with the Leibel trial. Leibel and his counsel agreed to this procedure and to waive any objections to delay in relation to this period of time. [13] Schafer re-elected to be tried by judge alone and his trial before Klebuc J. took place between September 7, 1999 and October 21, 1999, with written and oral arguments presented in December, 1999. Mr. Leibel testified, under subpoena, as defense witness. He was on the witness stand for three days, two under cross-examination by the Crown. Klebuc J. reserved his decision, and judgment was rendered on April 20, 2000. Klebuc J. convicted Schafer on number of counts and acquitted on others. With regard to each of the incidents then included as particular to count #1 he made specific finding as to whether that matter would support finding of guilt. In some cases he found that it would not. In his written judgment, he commented extensively on the evidence of Mr. Leibel, and made some specific findings, favourable to Leibel, in relation to the latter’s involvement (or lack thereof) in some of the matters with which Schafer was charged, including some of which he was found guilty. [14] Following the Schafer decision, Mr. Leibel’s counsel met with Crown counsel to review the decision, and to argue that, in light of number of the findings of Klebuc J., the Crown ought not to proceed with certain allegations contained in the original indictment against Leibel. The response of the Crown was to issue new indictment on June 29, 2000, reducing the number of counts charged from the original eight to two. Count #1, however, was very broad, omnibus charge, alleging that Richard Leibel: 1. between the 13th day of October A.D. 1988 and the 26th day of March A.D. 1993 at the City of Saskatoon and elsewhere in the Province of Saskatchewan did by deceit falsehood or other fraudulent means, by using the funds of International Capital Corporation (ICC) to advance the personal business interests of Reginald Schafer and/or Richard Leibel over those of the ICC, defraud the said Corporation and its preferred shareholders of money in excess of $1,000.00, by using ICC’s funds in ways which did not conform with ICC’s offering memoranda, its promotional materials and/or the Immigrant Investor Program Guidelines, contrary to s. 380(1)(a) of the Criminal Code. [15] This count contained none of the particulars that have since been ordered and are now numbered subparas. (a) through (j). Count alleges that Leibel: between the 16th day of January, A.D. 1991 and the 30th day of January A.D. 1991 at the City of Saskatoon in the Province of Saskatchewan did steal money in excess of $1,000.00 being portion of the proceeds of the sale of ICC’s shares in Giant Bay Resources Ltd. contrary to section 334(a) of the Criminal Code. [16] This indictment was in sharp contrast to the original indictment against Schafer and Leibel jointly, which had contained six counts relevant to Leibel (eight in relation to Schafer) and had included as particulars to count #1 (a count closely similar to the present count #1) nine particular acts and incidents relied upon, in numbered paras. (a) through (i). The effect of this was that the accused was unable to determine from the indictment which of the original allegations the Crown was still pursuing against Leibel, in light of the Schafer judgment, or whether it had now abandoned any of those matters. [17] On September 11, 2000, the applicant made successful application for an order that the Crown provide particulars for count #1, with the ultimate result of the indictment as now amended and quoted above. The effect of this, although it simplified and combined some of the original allegations, was to indicate that the Crown intended to proceed against Leibel in relation to all of the original allegations against him, except that the Crown was no longer alleging that the applicant together with his co-accused had charged unauthorized management fees. In addition, the allegation in particular (i), above, was new. [18] The accused alleges that his agreement to waive any objections to delay until the outcome of the Schafer trial was known was given on the common understanding and expectation that the Crown would reassess its position in relation to the charges against Leibel in light of the judgment of Klebuc J. in Schafer. This argument is expressed in his written brief, as follows: Leibel has prejudiced his position by waiving delay on the understanding that the Crown would reconsider the charges against him after Mr. Justice Klebuc made his findings on Schafer’s trial. Further, Leibel was compelled to testify at Schafer’s trial. The Crown, rather than considering the findings of Mr. Justice Klebuc concerning Leibel’s evidence, has simply used the opportunity to cross-examine him to assist in preparing its case against him. In his written brief the applicant alleges that the Crown breached its “agreement” with him and invites this Court to “step in and uphold the agreement” by itself undertaking detailed review of the indictment against him and consider whether those charges ought to be proceeded with in light of Mr. Justice Klebuc’s decision. [19] The Crown denies that there was any such agreement. Its position is that it was more logical to proceed against Schafer first because after September 28, 1988 Schafer was the sole director and shareholder and president of ICC whereas the Crown alleges that Leibel was working “behind the scenes”. Crown counsel comments in his brief: It is the Crown’s view that together they defrauded ICC and its preferred shareholders. If, however, trial judge found that Mr. Schafer’s conduct was not fraudulent and acquitted him, and if the Crown did not appeal that decision, then we would have to determine whether or not to proceed against Mr. Leibel. Although this approach seemed sensible to the Crown, we made it clear that if Learned Counsel for the Applicant wished to proceed before the decision came down in the Schafer trial, we were