Carlini Bros. Body Shop Ltd. v. The Queen, 92 DTC 6543, [1993] 1 CTC 55 (Ont. Ct. J. - G.D.)

Brockenshire, J.:—This was a motion brought by counsel for the accused in this income tax prosecution as if at the commencement of trial, to me as if I was the trial judge with the consent of the accused and the Crown. The accused sought the following orders under the Charter and the common law:

(1) the return to the accused of documents and other evidence seized by the Crown and prohibition of use of such evidence at trial, (2) a stay of the prosecutions, and (3) severance of the trial of Philip Carlini from the trial of the other accused.

Evidence and argument commenced March 16,1992, continued to March 20, resumed May 27 for the day, and again resumed June 1st, and continued until late in the evening on June 4. Needless to say, much evidence was presented and much argument was heard. I do not propose to review either exhaustively.

Background

Carlini Bros. Body Shop Ltd. is a corporation carrying on business in Windsor with two shops, a body or collision shop, and a paint shop, and also a farm. The two shops dealt largely with insurers, and the farm centred on keeping, training and racing harness horses. The individual accused, and Guiseppe Carlini, who died, are all brothers and shareholders of the corporation. Philip Carlini managed the office and financial matters. Guiseppe managed the farm, and the others worked in the shops.

In late 1984, Mr. James Beach of the Income Tax Department, Audit Branch, commenced an audit of the corporate accused. This continued, with a delay of some months at the request of the accused, until the fall of 1985. He concluded there was some evidence of fraud, and referred the matter to the Special Investigations Branch of the Department. He was then transferred to that Branch, and continued with this file.

From December 9, 1985 on, he regarded the matter as a criminal audit or investigation, but was still looking at civil matters such as readjustments.

From December of 1985 until October of 1986, James Beach and the Department sought sufficient third party or objective support for his suspicions to justify an application for a search warrant. On October 8, 1986 a warrant was authorized under section 231.3 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). Seizures were made from the accused on October 21, 1986. The seizures produced 16 boxes of material.

Following these seizures the accused were all aware that they were under criminal investigation, and that the Department was contemplating laying criminal charges. Letters from the Department dated November 30, 1987 to all of the accused, told them exactly how much the Department was alleging each of them had not reported.

Examination of the seized materials, third party inquiries, verification attempts, and further auditing work took Mr. Beach and the Department until December of 1988, when he asked the Department of Justice to prepare formal charges and provided it with the full details.

Despite follow-ups he did not get the charges back until December of 1989.

The formal charges were sworn in early January 1990, and served. The accused made their first court appearance on January 29, 1990.

The Crown was represented by a local agent, who could not get instructions from the Department of Justice on disclosure until May, and never, despite repeated requests by the defence and the court, got instructions on an election. Finally, on July 16, 1990, in the absence of instructions, the agent elected to proceed summarily.

The Department of Justice then became directly involved, laid new charges which repeated the previous ones, adding one naming the corporate bookkeeper, elected to proceed by way of indictment, stayed the previous charges, and then never did proceed further against the bookkeeper.

The accused elected trial by judge and jury on the new charges and a nine- day preliminary hearing commenced May 15, 1991, and was completed June 21, 1991. On consent a trial date has not yet been assigned.

Search warrant

The search warrant in this case was issued under section 231.3 of the Income Tax Act.

The argument dealing with the seized materials was based entirely on R. v. Baron, [1991] 1 C.T.C. 125, 91 D.T.C. 5055 (F.C.A.), a decision that declared section 231.3 of the Income Tax Act to be of no force and effect because it is inconsistent with sections 7 and 8 of the Charter. In Baron, supra, Hugessen, J. who wrote the unanimous decision, referred to Kourtessis v. M.N.R., [1990] 1 C.T.C. 241, 89 D.T.C. 5464, 50 C.C.C. (3d) 201 (B.C.C.A.). The same principle ground—that section 231.3 is inconsistent with sections 7 and 8 of the Charter due to interference with judicial discretion—was argued before both courts.

The Court in Kourtessis, supra, quashed on jurisdictional grounds an appeal from a decision upholding the validity of s. 231.3. However Locke, J., with the concurrence of Toy, J., dealt with the substantive grounds of the appeal. Locke, J. concluded s. 231.3 was valid, on the basis that any impairment by the section to the judge's function was to an administrative, rather than a judicial aspect of such function.

