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Fox Guarding the Hen House

   

 

Case Name:
R. v. Holmes

[1972] O.J. No. 1230
Also reported at:
25 C.R.(N.S.) 154

Ontario County Court
Graburn Co. Ct. J.

Oral judgment: June 7, 1972.
(54 paras.)
 

Counsel:

  C. Scullion, for the Crown.
R.J. Carter, for the accused.
 

 1      GRABURN Co. Ct. J. (orally): Mr. Holmes is charged as follows:

 

       "That on or about the 12th day of December in the year 1967, being a witness in a judicial proceeding, to wit:  an investigation ordered by the Ontario Securities Commission under section 21 subsection (1) of the Securities Act, 1966, of Ontario, by order dated the 16th day of November, 1967, unlawfully committed perjury by giving false evidence to the effect that he was not aware of the account of the Sisters of St. Joseph, Parry Sound, Ontario, with Meggeson, Goss and Company Limited, he was not aware of the transactions between the Sisters of St. Joseph, Parry Sound, Ontario, and Meggeson, Goss and Company Limited, and did not see the ledger cards kept by Meggeson, Goss and Company Limited relating to the account of the Sisters of St. Joseph, Parry Sound, Ontario, knowing such evidence was false and with intent to mislead, contrary to the Criminal Code."

 

 2      Mr. Holmes re-elected on this indictment to be tried in County Court Judges' Criminal Court, and he has pleaded not guilty.

 3      The transcript of the evidence which is referred to in the count which I have just read has been marked as an exhibit in this trial, as well as the transcript of the evidence at a previous trial of the accused, to which I shall refer at a later point in these reasons, and also the exhibits marked at the previous trial were filed as exhibits at this trial.

 4      From the transcripts and from the exhibits certain facts clearly emerge.

 5      The accused, a chartered accountant, was the auditor for Meggeson, Goss and Company Limited, a firm of investment dealers. Prior to 1967, Meggeson, Goss and Company Limited had been placed in bankruptcy and had been suspended by the Ontario Securities Commission. Meggeson, Goss and Company Limited had amongst their clients the Sisters of St. Joseph, in Parry Sound, who had advanced a considerable amount of money to Meggeson, Goss and Company Limited in order that the company would purchase for the Order short term separate school bonds with a high interest rate. These bonds were purchased by Meggeson, Goss and Company Limited, but were subsequently pledged to the bank to secure personal loans to the principals of the company. Such a pledge constituted a theft of the bonds by Meggeson and Goss, and the consequent debt to the Sisters of St. Joseph constituted a liability on the part of the limited company.

 6      In 1966 and 1967 the accused prepared financial statements or balance sheets as Meggeson and Goss Limited's auditor. These statements purported to refer to the company's affairs for the years ending 31st December 1965 and 31st December 1966, respectively. In each year two statements were prepared by the accused. One statement was for the information of the company's shareholders and was additionally furnished for income tax purposes. A second statement was for the information of the Investment Dealers' Association, of which Meggeson, Goss and Company Limited was a member. The Investment Dealers' Association is a body recognized by the Ontario Securities Commission, and through which members exercise self-imposed "policing" powers over one another. Not all investment dealers are members of the Investment Dealers' Association, but supervisory regulations exist for all investment dealers, whether or not they belong to the Investment Dealers' Association. If they do not belong, regulatory supervision emanates directly from the Ontario Securities Commission. For all practical purposes the scope of the authority is identical, whether it is exercised by the Investment Dealers' Association or the Ontario Securities Commission.

 7      In 1966 the two statements prepared by Mr. Holmes showed substantially different financial positions for the company. The same divergence was revealed in the two statements he prepared in 1967.

 8      Mr. Holmes's working papers, on which the statements prepared in 1966 and 1967 were based, contain no reference to the account of the Sisters of St. Joseph. The bonds stolen from the Sisters by Meggeson and Goss were listed by the accused as being the property of Meggeson, Goss and Company Limited in the relevant financial statements.

 9      Following the limited company's bankruptcy and suspension, Mr. Holmes was examined by the Ontario Securities Commission, as is set out in the charge before the Court. And the Crown alleges that he committed perjury in respect of three specific items of evidence, reference to which will be made in the course of these reasons.

 10      In 1968 Mr. Holmes was indicted on seven counts, one of which was the perjury count presently before this Court. The accused appeared for trial on these seven counts before Waisberg Co. Ct. J. and a jury, in May 1971. The additional six counts were as follows:

 11      Count 1 charged him that in the years 1964 to 1967 inclusive, at Toronto, he stole a number of valuable securities having a value of $90,500 more or less, the property of the Sisters of St. Joseph, Parry Sound, Ontario, contrary to the Criminal Code, R.S.C. 1970, c. C-34.