quite prepared to set the matter down for trial. (emphasis added) [20] Letters on the court file, and attached to the affidavit of Mr. Leibel, support the Crown’s contention that there was no express promise that its proceedings against Leibel would in any way be determined by the outcome of the Schafer trial. On January 11, 2000, Mr. Fox, counsel for the applicant, wrote to the Local Registrar, copied to the Crown prosecutor, Mr. Plemel, as follows: The Leibel matter is scheduled to be spoken to at the pre-trial conferences on February 4th. The trial of the Schafer matter has now been completed and the matter has been adjourned for decision to mid-April. have spoken with Mr. Plemel and, as we previously indicated, the ultimate proceedings against Leibel are somewhat dependent upon the outcome of the Schafer matter. For this reason we would ask that the Leibel matter be set over to be spoken to at the April 28th pre-trial conference. Both Mr. Plemel and agree that it is not realistic to expect the Leibel matter to proceed to trial before this fall. confirm on behalf of Mr. Leibel that we are waiving delay in regard to this matter. (emphasis added) [21] This letter sparked response from Mr. Plemel, Crown counsel in letter to Mr. Fox dated January 28, 2000: Further to your letter of January 11, 2000 to Mr. Berezowsky, this is to confirm our agreement that this matter be set over to be spoken to at the April 28th pre-trial conference. wish to reiterate, however, that Mr. Justice Klebuc’s decision, whatever it is, will not dictate how we proceed with relation to your client. Our understanding has been that we will properly use our discretion to proceed with Mr. Leibel’s matters as we see fit. Of course Mr. Justice Klebuc’s decision will be useful both to you and the Crown. thought should state this in writing to you given your comment to Mr. Berezowsky that “the ultimate proceedings against Leibel are somewhat dependent upon the outcome of the Schafer matter.” want to be sure that there is no misunderstanding between you and me. The possibility exists that even if Mr. Schafer is acquitted we might still proceed against Mr. Leibel. (emphasis added) further letter from Mr. Fox to Mr. Plemel dated February 2, 2000, indicated: Thank you for your letter of January 28th. My understanding of the situation is as set out in your letter, that being that the Crown will review the charges against Leibel in light of the decision, whatever it may be, by Mr. Justice Klebuc. (emphasis added) [22] It is my conclusion that there was clearly no promise by the Crown that it would be bound, in its proceedings against the applicant, by the findings of Klebuc J. in relation to the Schafer matter. This point was frankly conceded by counsel for the applicant in oral argument. On the other hand, do not think that the Crown can deny that the applicant reasonably expected that the Crown would carefully consider those findings and reassess its position in relation to this accused in light of them, and, further, that the applicant agreed to waive any objections in relation to the delay arising from awaiting the judgment of Klebuc J. on that basis. More than that, Crown counsel indicated to the Court, in oral argument on this application, that it was expected that it would be beneficial to both parties to have the findings of Klebuc J. before proceeding against Leibel. It is difficult to see what advantage the applicant might gain, unless it was the real possibility that certain of the charges against him might be dropped in light of the rulings of Klebuc J. After all, he was compelled to testify at the Schafer trial and was subjected to lengthy cross-examination by the Crown. In addition, Crown counsel indicated to the Court in oral argument, and in its written brief in the passage quoted above, that the reason it wanted to proceed with the Schafer matter first was that if the Court in that matter determined that certain of the particular incidents or dealings relied upon in that charge were not fraudulent, (i.e. the investors were simply not defrauded in relation to those matters) then “the Crown would have to consider carefully whether to proceed in relation to those matters in relation to Leibel.” [23] Certainly, it appears to have been Klebuc J.’s understanding that his findings would have some bearing on the proceedings against Leibel, for, following closing arguments, he stated that he would take time to give lengthy reasons for two reasons: “Number one, to work my way through it and make sure don’t miss anything; and secondly, provide you with some guidance with respect to the other case that’s outstanding.” [24] The Crown takes the position that it is not in any way bound in this proceeding by any of the findings of the Court in the Schafer matter. Nonetheless, it contends that it did, in any case, take certain matters arising from that trial into consideration in redrafting the new indictment against Leibel. In particular, it “simplified” the new indictment against Leibel in light of critical remarks made during the course of that trial from the Bench about the complexity and degree of overlap of the original indictment. Further, in view of argument presented and comments made by Klebuc J. during the Schafer trial the Crown has chosen not to proceed with the former count #6 against Leibel, which alleged that Leibel and Schafer committed fraud by charging unauthorized management fees and by concealing the overdrawing of funds by the fund manager. In addition, since the present indictment issued, the Crown has decided to delete from the indictment two of the particulars given for count #1: those described in para. (c), on the ground, agreed by the defence, that that allegation is really part of the allegation in para. (b), and para. (d). The Crown indicated to the Court that decision had been made not to proceed with the latter allegation in light of questions raised by this Court, on the first day of the argument of