Hiugessen, J. in Baron simply concluded that Locke, J. was wrong. In a detailed analysis Hugessen, J. set out the reasoning supporting his own deci- sion, that the use of the word "shall" in section 231.3 removes residual judicial discretion to refuse to issue a warrant and so violates sections 7 and 8 of the Charter.

I am advised that Baron has been appealed to the Supreme Court of Canada, that the appeal has been argued, and the decision was reserved.

My understanding of the law of stare decisis is that I am only bound by decisions of a Court to which a decision of mine could be appealed. Federal Court of Appeal decisions, even in relation to the Income Tax Act, are not binding on me, but are entitled to the same consideration and persuasive weight as would be given by this court to the decisions of the highest appellate courts of the other provinces—Bedard v. Isaac, [1972] 2 O.R. 391, 25 D.L.R. (3d) 551 (H.C.) [rev'd on other grounds, (1973), 23 C.R.N.S. 197, 11 R.F.L. 333, 38 D.L.R. (3d) 481].

I am therefore faced with two opposing opinions on the validity of section 231.3, which in law are of equal persuasive weight. I do not have the benefit of the decision of the Supreme Court of Canada, which will decide the question, and which, if available, would be binding upon me.

I am persuaded by the reasoning of Hugessen, J. that section 231.3 of the Income Tax Act is indeed invalid, and that therefore, the search warrant issued thereunder is also invalid. This application is brought pursuant to subsection 24(1) of the Charter. In my view the appropriate remedy is to declare that section 231.3 is invalid, as offending sections 7 and 8 of the Charter, for the reasons given in Baron, and to quash the search warrant.

This does not completely dispose of this part of the matter. There are 16 boxes of materials that were seized under that search warrant, and are currently held by the Tax Department, by virtue of a retention order issued under the same section 231.3, or as exhibits in this court. In Baron, the conclusion, after quashing the warrants, was to order the return of everything seized by virtue thereof. There was no review in that decision of the propriety, or lack thereof, in obtaining the warrants, or of the importance of the materials seized in the underlying prosecutions.

In R. v. Lagiorgia, [1987] 3 F.C. 28, [1987] 1 C.T.C. 424, 87 D.T.C. 5245, 35 C.C.C. (3d) 445, (F.C.A.), Hugessen, J. declared invalid an earlier version section 231.2 of the Income Tax Act. He stated that a breach of the Charter may not be overlooked to facilitate a simple prosecution for tax evasion, and ordered, under subsection 24(1), the return of the property illegally seized. However he went on to say, at pages 426-27 C.T.C. (D.T.C. 5247, C.C.C. 448):

We emphasize once again that our decision today deals only with the appropriate civil remedy for the acknowledged invasion of the Charter—guaranteed rights. Nothing we say should be read as bearing in any way on whether the Crown can or should be allowed to reseize the subject documents or to use them or the information they contain as evidence.

In this case, there is no suggestion of lack of good faith by Mr. Beach in applying for the search warrant, which of course occurred long before the validity of section 231.3 was questioned by the courts. It is obvious that the materials seized would, at least in part, be relevant and useful evidence for the prosecution.

During the hearing of this motion, the Crown asked me to issue a new search warrant, under the Criminal Code. Jurisdiction under section 487 of the Code extends to other acts of parliament, and its validity under the Charter has not been questioned. The Crown's new application, and the proposed warrant, are substantially the same in wording as the old ones, essentially substituting section 487 of the Criminal Code in the heading of the warrant for section 231.3 of the Income Tax Act. I declined to issue such new warrant, questioning authorizing a search for things that are held by the Crown, and the seizure of things still under a retention order. No application was made by the Crown to amend the existing warrant, to refer to the Criminal Code instead of the Income Tax Act; nor was an application made to appoint a receiver for the materials now under seizure.

It is my view that in this case, based upon the evidence heard, and the reasoning of Esson, J.A. in Dobney Foundry Ltd. v. A.G. (Can.), [1985] 3 W.W.R. 626, 19 C.C.C. (3d) 465 at 474 (B.C.C.A.), the Crown should be given an opportunity to re-seize, or to regularize the existing seizure of the documents and materials held. I adopt the reasoning and approach of Southey, J. in Re Borden & Elliot v. R. (1975), 30 O.R. (2d) 248, 70 D.L.R. (3d) 579, 30 C.C.C. (2d) 337 (Ont. H.C.), and adopted in Re Dobney Foundry Ltd. v. The Queen (No. 3), [1987] 1 W.W.R. 281, 29 C.C.C. (3d) 285 (B.C.C.A.). I order the seized materials and documents to be returned to the accused within 30 days, unless before that time the Crown reseizes the same or continues the existing seizure by other judicial process.