 12      On Count 2 he was charged that, at Toronto, in 1966, he unlawfully made a false document, to wit, a balance sheet relating to the financial position of Meggeson, Goss and Company Limited as at 31st December 1965, knowing it to be false, with intent that some person should be induced by the belief that it was genuine, to refrain from scrutinizing the affairs of Meggeson, Goss and Company Limited, and thereby committed forgery, contrary to the Criminal Code.

 13      On Count 3 he was charged that, at Toronto, in 1967, he unlawfully made a false document, to wit, a balance sheet relating to the financial position of Meggeson, Goss and Company Limited as at 31st December 1966, knowing it to be false, with intent that some person should be induced by the belief that it was genuine, to refrain from scrutinizing the affairs of Meggeson, Goss and Company Limited, and thereby committed forgery, contrary to the Criminal Code.

 14      On Count 4 he was charged that, at Toronto, in 1966, knowing that a document, to wit, a balance sheet, relating to the financial position of Meggeson, Goss and Company Limited, as at 31st December 1965 was forged, unlawfully used it as if it were genuine, contrary to the Criminal Code.

 15      On Count 5 he was charged that, at Toronto, in 1967, knowing that a document, to wit, a balance sheet, relating to the financial position of Meggeson, Goss and Company Limited, as at 31st December 1966 was forged, unlawfully used it as if it were genuine, contrary to the Criminal Code.

 16      Count 6 is the count presently before this Court.

 17      On Count 7 he was charged that, at Toronto, during the years 1964 to 1967 inclusive, knowing that Harry Barton Goss, John Robert Meggeson and Meggeson, Goss and Company Limited had been parties to the theft of a number of valuable securities having a value of $90,500, more or less, the property of the Sisters of St. Joseph, Parry Sound, Ontario, assisted them for the purpose of enabling them to escape by preparing false financial statements which indicated that such valuable securities were the property of Meggeson, Goss and Company Limited and was thereby an accessory after the fact to the commission of the indictable offence of theft, contrary to the Criminal Code.

 18      Counts 2 and 4 related to the alleged forgery and uttering of the financial statements in 1965 prepared for the Investment Dealers' Association.

 19      Counts 3 and 5 related to the alleged forgery and uttering respectively of the financial statements for 1966, and they were the subject of a directed verdict of not guilty. The transcript clearly indicates that the Crown completely abandoned those counts at the trial thereof.

 20      At the outset of this trial - and I refer to the trial before Waisberg Co. Ct. J. - upon an application made by the accused, the learned trial Judge directed that the perjury count be severed from the remaining six counts, and he directed the remaining six counts be proceeded with. Following his not guilty plea Mr. Holmes gave evidence in defence at that trial. On 26th May 1971 he was acquitted on each of the six counts before the jury.

 21      In the present trial, arising out of his not guilty plea, Mr. Holmes raised the defence of res judicata.

 22      Mr. Scullion, who has appeared on behalf of the Crown in the trial of the perjury charge before this Court, submits that the count of perjury having been severed at the trial in May 1971, res judicata is not available here to the accused. Mr. Scullion contends that this trial is simply a continuation of the previous trial, and that this is, in substance, a concurrent proceeding to the trial of May 1971. He relies upon the case of Regina v. Peda, [1969] 1 O.R. 90, 4 C.R.N.S. 161, [1969] 2 C.C.C. 228 (C.A.), affirmed [1969] S.C.R. 905, 7 C.R.N.S. 243, [1969] 4 C.C.C. 245, 6 D.L.R. (3d) 177.

 23      In that case the accused was acquitted of impaired driving, and he was convicted of dangerous driving by a jury where both counts had been tried together. On appeal by the accused from his conviction, he submitted that issue estoppel or res judicata applied against the Crown in connection with the dangerous driving charge. The accused's appeal was dismissed.

 24      At p. 236 of the report [C.C.C.], McLennan J.A. said:

 

       "Ground (3) raises the question of issue estoppel - that is to say, that the appellant having been acquitted on the impaired driving charge should not be placed in jeopardy in the dangerous driving charge which arose out of the same facts."