this application, as to why the Crown was pursuing this allegation given the clear finding by Klebuc J. that Schafer had concealed the relevant aspects of this matter from Leibel. [25] With regard to other matters which the applicant says were determined by Klebuc J. in his favour, the Crown makes three arguments. With regard to some of the matters it argues simply that the findings of Klebuc J. do not on proper interpretation exonerate Leibel. It points out that nothing can be read in to the fact that Klebuc J. often did not make any explicit findings against Leibel, for, of course, the nature and degree of Leibel’s own involvement or guilt was not matter that was, in itself, before him. Indeed, in the circumstances, it would have been improper to make findings explicitly against Leibel, who was not the accused before him and therefore not in position, despite his role as witness for Schafer’s defence, to provide full answer and defence to those allegations. [26] Secondly, the Crown argues that in relation to some of the matters in which Klebuc J. may appear to make findings favourable to Leibel, it is important for the Court to recognize that, because Leibel was not at jeopardy in the Schafer trial and his guilt was not itself in issue, the Crown would have focussed its evidence and arguments on the particular involvement of Schafer, and would not necessarily have pursued or emphasized those aspects that also proved the nature or extent of Leibel’s involvement. [27] Finally, in some cases the Crown frankly concedes that in relation to some matters, the conclusions of Klebuc J. would also, if they were accepted, exonerate Leibel, but argues that it is not bound in the present proceeding by those findings. Because Mr. Schafer was, in the final analysis, convicted, the Crown chose not to appeal those findings of Klebuc J. with which it did not agree. The primary example of this last rationale is in relation to the allegation against Leibel under para. (j) of count #1. [28] Assessment of these arguments requires more detailed consideration, at this point, of the conclusions of Klebuc J. as those relate to the indictment now before me. will consider the allegations of the indictment one by one, in light of the arguments made to me by counsel. Analysis of the allegations in the current indictment in light of the Schafer judgment. Count (a): Allegation that ICC’s funds were used in ways that did not conform with the ICC offering memoranda or promotional material or with the Immigrant Investor guidelines. [29] This allegation corresponds to Count #1, paras. (h) and (j) of the Schafer indictment, which Klebuc J. saw as involving essentially the same facts as those relevant to clause (b) of count #1 and Count Nos. and 3, all of which in turn involved investments that failed to comply with the investment guidelines because they were investments in businesses outside of Saskatchewan, and failed to comply with obligations imposed by the offering memorandum to seek investment advice from Peat Marwick and ICC’s auditors. Clause 1(b) alleged fraudulent loan to restaurant in San Antonio, Texas. Schafer was convicted in relation to this incident. It is the same incident as that described in clause 1(d) in the current Leibel indictment, and is one that the Crown has now indicated that it will be withdrawing, in light of Klebuc J.’s finding that Leibel was actively mislead by Schafer as to the nature of this investment. [30] Count #2 in the Schafer indictment is essentially the same as clause 1(f) of the current Leibel indictment, using $1,695,000 to purchase 5,500,000 shares of Giant Bay Resources Ltd. It is discussed in paras. 101-110 of the Schafer judgment. Schafer was found guilty of this charge. The applicant claims, “In summary, Justice Klebuc found that Leibel’s lack of involvement with Schafer’s activities rendered Leibel unable to accurately comment on Schafer’s state of mind. It is respectfully submitted that with the finding that Leibel was not involved, there can only follow finding that he was not culpable.” [31] With respect, do not agree that Klebuc J. can be read as finding that Leibel was “not involved” with this transaction, or as in any way exonerating him in relation to it. He did not, of course, make any finding that Leibel was criminally involved, for Leibel’s guilt was not in issue before him. do not find the allegation in this part of the Leibel indictment necessarily inconsistent with any part of the Schafer judgment. [32] Count #3 of the Schafer indictment is the same as clauses 1(g) and (h) of the indictment herein. It alleges the advance of ICC funds of approximately $2,250,000 to Giant Bay Resources Ltd. and from there to bank account in Malaysia. Schafer was convicted of this count. The applicant argues that the reasoning of Klebuc J. in that regard exonerates him in that Klebuc J. “did not attribute any mala fides to Leibel.” Again, do not agree that the comments of Klebuc J. in this regard can be read as finding of Leibel’s innocence in this regard, or as in any way necessarily inconsistent with the allegations against Leibel in paras. (g) and (h) of Count #1. [33] Clause 1(a) may also overlap, in my view, with other allegations in the within indictment, such as clause 1(e), but these can be dealt with separately. The above is sufficient to conclude that the allegation against the applicant in Count #1(a) is not inconsistent with the findings of Klebuc J. and can stand regardless of any agreement by the Crown to review those findings or any argument based on issue estoppel. Count #1(b): allowing $513,000 of ICC funds to be used by Trirak Industries Corporation, to the benefit of Richard Leibel and Trirak Industries and to the detriment of ICC and its preferred shareholders. [34] This allegation is equivalent to the allegation in clause 1(a) of the Schafer indictment. It is discussed by Klebuc J. at paras. 