Stay application

The second part of this motion sought a stay of the prosecution of all accused. Relief was sought under subsection 24(1) of the Charter and the common law. The defence contention was that relief should be available in this case based on the combination, or cumulative effect, of precharge delay, delay in disclosure, post-charge delay, and abuse of process even if relief would not be available for any of those items standing alone. The defence position was that the cumulative effect of the combination was to prejudice the accused's rights to a fair trial, and their ability make full answer and defence, in violation of sections 7, 8 and paragraphs 11(b) and 11(d) of the Charter, and the common law doctrine of abuse of process. The original claim for relief was for a stay, but at the commencement of this proceeding, on the consent of counsel, that claim was amended to "such remedy as the Court considers appropriate and just in the circumstances", so that there would be no problem later, if the Court found relief was called for, but not therelief sought in the formal notice of motion.

Post-charge delay

The defence calculation of post-charge delay (taking "charged" to mean when first charged, despite the later substitution of other charges, to which approach the Crown had not, properly, any objection) was some 13 months to the preliminary hearing. The Crown did not object strongly to the calculation of "neutral times” by the defence, but did have strong objection that the time admitted by the defence as "defence delays” was much too short. The 13 month figure is much longer than the 6 month figure reported as "normal" by Professor Baar in his report, cited by Cory, J. at S.C.R. 1235, D.L.R. 392, C.C.C. 486 of R. v. Askov, [1990] 2 S.C.R. 1199, 75 O.R. (2d) 673, 74 D.L.R. (4th) 355, 59 C.C.C. (3d) 449 and the 4.5 months reported as"average" in Provincial Court in Windsor, from the laying of an information to a trial, in the evidence before me of Brenda Gagnier, the local acting manager, Court Support Services. However, as was pointed out in R. v. Ross (1991), 3 O.R. (3d) 583, 65 C.C.C. (3d) 330 (Ont. C.A.); R. v. MacMillan (1991), 3 O.R. (3d) 588, 6 C.R. (4th) 87, 65 C.C.C. (3d) 321 (Ont. C.A.); R. v. Franklin (1991), 3 O.R. (3d) 597, 6 C.R. (4th) 73, 66 C.C.C. (3d) 114 (Ont. C.A.); R. v. Atkinson (1991), 5 O.R. (3d) 30, 50 O.A.C. 48, 68 C.C.C.

(3d) 109 (C.A.), and many other cases and in Askov itself, other factors than the passage of time have to be taken into account. Defence counsel described this case as simple, yet indicated it would take three months to try. Defence counsel did not seriously contend, and I would not be prepared to find on the evidence, that even a delay of 13 months from charge to preliminary hearing in this case was cause by itself for relief under paragraph 11(b) of the Charter.

Precharge delay

At first blush, it appeared that the Income Tax Department and the Department of Justice took an inordinately long time to investigate the alleged infractions, and to get on with these prosecutions. The charges in this case relate to the tax years 1982, 1983, 1984 and 1985. Mr. Beach of the Tax Office commenced his audit work in 1984. Formal charges were not sworn until 1990.

During this motion Mr. Beach was examined and cross-examined for many days. In cross-examination, he was tripped up on several details, and errors in his recollection were pointed out. However the overall impression left was of an honest and sincere public servant trying his best to carry out an unfamiliar and, for him, very difficult task, with little assistance. I had no indication at any point that he was untruthful, or attempting to mislead the Court in any way. Instead it appeared to me that he was trying his best to assist the Court.

Mr. Beach was trained as an accountant and tax auditor. At one point in his evidence he noted that he was a tax expert, and found he was into an insurance fraud case. He had spent 18 years with the Tax Department, but in that time had only done between 25 and 50 investigations.

His general approach seemed to have been to first try and get the books to reconcile, and to reluctantly conclude that something might be wrong when, despite his best efforts, reconciliation could not be achieved. For instance, he told us of finding hundreds of thousands of dollars had been deposited with no notes beside such deposits of whom they were from, or for what. He spent hundreds of hours going through invoices, trying to match invoices with the deposits, and finally concluded that some deposits could not be explained.

He attempted to seek third party verification of everything. He encountered great difficulty and delays in attempting to get the head offices of insurance companies to verify what cheques they may have issued, years before, to Carlini Bros., especially because those cheques would have been indexed to their insureds, and not to the body shop. His investigation led him to believe that the corporate accused may have been overstating its farm income, by showing funds earned in the body and paint shops as receipts of the farm. (There were loss carry forwards in the farm operation to set off against income so declared.) He was told the reported farm income came from winnings of the race horses. He encountered the greatest of reluctance by the race tracks, especially those in the U.S.A., to respond to his questions as to the winnings of the Carlini horses. These are only two examples of the problems and delays he encountered.

