[33] In Théroux at p. 457, McLachlin J. referred to cases in which fraud by other fraudulent means has been found in the following factual situations: the use of corporate funds for personal purposes, non-disclosure of important facts, unauthorized diversion of funds and unauthorized arrogation of funds or property.
[34] Nightingale, Brenda L., considered the actus reus of fraud in The Law of Fraud and Related Offences, loose leaf ed. (Scarborough: Carswell, 2008), and she offered the following additional principles at p. 2-23 regarding fraud by deceit and by falsehood:
- deceit is defined as inducing a person to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false;
- the subsequent honouring of intention or a future undertaking does not remove culpability;
- deceit does not have to be practiced on the victim, but there must be a causal connection between the deceit and the deprivation suffered by the victim;
- the failure to avoid the deception by the person to whom the misrepresentation was made does not remove the culpability;
- deceit is not a required element of the actus reus of fraud, but is merely one of the means by which fraud may be practiced.
At p. 2-24, Nightingale adopted the definition of falsehood as being a “falsity, something untrue, contrary to fact; lies, lying”.
[35] In Zlatic and Théroux, the Supreme Court held that the law regarding the mens rea of fraud is as follows:
- the mens rea of fraud is established by proof of the following:
(i) subjective knowledge of the prohibited act; and
(ii) subjective knowledge that the prohibited act could have as a consequence the deprivation of another (which deprivation may consist in knowledge that the victim’s pecuniary interests are put at risk);
- the test is not whether a reasonable person would have foreseen the consequences of the prohibited act, but whether the accused subjectively appreciated those consequences at least as a possibility;
- subjective knowledge does not require that the crown prove exactly what was in the accused’s mind – the inference of subjective knowledge may be drawn from the facts as the accused believed them to be;
- knowledge of the consequences includes recklessness as to those consequences – i.e., the accused undertook acts that could bring about a loss or risk of loss and was reckless as to whether or not the loss ensued;
- it is no defence to a charge of fraud for the accused to say that he did not intend to cause a loss or that he believed that his actions would subsequently be ratified;
- it is also not a defence to a charge of fraud for the accused to state that he did not believe that his conduct was wrong or that no one would be hurt in the end – i.e., the accused does not have to subjectively appreciate the dishonesty of his acts.
[36] The mens rea of fraud is described by Nightingale, at p. 9-14, as follows:
- mens rea can be defined as:
(a) knowledge or recklessness as to the facts that constitute a “deceit,” a “falsehood” or “other fraudulent means”; and
(b) foresight or recklessness as to the facts found in law to constitute “deprivation”;
- a belief by the accused that his or her conduct is not dishonest will not negate a finding of mens rea;
- a belief by the accused that his or her conduct will not cause deprivation will not negate a finding of mens rea.
[37] Nightingale considered the doctrines of recklessness, wilful blindness and mistake in relation to the intent required for fraud. She provided the following summary of the law regarding recklessness and wilful blindness at p. 11-8.5:
(1) fraudulent intent can be established upon proof that the accused was reckless or wilfully blind with respect to either or both of the conduct and consequence elements of the actus reus of fraud;
(2) an accused is reckless with respect to the conduct element of the actus reus of fraud when he or she is knowingly careless with respect to the facts upon which deceit, falsehood, or other fraudulent means are found – the accused is aware that there is a risk that such conduct may be prohibited, but nevertheless persists in spite of the risk;
(3) an accused is reckless with respect to the consequence element of the actus reus of fraud when he or she is knowingly careless with respect to the occurrence of the consequence of deprivation – the accused is aware that there is a risk that such conduct may bring about the prohibited consequence, but nevertheless persists in spite of the risk;
(4) an accused is wilfully blind with respect to the conduct element of the actus reus of fraud when he or she is aware that certain facts exist that would make such conduct a deceit, falsehood, or other fraudulent means, but deliberately refrains from making inquiries so as to remain ignorant;
(5) an accused is wilfully blind with respect to the consequence element of the actus reus of fraud when he or she is aware that certain facts exist giving rise to a belief that the prohibited consequences will flow from such conduct, but deliberately refrains from making inquiries so as to remain ignorant.
[38] Nightingale provided the following summary of the law regarding mistake at pp. 11-17 – 11-18:
(1) An honest though mistaken belief as to the facts upon which a Court will find in law to constitute “deceit, falsehood, or other fraudulent means” will negative a finding of mens rea with respect to the conduct element of the actus reus;
(2) An honest though mistaken belief with respect to whether a Court will find in law that certain facts constitute “deceit, falsehood or other fraudulent means” will not negative a finding of mens rea with respect to the conduct element of the actus reus;
(3) An honest though mistaken belief with respect to whether conduct will be characterized as “dishonest” will not negative a finding of mens rea with respect to the conduct element of the actus reus;
(4) An honest though mistaken belief with respect to the facts upon which a Court will find in law to constitute “deprivation” will negative a finding of mens rea with respect to the consequence element of the actus reus;
(5) An honest though mistaken belief with respect to whether a Court will find in law that certain facts constitute “deprivation” will not negative a finding of mens rea with respect to the consequence element of the actus reus;
(6) An honest though mistaken belief with respect to whether the consequence which flowed from the dishonest conduct will be characterized as “deprivation” will not negative a finding of mens rea with respect to the consequence element of the actus reus.