48-58. Klebuc J. found that this loan transaction did not support conviction against Schafer. [35] Trirak was Saskatchewan business in which Leibel served as officer and director, for which he provided considerable capital and for which he had personally guaranteed substantial operating loan from the Bank of Nova Scotia. The findings of Klebuc J. support the Crown’s contentions that at the time funds were advanced to Trirak, this company was in receivership and the Bank of Nova Scotia had demanded repayment of its operating loan. $271,130.75 of the funds advanced by ICC were used to pay this loan. [36] Klebuc J. made number of findings which, in my view, would be inconsistent with finding that this transaction was fraudulent. These include the following: accept Leibel’s testimony to the effect that all sums advanced by ICC were used to keep Trirak operating and that he never took any portion of the loan proceeds and further, personally advanced Trirak an additional $148,000 to keep it going. (at para. 51) am further satisfied that nothing in the 1988 Guidelines published by EIC prohibited the Trirak loan in the absence of evidence that the loan was an artificial transaction. In fact, the policy objectives set out in the 1988 Guidelines contemplate venture capital loans being made by private investment syndicates to assist small business ventures who require capital and have limited access to traditional sources. (at para. 55) accepted the evidence of Leibel with respect to the initial intent and purpose of the Trirak loan, the arrangement between FMI and Yokie, and the underlying purpose for assigning the under-secured Trirak loan to Yokie. (at para. 56) have further concluded that the representations made by Leibel in his letters to ICC of December and 21, 1988 were not intended to be misleading. (at para. 57) [37] Crown counsel argues that, while these findings may be interpreted as exonerating Leibel and, indeed, as finding that there was nothing fraudulent in this transaction, it should not be bound by this finding because it did not, in the Schafer trial, “focus” its arguments in relation to this transaction on the role of Leibel, who was much more extensively involved in it, than was Schafer, who only became president of ICC after this loan had been made. Rather, it focussed on the role of Schafer, which was much less significant. In the Leibel trial, it is argued, much more would be made of the financially shaky circumstances of Trirak at the time of the ICC loan, of Leibel’s personal financial interest as guarantor of the Bank of Nova Scotia loan, and of the lack of any independent assessment of this investment. [38] In response, however, the applicant filed copy of the written submission of the Crown in the Schafer trial, showing that these issues were fully covered by it in argument. In his judgment, Klebuc J. explicitly acknowledged the facts relied upon by the Crown and nonetheless found that the ICC loan to Trirak was not fraudulent. [39] In consideration of all of these factors, it is my conclusion that the findings of Klebuc J. on this matter are inconsistent with the allegations of fraud in this regard as against the applicant Leibel. It remains to consider, below, whether it is an abuse of process on the part of the Crown nonetheless to proceed with these allegations in the instant matter. Counts #1(c) and (d) do not need to be addressed because the Crown has indicated that it will not be proceeding with those matters. Count #1 (e): diversion of funds from 590188 Saskatchewan Ltd. to other companies in which Schafer or Leibel had an interest. [40] Schafer was convicted in relation to this matter. The applicant invites me to read the comments of Klebuc J. in relation to funds received, in particular, by the Willows, as exonerating Leibel. cannot do so, for reasons argued by the Crown. The Court, in the Schafer trial, was not addressing the question of Leibel’s guilt and it would, indeed, have been improper for it to do so. In addition, funds other than those going to the Willows are involved in this allegation. conclude that the findings of Klebuc J. in regard to this allegation are not inconsistent with the charge against Leibel, and that the applicant’s argument in relation to this matter cannot succeed. Count #1 (j): representing to ICC’s investors that 30 percent of their investment would be invested in Canadian Government Insured Certificates and then using that portion of their investment in other ways. [41] This was alleged in Count #4 in the Schafer indictment. Klebuc J. dismissed this count on the basis that any reliance by investors in this representation was superseded by an amended offering memorandum provided to all investors: All investors executed the Guideline 16 Investor’s Letter of Acknowledgement and thereby elected not to withdraw from the investment. There was no evidence of ICC advising investors that the representations in the Marketing Brochures were no longer operative, but it would have been evident on reading of the Amended Offering Memorandum that material change in the investment criteria had been made (at para. 125) He also found: Leibel testified that ICC intended to invest 30 percent of the capital raised in GICs or bank deposits but was unable to because of the position taken by EIC, Ferguson and Lamba that such investments would contravene the 1988 Guidelines. He stated investment plans were altered to appease EIC. accept his testimony on this point. (at para. 126) [42] The Crown concedes that these findings are inconsistent with Leibel’s guilt on this charge, but says that it simply does not agree with the findings of Klebuc J. on this point and does not think that it is bound by them in proceeding against Leibel. Count 2: theft of proceeds of sale of ICC’s shares in Giant Bay Resources Ltd. [43] This is the same allegation as contained in Count #5 of the Schafer indictment. Schafer was convicted on this count. The applicant argues that central to this finding was Schafer’s use of hidden bank account, of which Klebuc