



COURT OF APPEAL FOR ONTARIO

CITATION: Wescom Solutions Inc. v. Minetto, 2019 ONCA 251

DATE: 20190401

DOCKET: C64415

van Rensburg, Hourigan and Huscroft JJ.A.

BETWEEN

Wescom Solutions Inc.

Plaintiff

(Respondent)

and

Nadia
    Minetto aka Nadia Arsenault,

Eric Yip
    aka Sam Yip aka Samuel Yip aka Samson Man Chun Yip,

GF
    International, Gabriel Kit Chun Fung,

Plus One Solutions
, John Doe #1
    and John Doe #2

Defendants

(
Appellants
)

John Russo and Dina Milivojevic, for the appellants

Jeffrey Brown and Melissa Wright, for the respondent

Heard: March 25, 2019

On appeal from the
    judgment of Justice Michael G. Emery of the Superior Court of Justice, dated
    September 14, 2017.

REASONS FOR DECISION

[1]

This appeal seeks to overturn the judgment of the trial judge, holding
    that the appellant, Gabriel Kit Chun Fung, knew or was wilfully blind to the
    fraudulent means by which Nadia Minetto obtained iPhones and iPads (the Apple
    Products) that he purchased from her between early 2012 and July 2014.

[2]

The total value of the Apple Products was $6.2 million. Mr. Fung
    purchased them from Ms. Minetto with cash, generally meeting in parking lots. Ms.
    Minetto was the accounting manager of the respondent, Wescom Solutions Inc. (Wescom).
    In January 2011, she began purchasing the Apple Products through the fraudulent
    use of Wescoms corporate credit card. She then sold the Apple Products for her
    own personal gain.

[3]

The parties agreed on the issues to be determined at trial and that
    agreement was reflected in a court order directing the trial of the following
    issues:

(1)

Whether the defendant Gabriel Kit Chun Fung knew or was willfully blind
    to the fact that he was purchasing stolen goods or goods fraudulently obtained
    by Nadia Minetto; and

(2)

If Mr. Fung in fact knew or was willfully blind to the fact that he was
    purchasing stolen goods or goods fraudulently obtained by Ms. Minetto, did this
    apply to all the transactions or just transactions after a certain date.

[4]

In his reasons, the trial judge considered the nature and development of
    the sales relationship between Mr. Fung and Ms. Minetto. He divided the sales
    scheme into three phases:

1.

From
    November 2011 to early 2012, when they would meet to exchange Apple Products
    for cash in the parking lot of Yorkdale Mall (Stage 1);

2.

From early
    2012 to mid-April, 2013, when they would meet in the parking lot of the Ikea
    store at Highway 7 and Highway 404 to exchange Apple Products for cash (Stage
    2); and

3.

From
    mid-April 2013 to July 2014, when Ms. Minetto would direct Apple Inc. to ship
    products directly to the address of a virtual office that Mr. Fung had rented
    at 15 Allstate Parkway (Stage 3).

[5]

The trial judge found Mr. Fung was not wilfully blind during Stage 1,
    was wilfully blind during Stage 2, and had actual knowledge during Stage 3 that
    the Apple Products were stolen goods or fraudulently obtained by Ms. Minetto. He
    awarded damages to Wescom in the amount of $5,094,7674.72 plus interest for the
    Apple Products purchased by Mr. Fung during Stages 2 and 3.

[6]

On appeal, Mr. Fung and corporations controlled by him submit that the
    trial judge erred by: (i) applying an objective standard to his wilful
    blindness analysis rather than a subjective standard; and (ii) making credibility
    findings against Mr. Fung, while at the same time noting that his evidence was
    unshaken and consistent, and in the face of evidence that Ms. Minetto was
    concealing her illegal activities from Mr. Fung.

[7]

We do not give effect to either of these submissions.

[8]

We agree with the appellants submission that the trial judge engaged in
    an objective analysis. Indeed, as part of his wilful blindness analysis, the
    trial judge stated that wilful blindness is made up of two components:

a. In circumstances that arouse the suspicions
    of a reasonable and honest person that are strong or sufficient enough to raise
    a duty to inquire; and

b. Whether someone in that persons position
    chooses to remain deliberately ignorant to the knowledge that inquiry would
    reveal.