 

 25      After referring to the well-known cases of Connelly [Connelly v. Director of Public Prosecutions, [1964] A.C. 1254, 48 Cr. App. R. 183, [1964] 2 All E.R. 401] and Wright [Regina v. Wright, [1965] 2 O.R. 337, 45 C.R. 38, [1965] 3 C.C.C. 160, 50 D.L.R. (2d) 498 (C.A.)], his Lordship continued:

 

       "It is abundantly clear from these authorities that the defence only applies where there has been a determination of the issue against the Crown in a previous trial. It has never been applied to concurrent charges dealt with at one trial."

 

 26      There is no suggestion in the Peda case that where, as here, the accused obtains an order for severance of a count in a multiple count indictment, which s. 520(3) of the Criminal Code authorizes, he is thereby precluded from raising issue estoppel in a subsequent trial of the severed count. In my judgment in such a case if he were convicted on the severed count, and the conviction was wholly inconsistent with the verdicts on the counts from which severance was made, he would have an unanswerable ground of appeal. He would likewise in my view have an unanswerable ground of appeal if the conviction was inconsistent with the prior verdicts by reason of facts having been determined conclusively in his favour in the prior trial.

 27      If issue estoppel is available to an accused in these circumstances on appeal, it defies logic, in my view, to eliminate a defence so based at the trial of the severed count.

 28      Furthermore, as I indicated in argument, if in a multiple count indictment, the Crown, as is its perfect right, chose to proceed on one count only and a verdict was returned on that count, and then the Crown proceeded on another count in the indictment, then, if the argument of Crown counsel before me, namely that such proceedings are concurrent in principle, is correct, the defence of res judicata would not be available to the accused on the second trial based upon the disposition of the first trial.

 29      Now, while it is true that the Court in Regina v. Feeley, McDermott and Wright, [1963] 1 O.R. 571, 38 C.R. 321, [1963] 1 C.C.C. 254, 38 D.L.R. (2d) 133 (C.A.), affirmed [1963] S.C.R. 539, 40 C.R. 261, [1963] 3 C.C.C. 201, 40 D.L.R. (2d) 563, held in similar circumstances that from a factual standpoint the defence failed , it is clear from that judgment that the defence, if supported in the factual context, would avail to an accused.

 30      Accordingly I am satisfied that if the accused can satisfy the burden placed upon him by the authorities to which I will refer momentarily, the defence of res judicata is open to him notwithstanding that the count before this Court was severed from the other counts in the indictment in May 1971.

 31      At the prior trial the Court also ordered particulars to be given to the accused in relation to the counts then before the Court.

 32      Mr. Carter submits, and I entirely agree with this submission, that it is essential to consider the particulars so furnished pursuant to the order of the Court in order to appreciate the issues before the jury at that trial. In view of the circumstances pertaining to the directed verdicts on Counts 3 and 5 it is necessary to consider the particulars as they affected Counts 1, 2, 4 and 7 of the indictment only.

 33      I have read pp. 3 to 7 inclusive of Ex. A marked at this trial, and it is perfectly apparent that the particulars of the falsity of the financial statements submitted to the Investment Dealers' Association by the accused as audited for Meggeson, Goss and Company Limited for the year ending 1965 related to two distinct matters. First, that the statement was false in that it omitted the account of the Sisters of St. Joseph, Parry Sound, Ontario. Second, that the financial statement prepared by the accused as auditor for Meggeson, Goss and Company Limited for the year ending 1965 for tax and shareholders' information is evidence of the falsity of the statement furnished for the Investment Dealers' Association in that it differed substantially from it and both purported to reflect the financial condition of Meggeson, Goss and Company Limited for the same year.

 34      Mr. Carter contends that in the light of the particulars furnished by the Crown, the jury must have been satisfied or had a reasonable doubt in order to acquit the accused on each of the counts, that neither aspect of the falsity had been brought home to the accused so far as the Investment Dealers' Association financial statement is concerned, that is, they must have accepted or have been left in doubt in respect of the accused's explanation at the trial regarding the difference in the two statements for 1965 and - and I underscore the word "and" - they must have accepted or have been left in doubt on the evidence as a whole, that he was unaware of the account of the Sisters of St. Joseph, Parry Sound, with Meggeson, Goss and Company Limited. In view of the particulars which were furnished by the Crown I agree that it was necessary for the jury to find both of these matters in Mr. Holmes's favour before they could acquit on any of the Counts 2, 4 and 7, and it would be insufficient for an acquittal to find one element only in his favour.

 35      In the case of Feely, McDermott and Wright, supra, a judgment of the Ontario Court of Appeal, Schroeder J.A. said, at pp. 266-7 [C.C.C.] that:

 

       "It must be recognized that there may be cases in criminal law to which the pleas of autrefois convict and autrefois acquit do not extend because of the lack of identity between the offences charged in an earlier and later indictment but to which the common-law defence of res judicata, preserved by the provisions of s. 7(2) of the Criminal Code, may in some circumstances be applicable."