J. specifically found that Leibel was unaware. have read this portion of the Schafer judgment carefully. It is my conclusion that while none of the express findings of Klebuc J. in relation to this count would in themselves lead to conviction of Leibel in relation to it, neither do they necessarily exonerate him, except in relation to knowledge of the hidden bank account. am unable to conclude from this judgment that it is inconsistent with the charge against Leibel. Count #1 (i): postponing ICC’s mortgage and caveats on the Willows Golf Course in favour of Household Trust Mortgage in approximately November of 1990. [44] This allegation raises different issue. It is new charge with which Leibel has not had the benefit of Preliminary Inquiry. The applicant submits that it is an abuse of process to lay new charge at this stage of the proceedings. No authority is cited for that proposition and do not accept it. [45] In summary, am satisfied that on proper reading of the Schafer judgment finding of guilt against the applicant in relation to the allegations contained in Count #1, subparas. (b), (d) and (j) would be inconsistent with specific findings of Klebuc J. in that matter. As have indicated, the Crown has already agreed not to proceed against the applicant in relation to subpara. (d) for that reasons. It remains to consider whether proceeding on the other two matters constitute an abuse of process and ought to be stayed. [46] In his written brief the applicant argues that for the Crown to proceed against Leibel where this would be inconsistent with the findings in Schafer would be “breach of an agreement” with the Crown that was relied upon by the applicant in waiving objections of delay while awaiting the Schafer judgment, and therefore constitutes bad faith on the part of the Crown and gives rise to grounds for stay on the basis of abuse of process. The brief argues, at para. 55: It is important to remember that in the case at bar, the Accused is not seeking stay of all of the charges against him because of the Crown’s breach of the agreement. He is simply seeking Stay of Proceedings upon those charges which cannot be sustained in light of Mr. Justice Klebuc’s findings and which he anticipated that the Crown could have stayed of its own volition upon receipt of Mr. Justice Klebuc’s findings. This is akin to the situation in R. v. Burlingham, 1995 CanLII 88 (SCC), [1995] S.C.R. 206 [a case in which the Crown breached plea bargain agreement. The Court held that this constituted an abuse of process but warranted remedy less extreme than stay of all proceedings and substituted conviction for the lesser included offence which was the subject of the plea bargain] This is all the Accused is asking here. He is not asking for an outright stay of all the charges by virtue of the Crown’s breach of the agreement. He is simply asking that the Court step in and uphold the agreement. He respectfully requests that the Court undergo detailed review of the Indictment against him and consider whether those charges ought to be proceeded with in light of Mr. Justice Klebuc’s decision. The Crown agreed and promised to do so but they did not. The Accused now is asking the Court to do so. At para. 56, the applicant’s brief discusses the decision of the Supreme Court of Canada in R. v. Carosella, 1997 CanLII 402 (SCC), [1997] S.C.R. 80 and the factors enumerated in that case that the Court should take into account in granting stay. While this case deals with the destruction of evidence and the effect of that on the ability of the accused to make full answer and defence, the applicant argues that the principles are the same, and continues: These factors are particularly instructive here. The failure of the Crown to uphold its part of the bargain cannot be remedied through further adjournment or by an exclusion of evidence. The only rational and logical remedy is for the Court to undergo the exercise which the Crown promised but then failed to do. The Crown Prosecutor maintains an essential role in the criminal justice system. When that role is compromised by the Crown failing to abide by the agreements which it has struck, the Court must step in to ensure that justice is done. Otherwise, the system does not work. The brief then cites number of cases in which the courts found that the Crown had failed in its duty to exercise good faith, including R. v. Chaplin, 1995 CanLII 126 (SCC), [1995] S.C.R. 727 (a case in which the Crown beached its obligation for disclosure), R. v. Elijah, [1989] O.J. No. 2353 (DCO No. 1419, September 13, 1989, Ontario District Court), and R. v. MacDonnell, 1997 CanLII 369 (SCC), [1997] S.C.R. 305. None of these cases is entirely on point with the facts of this application. Two “breach of Crown agreement” cases relied upon are R. v. Burlingham, 1995 CanLII 88 (SCC), [1995] S.C.R. 206, which involved an agreement between the police and the accused that he would only be charged with second degree murder if he disclosed the location of the murder weapon, and R. v. L.B.D. (1995), 1995 CanLII 5988 (SK QB), 126 Sask R. 95 (Q.B.), in which the police had agreed not to charge the accused with sexual assault if he in turn agreed to undergo treatment. [47] It is my view that in light of the Crown’s clear statement that it did not undertake to be bound by the judgment of Klebuc J., but merely to “review” the matter in light of that judgment, any explicit agreement between the applicant and the Crown was only to the effect that it would exercise its discretion in bona fide way in light of the findings of Justice Klebuc. Thus, in order to prove breach of this “agreement”, the applicant would have to satisfy this Court not merely that that discretion could and should have been exercised differently, but that the Crown exercised its discretion in bad faith. [48] On the other hand, as indicated above, it is clear from the submissions made to me that both the Crown and the applicant understood and expected