



COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Way, 2017 ONCA 754

DATE: 20170927

DOCKET: C62578

Pardu, Huscroft and Fairburn JJ.A.

BETWEEN

Her Majesty the Queen

Appellant

and

Brian Way

Respondent

Melissa Adams, for the appellant

Timothy Breen, for the respondent

Heard: September 20, 2017

On appeal from the sentence imposed on August 8, 2016 by
    Justice Julie A. Thorburn of the Superior Court of Justice, sitting without a
    jury, with reasons for judgment reported at 2015 ONSC 3080 and reasons for
    sentence reported at 2016 ONSC 5052.

REASONS FOR DECISION

[1]

The Crown appeals the $20,000 fine in lieu of forfeiture imposed by the
    trial judge. The respondent concedes that the trial judge erred. In our view,
    that is an appropriate concession. On appeal, the respondent argues only that
    the income taxes paid on the proceeds of crime should be deducted from the
    calculation of the fine in lieu of forfeiture and asks for time to pay.

[2]

The respondent was in the business of producing and selling child
    pornography. He funneled the revenue through a corporation over which he had
    sole control. The gross sales proceeds were $946,391.25. After some allowance
    for discounts given to purchasers, and a deduction for money already seized,
    the Crown and respondent agree that the sales of child pornography generated
    $797,809.47 in revenue.

[3]

The trial judge considered the following factors to determine the fine
    in lieu of forfeiture:

a)

The sales revenue from the child pornography films did not represent the
    benefit or advantage received by the respondent from his crime, or the amount
    he took under his actual control.

b)

The respondent lived a modest life, had no significant assets, and there
    was no evidence that the sales revenues were hidden or transferred to third
    parties.

c)

There was no evidence that he travelled, owned property, or transferred
    money beyond the reach of the courts.

d)

The only benefit the respondent received from the sale of the 57 child
    pornography films and accompanying photographs was his salary from the
    corporation.

[4]

The trial judge based the fine in lieu of forfeiture on the portion of
    the respondents salary attributable to the production of child pornography.
    Since 57 of the 800 films produced by the corporation contained child
    pornography, the trial judge imposed a fine in lieu of forfeiture of
    approximately 1/16
th
of the total salary the respondent drew from
    the corporation over a 52 month period, with some small adjustments to reflect
    the production of other child pornography images and proceeds of crime already
    recovered by the Crown.

[5]

The trial judge erred by calculating the fine in lieu of forfeiture in
    this manner.

[6]

The corporations gross sales proceeds of child pornography constituted
    a benefit or advantage that was indirectly derived from the commission of the
    offence. Moreover, s. 2 of the
Criminal Code
, R.S.C. 1985, c. C-46
    defines property to include property originally in the possession or under the
    control of any person. See also
R. v. Dwyer
, 2013 ONCA 34, 296 C.C.C.
    (3d) 193, at para. 24.

As such, the gross
    sales proceeds amounted to proceeds of crime under s. 462.3(1) of the
Criminal
    Code
.

[7]

The respondent had sole control over the $797,809.47. Where funds are no
    longer available, s. 462.37(3) of the
Criminal Code
provides that the
    court may order the offender to pay a fine equal to the value of the
    property. As noted in
R. v. Lavigne
, 2006 SCC 10, [2006] 1 S.C.R.
    392, at paras. 31 and 34,

where a sum of money is concerned, a reduction in the value of
    such property is most often associated with the use thereof, which is itself
    often associated with an absence of other income. If one of the objectives is
    to ensure that crime does not pay, use of the proceeds of crime must be a basis
    for ordering a fine instead of forfeiture of the property and cannot be a basis
    for mitigating the impact of the measure.

[]

The limits on the courts
    discretion can be deduced from the objective and context of s. 462.37(3)
Cr.
    C
. They are also incorporated into the words of the provision itself. The
    courts discretion is limited not only by circumstances in which the
    substitution may be made, in particular those listed in paras. (
a
) to
    (
e
), but, even more importantly, by the clear words of the provision
    itself. The amount of the fine is established by the
Criminal Code
:
    the court may, instead of ordering that property  to be forfeited , order
    the offender to pay a fine in an amount
equal to the
    value of that property
. The words are crystal clear.  Parliament has
    itself determined the amount of the fine.

[Emphasis in original.]

[8]

For the same reasons, it would be inappropriate to deduct the income tax
    paid on the income derived from the sale of child pornography from the proceeds
    of crime subject to forfeiture in this case. As Fish J. stated in his partial
    dissent in
R. v. Craig
, 2009 SCC 23, [2009] 1 S.C.R. 762, at para.
    122: Subjecting forfeiture to the lien of the revenue authorities would have
    allowed her [the appellant] to discharge the tax indebtedness arising from her
    criminal activities out of her interest in a property subject to forfeiture as
    a result of those very same crimes. As a matter of principle, Ms. Craig should
    not be permitted to do so.

[9]

Accordingly, leave to appeal the sentence is granted, the Crowns appeal
    is allowed, and the trial judges order for a fine in lieu of forfeiture in the
    sum of $20,000 is vacated. A fine in lieu of forfeiture in the sum of
    $797,809.47, an agreed amount, is substituted.

[10]

The respondent requests time to pay the fine in lieu of forfeiture.
    Having regard to the amount of the fine, the respondent will have eight years
    from the expiry of the global sentence of imprisonment imposed by the trial
    judge to pay it. In default of payment of the fine in lieu of forfeiture, the respondent
    is sentenced to four years incarceration pursuant to s. 462.37(4)(vi) of the
Criminal
    Code
, consecutive to the trial judges sentence of imprisonment.

G. Pardu
    J.A.

Grant
    Huscroft J.A.

Fairburn
    J.A.