Mr. Beach was not only in charge of this investigation—he had to carry out nearly all of the work himself. It apparently is a policy of the Tax Office not to turn its investigations, even criminal investigations, over to the R.C.M.P., and to have the person in charge of the investigation carry out most of the work, with limited opportunity to delegate to others. Because of constraints within his office, he even ended up running a great many of the 20,000 or so photocopies of documents seized, that were provided to the Carlinis.

On calendar sheets for the years 1984 to 1988, inclusive, filed on this motion Mr. Beach noted the days on which he worked on this matter. It is obvious from that summary, and from the extensive cross-examination centred around it, that this file was not sitting inactive for long periods of time. It was being actively worked on. In retrospect, some of the work done and some of the delays encountered may be subject to criticism, but I accept the general position put forth by Mr. Beach—that at the time the work appeared necessary and the delays reasonably unavoidable.

I note that while Mr. Beach took the stand to explain the delays in the investigation, no one came forth from the Department of Justice to explain why it took a year to draft the information in this case, despite the complete documentation provided by Mr. Beach, and his follow-ups, nor why despite repeated requests from its local agent and the Court, it could not give instructions as to whether to proceed summarily or by indictment.

Counsel for the accused based their Charter argument for relief because of the pre-charge delay, on the lengthy judgment of Lamer, J. in Mills v. The Queen, [1986] 1 S.C.R. 863, 29 D.L.R. (4th) 161, 21 C.R.R. 76,26 C.C.C. (3d) 481. At page 922 S.C.R., (C.C.C. 540) he discussed paragraph 11(d) and section 7 of the Charter in relation to paragraph 11(b), and observed that:

The “fair hearing” and “fundamental justice” provisions of subsection 11(d) and section 7 require that a wider and, to some extent, different range of factors be considered in the analysis of the delay: the conduct of the Crown may be properly considered, timely assertion by the accused of his right and disclosure of the nature of the impairment thereto may be required, remedial relief will be more varied and the length of time elapsed will generally be a less critical factor than under subsection 11(b), and is to be considered in a different light, given the difference of purpose for so doing.

And further at pages 944-45 S.C.R. (C.C.C. 558):

Precharge delay is relevant, however, to the right to a fair trial protected by subsection 7 and 11(d) of the Charter. I am in substantial agreement with the following passage from McKay, J.’s judgment in A.-G. B.C. v. Craig et al. (1983), 36 C.R. (3d) 346 at p. 353, (B.C.S.C.) in which he stated:

I have no doubt that relief is available under subsection 11(d) or section 7 and possibly by way of a finding of abuse of process if it is demonstrated that preinformation or pre-indictment delay would cause substantial prejudice to an accused's right to a fair trial and that the delay was caused by the police or the Crown for an oblique purpose.

Precharge delay is relevant under section 7 and subsection 11(d) because it is not the length of the delay which matters but rather the effect of that delay upon the fairness of the trial. Pre-charge delay is as relevant as any other form of precharge or post-charge conduct which has a bearing upon the fairness of the trial. In other words, pre-charge delay is relevant to those interests which are protected by the right to a fair trial whereas it is irrelevant to those which are protected by subsection 11(b). Similarly, pre-charge delay may be a relevant consideration under the doctrine of abuse of process in the same manner as any other conduct by the police or the Crown which may be held to constitute an abuse of process.

In R. v. Kalanj, [1989] 1 S.C.R. 1594, 70 C.R. (3d) 260, [1989] 6 W.W.R. 577, 48 C.C.C. (3d) 459, McIntyre, J. discussed alternatives to subsection 11(b) to deal with pre-charge delay, and observed at page 471 C.C.C. (W.W.R. 590):

Prior to the charge, the rights of the accused are protected by general law and guaranteed by ss. 7, 8, 9 and 10 of the Charter.

He further stated that outside of the Charter the right to make full answer and defence is statutorily protected by what is now subsections 650(3) and 802(1) of the Criminal Code, should pre-charge delay prejudice that right. The doctrine of abuse of process which he traced to R. v. Robins (1844), 1 Cox C.C. 114, is also available in cases of pre-charge delay. He thus found that all of the Charter, the Code and the common law could be available.