that the determinations by the trial judge in Schafer would have some bearing on the Crown’s decision as to how to proceed in relation to Leibel, and, in particular, that the Crown would want to know whether Klebuc J. found that the particular matters alleged were fraudulent at all. [49] In oral argument, counsel for the applicant made it clear that it did not intend to take the argument so far as to allege bad faith, based solely on the “understanding” between the applicant and the Crown with respect to the matter of awaiting the Schafer judgment before proceeding. Certainly no improper motive was alleged against the Crown. Rather, in oral argument, the applicant focussed on the second aspect of this argument, based upon the principles of res judicata or issue estoppel which, it was argued, should be assessed in light of the understanding between the Crown and the applicant in relation to the Schafer matter. The relevance of the parties’ understanding was therefore not advanced so much as an independent ground for stay of proceeding but rather as part of the context in which the Court should determine whether the issues on some matters between the Crown and the applicant had been fully canvassed in the Schafer judgment. [50] This seems to me to be the right way to put the argument. Clearly, the applicant cannot argue autrefois acquit, the criminal law equivalent of res judicata, in relation to the Schafer judgment, because he was not at jeopardy in the Schafer trial. The question, however, of whether it would be abuse of process to prosecute the applicant in relation to financial transactions that have determined that Klebuc J. clearly found did not violate the investment agreements and requirements and therefore did not constitute fraud raises the more complex issue of the extent to which finding to the contrary in trial of the applicant, inconsistent with the clear findings of Klebuc J. in Schafer, would bring the administration of justice into disrepute and raise issues of fairness in relation to this accused. [51] Certainly, in the civil context, the courts have held that it is no longer essential that the parties to previous determination be identical for an argument of res judicata or issue estoppel to succeed. In some circumstances it is sufficient if the party against whom the plea is raised was party and had full opportunity in the earlier proceeding to make its case. An example is the decision of the Saskatchewan Court of Appeal in Bomac Construction Ltd. et al. v. Stevenson et al. (1986), 1986 CanLII 3573 (SK CA), 48 Sask. R. 62, involving an airplane crash in northern Saskatchewan. In an action by one of the plaintiffs against the owner and the pilot, the court found that the pilot had been negligent and awarded damages against both defendants. second passenger then sued the owner and pilots and was successful in striking out their defence (except on the issue of damages) on the basis that it raised issues already determined. The Court of Appeal agreed, holding that even though the second action involved new plaintiff, the basic issues had been fully canvassed and determined in the first proceeding and therefore, To rule otherwise would be to permit an abuse of process through the prospect of multiplicity of actions, inconsistent results and no fitting end to the litigation process. (at 67) The Court agreed that although this case might not satisfy the traditional requirement of identity of parties, for ruling of res judicata or issue estoppel, relitigation would nonetheless constitute abuse of process. [52] In the context before me, the issue depends in my view both on the extent to which findings against Leibel, in regard to the matters have identified, would be inconsistent with findings in the Schafer trial, (a matter have determined above, in the applicant’s favour, in relation to subparas. 1(b) and (j)) and also on the extent to which the issues in relation to those matters can be said to have been fully dealt with, in light of all the available evidence, by the trial judge in Schafer. [53] In this regard, rely on the following facts: 1. The original indictment against Schafer and Leibel jointly was identical to the indictment against Schafer after the charges were severed and it alleged fraud based on financial transactions that favoured the interests of both Schafer and Leibel. The allegations at issue in the present indictment against Leibel are identical. It is clear that Leibel’s interest and involvement in these matters was fully at issue in the Schafer trial and was fully canvassed by the trial judge. 2. While the Crown says that its focus was different in the Schafer trial, the written argument submitted by the Crown in that trial does not reflect the differences claimed and in fact covers all of the points the Crown now indicates that it intends to pursue against Leibel. 3. Both the Crown and the applicant expected the judgment of Klebuc J. to resolve some of the issues raised by the Leibel indictment, if Klebuc J. found that the circumstances relied upon did not support finding of fraud. (a) While the Crown says that it reserved the right to proceed, anyway, it also says that it was assumed that it would be of benefit to both parties to have Klebuc J.’s judgment (where this would only benefit the accused if the Crown accepted that judgment as determinative of issues found in his favour). (b) Crown counsel indicated before me that the very reason that the Crown wished to proceed against Schafer first was that it would get clearer ruling as to whether certain financial transactions were fraudulent because Schafer was an officer of ICC while Leibel was only working “behind the scenes”. am satisfied that both parties expected that the Crown would not proceed against Leibel in circumstances where Klebuc J. made clear finding that the transaction alleged was not fraudulent, at least in the absence of special circumstances that would distinguish the nature of that transaction for the purpose of the Leibel charge. This, again, indicates that the Crown both expected and intended the issues in question to be fully canvassed and determined by Klebuc J. (c) Justice Klebuc himself expected that his judgment would have some bearing on the Leibel matter and therefore, it can be assumed, addressed his findings with that in mind. (d) The Crown has in fact accepted the factual finding of Klebuc J. in relation to one of the allegations against Leibel, that set out in subpara. 