



COURT OF APPEAL
    FOR ONTARIO

CITATION: R. v. Headley, 2018 ONCA 915

DATE: 20181115

DOCKET: C62209

Sharpe, Lauwers and van Rensburg JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Stephen Headley

Appellant

Mark Halfyard and Breana Vandebeek, for the appellant

Avene Derwa, for the respondent

Heard: October 4, 2018

On appeal from the convictions entered on March 11, 2016,
    by Justice K. Barnes of the Superior Court of Justice, sitting with a jury.

Lauwers J.A.:

[1]

The appellant was convicted of six counts of
    fraud over $5,000 (three counts against Deborah Lo, two counts against Glenford
    Jones, the appellants half-brother, and one count against Scotiabank), one
    count of uttering a forged document (an IBM invoice) and one count of
    personation (for impersonating Mr. Jones). He was sentenced to four years in
    jail, restitution and a fine in lieu of forfeiture. The total loss was just
    over $600,000. He appeals his conviction and seeks a new trial.

[2]

The appellant raises two grounds of appeal:
    First, the trial judge erred in admitting the hearsay evidence of the
    Scotiabank account manager, Dean Karahojitis, at the trial under s. 715(1) of
    the
Criminal Code
,
because doing so was fundamentally unfair to
    the appellants right to full answer and defence. Second, the trial judge
    failed to relate the large volume of oral

and documentary evidence to
    the individual counts in his jury charge. I address each issue after setting
    out the factual background. I would dismiss the appeal.

The Factual Background

[3]

The appellant was a financial advisor. He
    controlled a number of financial companies, including Laers Inc., Laers LPC,
    and 1590 Group Inc. He was alleged to have defrauded two clients: his friend
    Deborah Lo and his half-brother Glenford Jones. Ms. Lo lost $350,000 in what
    the appellant portrayed as an investment in Gametronics gone bad. The jury
    found that it was a fraud. Mr. Jones lost $11,826.73 because the appellant
    cashed in his RRSP and took the money. He also lost $35,340 on his investment
    in Gametronics. Convictions for these frauds are not seriously challenged by
    the appellant.

[4]

The heart of this appeal is the Scotiabank
    fraud. The appellant was alleged to have personated Mr. Jones and used a
    fraudulent IBM invoice and other documentation in order to obtain from
    Scotiabank $250,000 advanced as a loan and line of credit, to be used in part
    to finance the acquisition of an IBM computer server (the Laers loan). The
    substantiating documents included insurance, an invoice for the purchase of the
    IBM server, and the unaudited financial statements of Laers Inc. The documents,
    all fakes, were provided to Mr. Karahojitis by Jones.

[5]

Mr. Karahojitis testified at the appellants
    preliminary inquiry but died before trial. He testified that he met Jones
    before the loan was made. He also testified that he and his superior Wayne
    Ellis met with Jones in August 2005 after the Laers loan was in arrears, when
    Jones showed him evidence of assets of over $400,000 with TD Bank. Mr.
    Karahojitis identified the appellants Ministry of Transportation (MTO)
    picture as being that of Mr. Jones, but did not recognize Mr. Jones actual MTO
    picture. This testimony supported the Crowns theory that the appellant was
    personating Mr. Jones in order to secure the loan from Scotiabank.

[6]

Mr. Karahojitis testified that he did his due
    diligence by inspecting the server at Mr. Jones business address, by
    contacting IBM and verifying the transaction, and by investigating Laers Inc.s
    financial statements that were purportedly prepared by Val Purushothaman,
    Chartered Accountant. However, Mr. Purushothaman denied preparing these
    statements. IBMs head of investigation denied that Mr. Karahojitis spoke to
    IBM about the server; there was no such server to be inspected.

[7]

Mr. Karahojitis also admitted he improperly kept
    client files at home. Among the items found at his home was the second
    fraudulent IBM invoice. It was contained in the documents disclosed by the
    Crown before the preliminary inquiry. It was located at Tab 18 of the Crowns
    disclosure book and labeled as Documents found from Dean Karahojitis
    residence.
[1]
Mr. Karahojitis was not questioned about the second fraudulent IBM invoice,
    although defence counsel cross-examined him extensively and impeached his testimony.

[8]

The second IBM invoice, which was not referred
    to at the preliminary inquiry, assumed some importance at trial. The fact that
    Mr. Karahojitis was no longer available to be cross-examined on this document 
    was raised by trial defence counsel (who was not counsel at the preliminary
    inquiry) three times: in a pre-trial motion, during the trial, and in an
    application for a mistrial. This leads to the first issue.

Issue One: Did the trial judge err in admitting Mr. Karahojitis
    hearsay evidence at the trial under s. 715(1) of the
Criminal Code
?