In R. v. L. (W.K.), [1991] 4 W.W.R. 385, 6 C.R. (4th) 1, 64 C.C.C. (3d) 321, the Supreme Court of Canada dealt with the issue of precharge delay and section 7 and paragraph 11(d) of the Charter. Stevenson, J., relying on Rourke v. the Queen, [1978] 1 S.C.R. 1021, [1977] 5 W.W.R. 487, 35 C.C.C. (2d) 129 stated, at pages 327-28 C.C.C. (W.W.R. 391), that:

Delay in charging and prosecuting an individual cannot, without more, justify staying the proceedings as an abuse of process at common law. . ..

Section 7 and subsection 11(d) of the Charter protect, among other things, an individual's right to a fair trial. The fairness of a trial is not, however, automatically undermined by even a lengthy pre-charge delay. Indeed, a delay may operate to the advantage of the accused, since Crown witnesses may forget or disappear.

The defence alleged prejudice from the lengthy pre-charge delay because of:

1. The intervening death of Guiseppe Carlini;

2. The present inability to document bank transactions of Anthony Carlini;

3. The difficulty, years afterward, of supporting the defence position that the wives had worked as claimed.

Guiseppe Carlini had been ill, and upset over the tax investigation probably did not help his health problems, but there was no evidence that the Tax Department or the Federal Crown held off laying charges until he was dying nor that they delayed for any devious or improper purpose. Guiseppe ran the farm during the tax years in question, and the defence suggested the accused were now prejudiced in making full answer and defence because he could have explained in detail the farm receipts and disbursements.

Antonio Carlini is alleged to have received and deposited into his own bank account, large amounts of money that properly would have been taxable income of the corporation. He did not keep a record of the sources of his deposits. His evidence was that after he was charged, he attempted to get bank records, but he was told by his bank that they could no longer produce copies of the cheques he deposited. Mr. Beach also testified that his inquiries led to his being advised that banks microfilm cheques going through the clearing system, and up to a year afterward can retrieve the code number for the copies, and from that the copies themselves. After the year, the code number, and hence the copies, can no longer be located. This, of course, was all hearsay, but appeared to be credible evidence for the purposes of this motion, of the difficulties encountered by both the prosecution and defence. The position of Antonio Carlini is that without those copies to explain his deposits, he cannot fully defend himself.

The defence position in relation to the wives, supported by an appeal to commonsense but with little, if any evidence, was that after the passage of years it would be hard for the wives to give exact details of the work they allegedly performed to entitle them to the salaries they received.

The defence position on these three specific matters failed to fully recognize that in this criminal prosecution, the onus is on the Crown to satisfy a jury beyond a reasonable doubt of the correctness of the allegations made, and that the onus does not shift to the defence.

The death of Guiseppe Carlini was, of course, beyond the control of all parties. I note that the evidence was, while he managed the farm, the financial records for it were overseen by Phillip Carlini.

The Tax Department was and is at a real disadvantage without copies of the cheques that went into Antonio Carlini's account. If the information relayed about the bank policy on retrieval of this material is indeed accurate, even by the time the search warrant issued, the majority of the desired material was already unavailable.

On the issue of the wives’ salaries, the Crown, to succeed, will have to establish that the wives did not perform services that reasonably would have entitled them to the incomes paid them.

In short, I am not satisfied on the balance of probabilities on the evidence presented, that the difficulties arising from pre-charge delay suggested by the defence in the three above areas, so impair the rights of the accused under the Charter and to make a full answer and defence, as to require the imposition of a Charter remedy.

Disclosure

During this motion, it became apparent that despite so-called disclosure in May of 1990, and the informal productions of copies of documents to the defence by the Department, the clear directives of R. v. Stinchcombe, [1991] 3 S.C.R. 326, [1992] 1 W.W.R. 97, 83 Alta. L.R. (2d) 193, 8 C.R. (4th) 277, 68 C.C.C. (3d) 1, had not penetrated either the Income Tax Department or the Department of Justice. When the accused testified on this motion, Crown counsel produced, and proposed to use in cross-examination, statements taken from the accused that had never been revealed or produced to the defence. Later, this motion was adjourned during the evidence of Mr. Beach, because it became evident that without production to the defence of documents being referred to, the process was of little value. Mr. Beach and the Crown were directed to make production before resumption of the motion. Despite that direction, the material was not actually delivered to the defence, until the defence brought a further motion to strike the prosecution.

