R. v. John Matthew Lauer, 2011 PECA 5 (CanLII)
THE ACT OF FRAUD (the Actus Reus)
[79] The act of fraud is made out where:
a. there is a dishonest act involving deceit, falsehood or other fraudulent means assessed objectively through the eyes of a reasonable person as dishonest commercial conduct. See: R. v. Zlatic, 1993 CanLII 135 (SCC), [1993] 2 S.C.R. 29 at p.9;
and
b. deprivation caused by proof of detriment, prejudice, or risk of placing the victim’s pecuniary interests at risk, caused by the dishonest act. See: R. v. Théroux, supra.
[80] In instances of fraud by deceit Nightingale at p.2-24 summarized general principles applicable to fraud by way of deceit, and some examples are:
(1) Deceit is defined as inducing a person to believe that a thing is true which is false and the person practising the deceit knows or believes to be false.
(2) Deceit may be practised by means of an oral representation, a written representation or by conduct.
(3) The deceit may be in relation to a matter of fact, an intention or undertaking as to future conduct.
(4) The subsequent honouring of intention or a future undertaking does not remove culpability.
(5) A deceit does not have to be false pretence in law.
(6) ‘Dishonesty’ does not have to be proven in addition to proof of deceit.
(7) The deceit must induce a state of mind, being belief in the truth of the misrepresentation.
(8) Deceit does not have to be practised upon the victim.
(9) There must be a causal connection between the deceit and the deprivation suffered victim.
(10) The deceit need only be an effective cause of the deprivation suffered by the victim. It does not need to be the exclusive cause of the deprivation.
(11) The fact that persons other than the person to whom the representation was made was induced by the accused’s misrepresentation does not remove culpability.
(12) The failure to avoid the deception by the person to whom the misrepresentation was made does not remove culpability.
(13) Deceit is not a required element of the actus reus of fraud, but is merely one of the means by which fraud may be practised.
[81] Falsehood is defined in the Concise Oxford Dictionary as meaning something which is untrue, contrary to fact; lying, lies. In R. v. Gupta, 2007 CanLII 51705 (ON SC), 2007 CanLII 51705 the Court held that the conduct element of “falsehood” was established by proof of material “misrepresentations of fact.”
[82] What constitutes “other fraudulent means” as set out in s.380 of the Criminal Code was summarized by Ms. Nightingale at pp.3-12 and 3-13. The principles of other fraudulent means can be identified as follows:
(1) The issue of whether conduct will be characterized as ‘other fraudulent means’ is a question of fact to be determined by the trier of fact;
(2) Canadian courts, unlike their English counterparts, do not define the concepts of ‘dishonest’ or ‘other fraudulent means’ for the trier of fact;
(3) The English cases, with respect to the definition of ‘dishonesty’ and the identification standard against which conduct is to be measured are no longer accepted as part of Canadian law of fraud;
(4) As with all other elements of actus reus, an objective test is to be utilized in the determination of whether the accused’s conduct can be characterized as ‘other fraudulent means;’
(5) Conduct will be characterized as being ‘other fraudulent means’ if a reasonable person would consider the conduct of the accused to be dishonest.
[83] Both the Théroux and Zlatic decisions identified different types of conduct which may be characterized as “other fraudulent means.” They are:
a. the use of corporate funds for personal purposes;
b. the non-disclosure of material facts;
c. exploiting the weakness of another;
d. unauthorized diversion of funds; and
e. unauthorized arrogation of funds or property.
(See: Nightingale, supra, p.3-13.)
[84] Deprivation or the risk of deprivation must also be shown. The act of fraud may be made out if there was no loss to the victim provided there was a risk of loss.
THE INTENTION TO COMMIT FRAUD (the Mens Rea)
[85] To establish the intention to commit fraud the Crown must prove that the accused knowingly undertook acts which constitute the falsehood, deceit or other fraudulent means, and the accused was aware that deprivation or risk of deprivation could result from such conduct.
[86] In R. v. Théroux, supra, at p.8, McLachlin J., in dealing with the application of the principle of mens rea to the offence of fraud, stated as follows:
[24] ... The mens rea would then consist in the subjective awareness that one was undertaking a prohibited act (the deceit, falsehood or other dishonest act) which could cause deprivation in the sense of depriving another of property or putting that property at risk. If this is shown, the crime is complete. The fact that the accused ... may have felt there was nothing wrong with what he or she was doing, provides no defence. ... the proper focus in determining the mens rea of fraud is to ask whether the accused intentionally committed the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiring the consequences proscribed by the offence (deprivation, including the risk of deprivation). ...
CONCLUSION ON THE LAW OF FRAUD
[87] The Court, at p.11 in the Théroux case, summarizes the onus placed upon the Crown with respect to the actus reus and mens rea of fraud in the following terms:
[39] ... To establish the actus reus of fraud, the Crown must establish beyond a reasonable doubt that the accused practised deceit, lied, or committed some other fraudulent act. Under the third head of the offence it will be necessary to show that the impugned act is one which a reasonable person would see as dishonest. Deprivation or the risk of deprivation must then be shown to have occurred as a matter of fact. To establish the mens rea of fraud the Crown must prove that the accused knowingly undertook the acts which constitute the falsehood, deceit or other fraudulent means, and that the accused was aware that deprivation could result from such conduct.
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