1(d). (e) Leibel testified at the Schafer trial, was on the stand for three days and was subject to full cross-examination by the Crown for two of those days. [54] These considerations lead me to conclude that the issues in relation to the two allegations that have identified were fully argued by the Crown and fully canvassed by the trial judge in the earlier trial. have already indicated my conclusion that, in relation to those two allegations, finding of guilt against the accused in the present proceeding would be inconsistent with the clear findings and determinations of Klebuc J. [55] In these circumstances, have concluded that to permit the Crown to say simply that it does not agree with the determinations of Klebuc J. on these two matters and wishes to have the matters tried again with fresh determination in this proceeding is not good enough. The potential for inconsistent findings in all of these circumstances puts at issue the integrity of the system of justice and public confidence in the system as well as raising issues of fundamental fairness to this accused. In R. v. Elijah, supra, the trial judge commented: also raised an argument as to what as juror would think if convicted [the accused] of attempted murder and then heard afterwards that the perpetrator of the crime had in fact pleaded guilty to lesser offence [and] the plea was accepted by the Crown. comparable question could be posed in this case. [56] have concluded that in the circumstances have attempted to describe in some detail, it would be an abuse of process for the Crown to pursue the allegations raised in subparas. (b) and (j) of count #1 of the indictment. There shall be an order staying proceedings in relation to these two allegations. The Crown has earlier indicated that it does not intend to proceed with subparas. (c) and (d). The indictment shall be amended to reflect this ruling and these decisions. 3. Has there been unreasonable delay in bringing this matter to trial in breach of the s. 11 of the Charter? [57] The original information in this matter was sworn October 4, 1996, over four years ago. The investigation and allegations against this accused were matters of public knowledge for several years prior to that. This is sufficient to raise an inquiry as to the reasons for the delay. [58] On a review of this matter, I am in fundamental agreement with the submission of the Crown that there has not been unreasonable delay in light of the complexity of the charges, the reasons for the delay, and the agreement by the applicant not to object to certain periods of delay. In particular, rely on the following consideration: First, find on the information before me on this application, including affidavits from the investigating officers, that the pre-charge investigation of this matter was conducted reasonably and efficiently given the difficulties encountered. Following the laying of the charges, there was ongoing disclosure and various court appearances including the following: October 30, 1996: The first appearance of the applicant and his co-accused in Provincial Court on the charges. motion to quash the information was brought on this date. It was argued and then ultimately the motion was dismissed on December 16, 1996. October 30, 1996 to April 30, 1997, inclusive: During this time there were six court appearances in Provincial Court with various other motions being brought. On April 30, 1997, both accused elected to be tried by Provincial Court but refused to plead and not guilty plea was entered by the court pursuant to section 606(2) of the Criminal Code. Dates for further motions were made available for September of 1997 and trial time was made available for October and November of 1997. April 30, 1997 to October 14, 1997: There were seven more appearance in court between these two days during which the accused made various applications. August 26, 1997: The accused re-elected to be tried by judge and jury pursuant to section 561 of the Criminal Code. October 14, 1997 to November 21, 1997: The preliminary hearing took place during this time. On November 21 the matter was adjourned for argument on committal to Dec. 3, 1997. December 3, 1997: Argument was presented by Crown and Defence regarding committal. The matter was adjourned to December 8, 1997 for decision on committal. December 7, 1997: The preliminary hearing judge committed both accused to stand trial. Twenty Eight witnesses were called at the preliminary hearing. There was no unreasonable delay. The matter was handled with reasonable efficiency in Provincial Court. The preliminary hearing generated 2436 pages of typed transcript which was bound in eleven volumes. The Crown received its copy on July 7, 1998. The delay occasioned by the preparation of the transcript was not unreasonable. On July 24, 1998, joint indictment charging Messrs. Schafer and Leibel was filed with the Court of Queen’s Bench. [59] Following this, the applicant moved for the charges against himself to be severed from those against Schafer and was successful. The parties then agreed that the Schafer matter would proceed to trial first and then agreed to adjourn the trial until the Schafer judgment came down, as is described above. The applicant agreed to waive objections to delay during this period. [60] To this point, am satisfied that there was no unreasonable delay. Indeed, most of the passage of time was at the instance of the applicant, pursuing his legitimate rights, including the