[9]

The respondent submits that the objective analysis was appropriate
    because this was a knowing receipt case. It is true that knowing receipt can be
    proven not only by establishing actual knowledge or wilful blindness, but also
    by establishing constructive knowledge using objective criteria.
    Specifically, knowing receipt can be proven by showing that the defendant: (i)
    had knowledge of circumstances that would indicate the facts to an honest and
    reasonable person; or (ii) had knowledge of circumstances that would put an
    honest and reasonable person on inquiry:
Paton Estate v. Ontario Lottery
    and Gaming Corp.
, 2016 ONCA 458, 131 O.R. (3d) 273, at para. 62; see also
Gold
    v. Rosenberg
, [1997] 3 S.C.R. 767, at paras. 53, 74. However, in this case
    the agreed issues for the trial judge were whether Mr. Fung had actual
    knowledge or was willfully blind to the fact that he was purchasing stolen
    goods or goods fraudulently obtained by Ms. Minetto. The trial judge was not
    asked to consider whether Mr. Fung as a reasonable person would have been alerted
    to a potential breach of trust.

[10]

The trial judge erred in law in his articulation of the concept of
    wilful blindness.  As stated by this court in
R. v. Malfara
(2006),
211 O.A.C. 200
(C.A.), at para. 2, 
Where wilful blindness is in issue, the
    question is not whether the accused should have been suspicious, but whether
    the accused was in fact suspicious. In short, a finding of wilful blindness,
which
    is the same standard in criminal and civil proceedings,
involves a subjective focus on the workings of a defendants
    mind.

[11]

Notwithstanding this mischaracterization, we are not satisfied that the
    trial judge erred when he concluded that Mr. Fung was wilfully blind. It is clear
    from his reasons that he made findings of fact that established that
    subjectively Mr. Fung was wilfully blind:

[128] I also reach this
    conclusion because Mr. Fung admitted not once, but twice that the iPhones and
    iPads he was purchasing from Ms. Minetto were not upgrades. This is contrary to
    his evidence that he took comfort in purchasing cell phones through his store
    that were mostly upgraded products that had been legitimately obtained. As the
    availability of Apple products in this volume that were not upgrades, Mr. Fung
    had to know they were probably products that had been stolen or obtained
    through fraud.



[130]
I further find as a fact
    that Mr. Fung made a conscious choice not to seek verification or further
    information about the source of the Apple products he was purchasing from Ms.
    Minetto. He chose to remain deliberately ignorant as to the source of those
    products. I make this finding of fact because of Mr. Fungs evidence that he
    may have asked Ms. Minetto a second time if the products he was purchasing from
    her were legitimate.

[12]

These findings establish that Mr. Fung knew that the Apple Products were
    probably stolen or obtained by fraud, but that he made a deliberate choice not
    to investigate. This conduct meets the definition of wilful blindness
    articulated in
R. v. Sansregret
, [1985] 1 S.C.R. 570, at p. 584, which
    arises when
a person who has
    become aware of the need for some inquiry declines to make the inquiry because
    he does not wish to know the truth. See also
R. v. Briscoe
, 2010 SCC 13,
    [2010] 1 S.C.R. 411, at paras 21-24.
Therefore, despite the trial judges error in defining
    wilful blindness, we do not give effect to this ground of appeal.

[13]

With respect to the second ground of appeal, we are not persuaded that
    the trial judge erred in his credibility analysis. He made adverse credibility
    findings against Mr. Fung during Stages 2 and 3. These findings were well
    rooted in the evidence, including the fact that Mr. Fung asked Ms. Minetto a
    second time in Stage 2 whether the Apple Products were legitimate while they
    were trading in a much higher volume, and the fact that Mr. Fung saw invoices
    in Stage 3 that showed, among other things, that the Apple Products were being
    purchased by Wescom at full retail price.

[14]

The appeal is dismissed. The appellants shall pay Wescom its costs of
    the appeal, fixed in the agreed-upon all-inclusive sum of $22,500.

K. van Rensburg J.A.

C.W. Hourigan J.A.

Grant Huscroft J.A.