 

 36      His Lordship then referred to the case of Rex v. Quinn (1905), 11 O.L.R. 242, 10 C.C.C. 412 (C.A.), and after referring to the cases, his Lordship indicated:

 

       "Where that defence is raised the onus is cast upon the accused to establish all the facts necessary to support it and to satisfy the Court that in the earlier proceedings there was a determination of a question of fact vital to the later charge which operates as an estoppel against the Crown so as to bar the later prosecution. In criminal cases where the accusations are not the same in substance or where the essential ingredients may be widely different, as here, that onus may be a very burdensome one."

 

 37      I have read the evidence given at the trial in May 1971 in its entirety, and the addresses of counsel, both for the Crown and for the defence, and I have also read the charge of the learned trial Judge to the jury. In considering the particulars given at the opening of that trial I have come to the conclusion that the accused before me has discharged the onus cast upon him to establish all the facts necessary to support the defence of res judicata. I am satisfied that in the earlier proceedings there was a dual factual determination, one of which is vital to the present charge, and that such factual determination operates as an estoppel against the Crown so as to bar this prosecution.

 38      The principles underlying issue estoppel are clear, but the application of the principles to the facts and circumstances of a given case can involve complex difficulties. Now this, I think, is borne out by the case of Feeley, McDermott and Wright, to which I have already made reference. In that case, the appellants, so far as is relevant, were charged as follows:

 39      In the first count they were charged that: "between the 1st day of January, 1960, and the 1st day of July, 1960, in the Province of Ontario (they) did unlawfully agree and conspire together to commit an indictable offence under Section 101(b) of the Criminal Code of Canada by corruptly giving money to George Scott, a peace officer of the Ontario Provincial Police Force, with intent that the said George Scott should interfere with the administration of justice, contrary to the Criminal Code of Canada, Section 408(1)(d)."

 40      And in Count 2 they were further charged that: "between the first day of January, 1960 and the first day of July, 1960, in the Province of Ontario, did unlawfully agree and conspire together to effect an unlawful purpose, to wit: to obtain from George Scott, a constable of the Ontario Provincial Police, information which it was his duty not to divulge, contrary to the Criminal Code of Canada, Section 408(2)."

 41      Now, at the first trial, proceeding on Count 1, the three accused were acquitted. The Crown then proceeded against them on Count 2, and on that count they were convicted. And at p. 266 of the report in the C.C.C., Schroeder J.A. said that:

 

       "The better view today is that the special pleas of autrefois convict and autrefois acquit do not exhaust the application ... of the principle of res judicata. This more general ground of defence cannot be raised by a special plea but can be raised under the plea of not guilty ..."

 

 42      Now the defence failed in that case because of a lack of the identity of issues. And his Lordship continued. In discussing the question of res judicata and the acquittal on Count 1, he went on to say, and again I am quoting, and this is from p. 268 of the C.C.C.:

 

       "No one can say what was the precise ratio decidendi of the jury ... To plead successfully the defence of res judicata the appellants must establish that a point of fact vital to the second charge was determined against the Crown and that, accordingly, further prosecution of the appellants on count 2 is barred."

 

 43      In the case of McDonald v. The Queen, [1960] S.C.R. 186, 32 C.R. 101, 126 C.C.C. 1, the accused had been acquitted by a jury on a charge of conspiring to be in possession of drugs for the purpose of trafficking, and subsequently he was convicted of being in possession of the same drugs for the purpose of trafficking. One of the grounds of appeal from his conviction was that the issue was res judicata. The appeal was dismissed. Martland J. said at p. 18:

 

       "As I see it, the principle of res judicata enunciated in the Sambasivam case [Sambasivam v. Public Prosecutor, Federation of Malaya, [1950] A.C. 458] only estops the Crown in the later legal proceedings from questioning that which was in substance the ratio of and fundamental to the decision in the earlier proceedings."

 

 44      In the present case the perjury alleged in the count before this Court is three-fold. (1) That the accused falsely swore that he was not aware of the account of the Sisters of St. Joseph, Parry Sound, Ontario, with Meggeson, Goss and Company Limited. (2) That he falsely swore that he was not aware of the transactions between the Sisters of St. Joseph, Parry Sound, Ontario, and Meggeson, Goss and Company Limited. And (3) he falsely swore that he did not see the ledger cards kept by Meggeson, Goss and Company Limited relating to the account of the Sisters of St. Joseph, Parry Sound, Ontario.