I emphasize here, as I did during the hearing, that Stinchcombe imposes a positive duty on the Crown to produce to the defence, all relevant information, subject to the reviewable discretion of the Crown. "The material must include not only that which the Crown intends to introduce into evidence but also that which it does not. No distinction should be made between inculpatory and exculpatory evidence” (Sopinka, J. at S.C.R. 343, W.W.R. 110, C.C.C. 14).

Failure to follow that clear, new directive of the Supreme Court of Canada is in my view unacceptable.

In Stinchcombe that clear directive was grounded in section 7 of the Charter and the implicit right thereunder to make full answer and defence.

In this case, disclosure has now, at long last, been made. Although it twice gave grounds for adjournments during this motion, it is not so late as to obviously create claims of surprise, inherent unfairness, or impairment of the right to make full answer and defence at the trial itself.

However, in my view, the late disclosure in this case clearly added to the delay in bringing the case to trial, and violated a principle of fundamental justice.

Abuse of process

Abuse of process was defined in a negative way by Lamer, J. in Carter v. The Queen, [1986] 1 S.C.R. 981, 26 C.C.C. (3d) 572 in this way at page 986 (C.C.C. 575-76):

There is no suggestion of any deviousness or maliciousness, or of any offensive or vexatious conduct on the part of the police. There can therefore be no finding of abuse of process.

Dubin, J. in R. v. Young (1984), 46 O.R. (2d) 520, 40 C.R. (3d) 289, 13 C.C.C. (3d) 1 (C.A.) after an extensive review of the law concluded that at O.R. 551, C.C.C. 31:

There is a residual discretion in a trial court judge to stay proceedings where compelling an accused to stand trial would violate those fundamental principles of justice which underlie the community's sense of fair play and decency and to prevent the abuse of a court's process through oppressive or vexatious proceedings. It is a power, however, of special application which can only be exercised in the clearest of cases.

In my view pre-charge, post-charge and disclosure delays can all constitute elements of abuse of process. When looked at solely from the common law point of view, a remedy for abuse of process appears to be limited by Young, supra, to "the clearest of cases" where justice demands a stay of proceedings. Protection against abuse of process is enveloped in the principles of fundamental justice, the right to which is protected for every person under section 7 of the Charter. I conclude that the facts brought forth in this motion would not entitle the accused to a stay of proceedings under the common law as it now stands, on abuse of process.

Cumulative breach of rights

I have concluded that it is not only proper, but in a case such as this, necessary for a court to consider the totality of the situation in determining whether the legal rights and Charter protections of the accused have been infringed to the point where a remedy must issue. The Charter is designed to protect fundamental rights and freedoms. Parliament in authorizing the wide range of remedies now available under subsection 24(1), must have considered that remedies were to be made available for Charter rights invasions less clear and less "special" than the remedy under the common law for abuse of process.

In this case, matters of precharge delay, post-charge delay (including the recharging of the accused to permit a new Crown election), and late disclosure have all been considered and found cumulatively not to meet the high common law threshold of abuse of process, or individually, the threshold for a Charter remedy. However, can the legal rights of an individual truly be protected by the Charter if the Crown is permitted to repeatedly infringe the rights of an accused, and then be excused because the individual infraction would not prevent an ultimate fair trial, or does not meet the threshold intended to prevent the debasing of fundamental protections?

I conclude that when viewed cumulatively in the totality of this situation the precharge, post-charge and disclosure delays and infractions here did violate the fundamental principles of justice which are protected by section 7 of the Charter. Also, in my view, the conduct of the Department of Justice herein was offensive, in the sense such word was used in Carter, supra. Certainly, that conduct substantially interfered with the rights of the accused to make prompt, full answer and defence and to a prompt fair hearing. I find that the Charter rights of the accused have been infringed, and that the accused are entitled to a remedy under subsection 24(1) of the Charter.

Remedy

I am at first mindful that the right to protection under the Charter, and thus the right to claim a remedy under subsection 24(1), is limited to natural persons, so that the corporate accused, although intimately linked with the individual accused, who together own it and run it, is not entitled to claim relief for itself under the Charter. See Irwin Toy Ltd. v. R., [1989] 1 S.C.R. 927, 58 D.L.R. (4th) 577,25 C.P.R. (3d) 417, 39 C.R.R. 193.

A series of cases in the Supreme Court of Canada, including Askov, supra, indicated that the appropriate remedy for post-charge delay is a stay of proceedings. But this is not an application based solely on post-charge delay. The claim for relief in this application was amended specifically to make available the full range of remedies under subsection 24(1), and in my view, in this application, that full range is open for consideration.