right of appeal in some instances, before the matter could proceed. [61] Of more concern is the passage of time since the Schafer judgment. The parties had agreed to trial date of September 28, 2000. This date was adjourned to March 5, 2001 after the Crown issued new indictment against the applicant following the receipt of the Schafer judgment. The applicant argues that this adjournment was necessitated by the unreasonable action of the Crown in amending the indictment to produce global charge without particulars of the allegations it was still pursuing against Leibel, compelling the applicant to apply to the trial judge, who was not determined until early September, 2000, to get particulars. [62] am sympathetic to aspects of this claim. agree that the applicant reasonably expected the Crown to indicate clearly, following the judgment of Klebuc J., which allegations it was still going to proceed with against the applicant. The indictment that issued on June 29, 2000 gave the applicant no information at all on this point and certainly necessitated an application for particulars and likely, as well, some adjournment of the trial. The total amount of the delay to March 5, 2000, however, cannot be attributed to this factor. [63] As the Crown rightly points out, at pre-trial conference held August 12, 2000, counsel for the applicant indicated that he intended to seek an adjournment of the trial date and that, in addition to an application for particulars, would likely be bringing number of other applications prior to trial including motion to quash search warrant on which an evidential hearing would be required and possible motion for change of venue. Mr. Fox also indicated at that time that he was unavailable to commence the trial, which is presently scheduled for two months before judge and jury, during the months of November and December, 2000, due to other commitments and, indeed, that realistically he was not available before February 12, 2000. In the meanwhile, it has been possible to schedule hearing of the other applications that the defence would have brought, in any event, for dates between September 28, 2000 and the new trial date of March 5, 2001. This includes what might be lengthy evidential hearing on the motion to quash the search warrants. Accordingly, the actual delay caused by the postponement of the September, 2000 trial date is considerably less than the March date would indicate, and much of this is due to the lack of availability of defence counsel. [64] In light of all of these considerations, have concluded that there has not been unreasonable delay in bringing this matter to trial. This application to quash the proceedings is dismissed. Conclusion [65] The application to quash count #1 on the basis that it charges more than one transaction contrary to s. 581 of the Code is dismissed. [66] The application to stay proceedings on the basis of findings made by Klebuc J. in the Schafer trial is allowed in part as follows: [67] The Crown’s proceeding in relation to the particular charged in subpara. (b) of count #1 regarding the use of ICC funds in the amount of approximately $513,000 for Trirak Industries Corporation is stayed on the grounds that to allow the Crown to now proceed against this accused with that allegation would constitute abuse of process. [68] The Crown’s proceeding in relation to the particular charged in subpara. (j) of count #1 regarding the alleged representation to investors that 30 percent of their investment would be invested in GICs is stayed on the ground that to allow the Crown to now proceed against this accused with that allegation would constitute abuse of process. [69] note that the Crown has already advised the Court that it will not be proceeding with either subpara. (c) or (d) of count #1. [70] The application for stay of proceeding on the ground of delay is dismissed.
FIAT. The accused applied for an order pursuant to s.581(1) of the Criminal Code quashing count 1 on the grounds it offended the 'single transaction rule'; an order pursuant to ss.7 and 24(1) of the Charter and the common law doctrine of abuse of process that portions of the indictment as amended be quashed or stayed on the basis of the judgment in the trial of the former co-accused, Reginald Schafer; alternatively, an order staying the proceedings on the grounds of unreasonable delay in bringing the accused to trial. He argued the Crown would be in breach of an agreement in which he waived delay to proceed on the charges on which inconsistent findings could be made and would constitute bad faith. HELD: 1)The application to quash count 1 on the basis it charges more than one transaction was dismissed. The count particularizes in the alternative various ways in which the accused is alleged to have defrauded the investors of ICC by using funds of ICC to advance his or Schafer's interests. The case law cited by both parties clearly establishes that the word 'transaction' as used in s.581(1) is to be interpreted broadly and flexibly, and that a single transaction may, in this sense, include a number of acts or incidents occurring over a period of time. 2)Count 1 of the indictment was to be amended. The application to stay proceedings on the basis of findings made in the Schafer trial was allowed in relation to the particular charge in subpara.(b) of count 1 regarding use of ICC funds in the amount of $513,000 for Trirak along with subpara.(j) regarding alleged representations to ICC's investors that 30% of their investment would be invested in GICs. To allow the Crown to pursue these allegations would be an abuse of process. The Crown had indicated it would not proceed with subparagraphs (c) or (d). 2)There had not been unreasonable delay in light of the complexity of the charges, reasons for the delay, and the agreement by the applicant not to object to certain portions of delay. There was ongoing disclosure and there were various court appearances following the laying of charges.