 45      Now, although three distinct aspects of Mr. Holmes's evidence before the Ontario Securities Commission are alleged to be perjured, it is clear in the circumstances of this case that they resolve themselves into one allegedly false statement, namely, that he was unaware of the actual account of and transactions by the Sisters of St. Joseph with Meggeson, Goss and Company Limited, as he had not seen the genuine ledger card relating to their account.

 46      At the trial, Mr. Holmes gave substantially the same evidence as he did before the Ontario Securities Commission. He admitted making two financial statements in each of the years 1966 and 1967, and he testified that his working papers on which the financial statements were based did not reflect any transactions involving the Sisters of St. Joseph as he knew of none. The only ledger sheet he had seen, according to his testimony, pertaining to the Sisters was a ledger showing a "nil" balance. There was abundant evidence at the trial that this dummy ledger card was used in particular to deceive the accused in connection with the company's involvement with the Sisters. As I said before the accused gave an explanation at the trial as to the differences between the two financial statements prepared in 1966 for the year ended 31st December 1965.

 47      The issues which the Crown seeks to litigate before me were at the very core of the Crown's case at the previous trial. Mr. Holmes could only have been guilty of theft of the bonds as charged in Count 1 if he aided and abetted Meggeson and Goss in the theft thereof, and Count 7 was complimentary to Count 1 in that regard, as it charged him with being an accessory after the fact to the theft. Now, in support of the contention that Holmes was a party to the theft, the Crown's case was that he concealed the theft by the preparation and uttering of a false financial statement relating to Meggeson, Goss and Company Limited to the Investment Dealers' Association in 1966, omitting the Sisters' account. On any fair view of the evidence and the verdicts returned, the jury found that he did not knowingly omit their account.

 48      In support of the contention of Mr. Holmes as an accessory after the fact of the theft, the Crown pleaded that he concealed the theft by the preparation and uttering of false financial statements relating to Meggeson, Goss and Company Limited for the years 1964 to 1967 by attributing ownership of the bonds to the company. Again, on a fair view of the evidence he could only have knowledge of such falsity if he were aware of the true state of the Sisters' account and I am satisfied that the jury's verdict negatives this knowledge.

 49      And finally, as I have stated before, Mr. Holmes could only have been guilty on the forgery and uttering count if he knew of the true state of the Sisters' account or, not and, but or, he had deliberately falsified the financial statement prepared for the Investment Dealers' Association, regard being had to the financial statement prepared for tax and shareholders' purposes. The jury by their verdict of not guilty have clearly determined both of these issues in Mr. Holmes's favour.

 50      Accordingly, in my judgment, the sole issue in this trial, namely, whether Holmes lied before the Ontario Securities Commission by stating on oath that he was unaware of the actual account of and transactions by the Sisters of St. Joseph, Parry Sound, Ontario, with Meggeson, Goss and Company Limited, as he had not seen the genuine ledger card relating to their account, has been conclusively determined in the accused's favour at the previous trial.

 51      It was argued by Mr. Scullion at this trial, a reasonable interpretation of the jury's verdict in the previous trial was that while the jury might have been satisfied that the accused was aware of the true state of the account of the Sisters of St. Joseph, Parry Sound, with Meggeson, Goss and Company Limited, they may have had a reasonable doubt as to his criminal intent.

 52      Upon a reading of all of the evidence in the previous trial, the addresses of counsel and the Judge's charge to the jury, it is abundantly clear that the intent which was attributed to the accused by the Crown was that specified in Count 2 of the indictment, namely, that he had made a false financial statement intending that the Investment Dealers' Association would refrain from scrutinizing the affairs of Meggeson, Goss and Company Limited. Now, as Mr. Carter has submitted, this question was never an issue before the jury. Realistically, there was no suggestion at the previous trial that had the accused prepared the false financial statement, nevertheless he did not have the requisite intent set out in the indictment. In my judgment the issue at that trial was clear and it was crystal clear. Did the accused knowingly prepare a false balance sheet? If he did, in all the circumstances of the case, the only possible conclusion a jury could reach was that his intent was to induce the Investment Dealers' Association from scrutinizing the affairs of Meggeson, Goss and Company Limited.

 53      Now the jury, in my view, by their verdict have found conclusively in Mr. Holmes's favour the very issue that the Crown alleges against him in the present trial.

 54      So, Mr. Holmes, for the reasons that I have just given, I am finding you not guilty. You are free to go