The individual accused can all be assumed to have suffered, to this date, the “ stigmatization of the accused, loss of privacy, stress and anxiety resulting from a multitude of factors, including possible disruption of family, social life and work, legal costs, uncertainty as to the outcome and sanction” described by Lamer, J. in Mills at S.C.R. 920, C.C.C. 539, which description was adopted by Cory, J. in Askov (at S.C.R. 1211, C.C.C. 468) to which he added at S.C.R. 1219, C.C.C. 474:

There could be no greater frustration imaginable for innocent persons charged with an offence than to be denied the opportunity of demonstrating their innocence for an unconscionable time as a result of unreasonable delays in their trial. The time awaiting trial must be exquisite agony for accused persons and their immediate family.

Additionally, in this case, the accused are businesspeople, and the criminal investigation by the Tax Department has reached out and touched directly the insurance companies and others with which the body shop business is carried on, and the race tracks and others with which the race horse business is carried on. Phillip Carlini testified that, not surprisingly, this has been bad for business. I am not unmindful that Phillip Carlini has been convicted of insurance fraud, which could also tend to tarnish the good name of the family operation. However, while that fact may be taken into account as diminishing the inference of prejudice, it has no bearing on whether Charter rights have been breached. See R. v. Pugliese (1992), 8 O.R. (3d) 259, 71 C.C.C. (3d) 275 (Ont. C.A.).

In Mills, supra, McIntyre, J. at S.C.R. 965-66, (C.C.C. 501) said:

What remedies are available when an application under subsection 24(1) of the Charter succeeds? Subsection 24(1) again is silent on the question. It merely provides that the appellant may obtain such remedy as the court considers"appropriate and just in the circumstances”. It is difficult to imagine language which could give the court a wider and less fettered discretion. It is impossible to reduce this wide discretion to some sort of binding formula for general application in all cases, and it is not for appellate courts to pre-empt or cut down this wide discretion. No court may say, for example, that a stay of proceedings will always be appropriate in a given type of case. Although there will be cases where a trial judge may well conclude that a stay would be the appropriate remedy, the circumstances will be infinitely variable from case to case and the remedy will vary with the circumstances.

I am persuaded by the reasoning of McDonald, J. in Germain v. The Queen (1984), 53 A.R. 264, 10 C.R.R. 232 (Alta. Q.B.) where he says at page 242 (A.R.):

There may be circumstances in which quashing or staying proceedings or dismissing an indictment will be a just remedy for an infringement of a Charter right. However, when the offence in question is a serious one, it might not be just to grant such a remedy. It might not be just because it would foster a sense of injustice in the community at large. To grant the remedy might cause revulsion in the community because the community might see such a remedy as disproportionate to the infringement of the constitutional right. That sense of injustice might be greater than would be the case, if some other remedy were available which would not result in the freeing of a possibly guilty offender. ....

I note the view expressed by Mr. E.G. Ewaschuk, Q.C., in his article "The Charter: An Overview of Remedies” (1982) 26 C.R. (3d) 54 at 73, that what subsection 24(1) contemplates is a remedy "to be provided to the applicant, not a sanction imposed on the contravener”. He added: "The remedy must result in a personal benefit to the applicant as opposed to merely punishing another party or person."

McDonald, J. canvassed the full range of remedies available and then adjourned the application to permit amendment of the claim for relief, a step rendered unnecessary here by the granting of such an amendment at the start of the proceedings.

The concern in this case, of course, is to find the remedy which I consider appropriate and just in the circumstances.

Here the Crown, as above noted, provided no evidence of why the Department of Justice did not carry out the simple administrative task entrusted to it of preparing the formal charges until a year had elapsed from being given the complete brief; why it failed to instruct its local counsel as to an election; why it went through the dubious manoeuvre of recharging when local counsel had elected, or why it did not, through its counsel, ascertain exactly what the Tax Department had gathered up, and arrange for timely disclosure. There was some indication in the evidence of Mr. Beach of "foul-ups" after the charges were laid, in getting the required election of the Attorney General of Canada, but no indication of why that authorization had not been arranged for, if thought required, before the charges were ever laid.

That absence of evidence permits me to draw an adverse inference, and the inference I draw is that despite the concerns of the local tax office and Mr. Beach, the Federal Department of Justice Office in Toronto simply did not place any importance on this case.

After carefully considering the range of remedies available, and the cases cited in Germain and subsequent to Germain in the Canadian Charter of Rights Annotated (Canada Law Book) on reduction of sentence, I have concluded that the appropriate and just remedy here, for the breach of the Charter rights of the individual accused, is to reduce the seriousness of the financial penalty and prison sentence being faced by them to reflect the lack of seriousness given the matter by the Federal Department of Justice.

Section 239 of the Income Tax Act provides that on summary conviction an accused is liable to a fine of not less than 50 per cent and not more than 200 per cent of the tax that was sought to be evaded. If prosecuted upon indictment and convicted, an accused is liable to a fine of not less than 100 per cent and not more than 200 per cent of the amount of the tax that was sought to be evaded. The difference in seriousness of the two methods of prosecution is thus reflected in a doubling of the minimum fine.

Upon summary conviction, an accused is also liable to imprisonment for a term not exceeding two years, while if prosecuted upon indictment and convicted is liable to imprisonment for a term not exceeding five years. The perceived seriousness of the offence is thus reflected by a substantial increase in the maximum possible prison term. I appreciate that any sentence of imprisonment is only sought after a conviction in serious cases of tax evasion, and again, I am left with the impression that the Federal Crown did not take this matter seriously. On the other hand the removal of the risk of imprisonment should do much to relieve the stress and anxiety of the accused as well as the stigma of this long delayed prosecution.

I therefore order pursuant to subsection 24(1) of the Charter that in the event of any of the individual accused being found guilty, such accused shall be liable to only a fine of not less than 50 per cent and not more than 200 per cent of the amount of the tax that was sought to be evaded. They shall not be liable for imprisonment.

Further, I have considered that, in the course of this motion, twice proceedings came to a halt and adjournments were granted because of late production. I have considered carefully R. v. Pawlowski, (unreported), Ont. Gen. Div., Chadwick, J., March 29, 1992, on the power of the court to grant costs. In the proceedings before me, most of the time spent related to the prosecution of the motion by defence counsel, and in my view the ordinary rule of not granting costs should be followed for such time. However there were two days of court time that were essentially wasted because of late disclosure. Defence counsel had to launch an interim motion seeking disclosure, and then spend considerable extra time reviewing the materials disclosed, which normally would have been done as part of their preparation for the motion or for defence of their clients.

Pursuant to subsection 24(1), I consider it appropriate and just that defence counsel be given their costs against the Crown on a solicitor and client basis, for those two days, for the extra preparation time relating to the interim motion to force disclosure, and for the time spent to review the materials disclosed; and I do order. I am prepared to fix those costs after submission by counsel, either by letter or on a date to be set by the coordinator.

Severance

The final matter was the application to sever the trial of Phillip Carlini from the trial of the other accused. The reasons put forth for this application in submissions of counsel were that Phillip Carlini was the directing mind of the corporation, he acted on his own without the concurrence of others, his dealings with a Corvette was what attracted the attention of the Department, he had a record for fraud, and he had been examined (I presume civilly) in relation to accident claims, the result being prejudice could flow to the others. Reliance was placed on R. v. Weir (No. 4) (1899), 3 C.C.C. 351 (Que. Q.B.) and cases following.

The remedy sought is now statutorily defined in paragraph 591(3)(b) of the Criminal Code, which provides that:

The Court may, where it is satisfied that the interests of justice so require, order . . . where there is more than one accused . . . that one or more of them be tried separately on one or more of the counts.

The general rule, supported by a number of authorities, as put at 9.13230 of Ewaschuk, Criminal Pleading and Practice in Canada, 2nd ed. (1987) is that persons engaged in a common enterprise should be jointly tried unless it can be demonstrated that a joint trial would work an injustice to a particular accused. The trial judge must consider the interests of justice as well as the interests of the accused.

The factual situation here is that all of the individual accused are shareholders of the corporate accused; all were and are employees of it, and all were and are carrying on business together, tending to various aspects of this family business. As such, I would expect the evidence relating to each of the accused to be intertwined. The defence allegations raise the thought of the possibility of one accused shifting blame to another if separate trials were ordered, which was considered as strong grounds for not ordering separate trials in R. v. Lane and Ross (1979), 1 C.C.C. 196 (Ont. H.C.) and R. v. Jefferson, [1972] 2 O.R. 38, 6 C.C.C. (2d) 33 (H.C.).

I do not consider any of the allegations made in support of the severance as being sufficient to raise a concern of injustice to the accused other than Phillip Carlini, if all are tried together, outweighing the interests of justice in this case. Without prejudice to the right of the accused to reapply, if so advised, at or during trial, the application to sever is refused.

Application granted in part.