[9]

Mr. Karahojitis died before trial. The Crown was
    obliged to bring a pre-trial motion to admit his preliminary inquiry testimony
    under s. 715(1) of the
Criminal Code
in order
    to use his evidence in the appellants prosecution. The defence agreed that the
    testimony met the statutory pre-conditions in s. 715(1), but argued that the
    judge should refuse to admit the testimony using his residual discretion,
    because the admission of the testimony would undermine trial fairness.

[10]

The governing principles regarding both the
    application of s. 715 of the Code and the application of the trial judges
    residual discretion were canvassed extensively by Watt J.A., in
R.
    v. Saleh
, 2013 ONCA 742, 303 C.C.C. (3d) 431, and by
    Brown J.A. in
R. v. Jones-Solomon
, 2015 ONCA
    654, 329 C.C.C. (3d) 191.

[11]

Watt J.A. noted in
Saleh
, at paras. 77-78, that among the factors to be considered by the
    trial judge in the exercise of the residual discretion to exclude evidence
    admissible under s. 715 (1) are the crucial nature of the evidence itself and
    the crucial nature of the credibility of the witness whose evidence is
    tendered for admission. He added that the circumstances in which the evidence
    may be excluded are comparatively rare. The appellant argues that this is one
    such rare case.

The Pre-Trial Motion

[12]

Trial defence counsel raised the issue of the
    second fraudulent IBM invoice in his argument opposing the admission of Mr.
    Karahojitis testimony at trial under s. 715(1) of the Code. If the invoice
    really did come from Mr. Karahojitis home, then it could have been used to
    impeach him in two ways. First, the invoice was addressed to 1590 Group Inc.
    (one of Mr. Headleys companies), potentially contradicting Mr. Karahojitis
    testimony that he had no knowledge of this company. Second, there was no
    apparent reason why Mr. Karahojitis should have had this second fraudulent
    invoice in his possession unless he was complicit in the fraud. The defence
    theory was that Mr. Karahojitis actually met with the real Mr. Jones and that
    the two of them worked together to defraud Scotiabank.

[13]

Crown counsel was not prepared to admit that the
    second IBM invoice was found at Mr. Karahojitis residence until this was
    confirmed by the investigating officer. However, Crown counsel said he was
    satisfied that the invoice was in the Crown disclosure and had come from Mr.
    Ellis.

[14]

Defence counsel expressed the view that second
    IBM invoice had been found in Mr. Karahojitis residence, but said he was
    content with the Crowns answer. Defence counsel also stated his view that it
    would be getting closer to fairness if the judge gave a jury instruction that
    the defence had not had an opportunity to cross-examine Mr. Karahojitis on this
    document and combined this with a

Vetrovec
warning.

[15]

The trial judge granted the Crowns application
    to admit Mr. Karahojitis preliminary inquiry testimony at trial under s.
    715(1) of the Code, and said he would give reasons in writing at a later date.
    He stated:

I am not going to
    write my reasons because I havent had a chance to do that. I am going to,
    these are not my reasons but just to give you an idea of the ballpark. I am
    going to permit, I am going to grant the Crown's application and the
    expectations that the jury receive the usual instructions and Ill set it out
    as we discussed. And if the evidence comes out the way in which the defence has
    said it's going to come out I am inclined to give a
Vetrovec
with respect to
    him, all right. So I am inclined to give a
Vetrovec
with respect to him and that
    forms an important component of my reasons. So at least you have an idea of the
    parameters with respect to that. That will allow us to be able to start the
    trial.

[16]

The trial judges written reasons arrived
    shortly before the argument of the appeal but this court did not consider them,
    nor did counsel refer to them in oral argument.

Trial

[17]

Partway through the Crowns case, on February
    11, 2016, defence counsel again raised the issue of the second IBM invoice.
    Crown counsel repeated that he did not know where it had been found. Defence
    counsel pointed out that Tab 18 was labeled Documents found from Dean
    Karahojitis residence and asked the Crown to make further inquiries. Crown
    counsel said he had already done so and would again, but reiterated that he thought
    the documents had come from Mr. Ellis.

[18]

The defence then called Mr. Ellis, who was
    cross-examined by the defence as a hostile witness. He testified that Mr.
    Karahojitis was fired for violating bank policies and poor performance. Mr.
    Ellis agreed that he had a meeting with Jones and Mr. Karahojitis after the
    Laers loan went into arrears. He identified the appellant as Jones and did
    not recognize Mr. Jones genuine MTO photograph.

[19]

The defence also called Mr. Karahojitis ex-wife
    Ms. Skordakis. She testified that she returned a large quantity of bank
    documents to Mr. Ellis from Mr. Karahojitis home shortly after he died. Inside
    one of those boxes was the second IBM invoice, an application for banking
    services completed by the appellant, and multiple pieces of the appellants ID.
    The defence called both Mr. Ellis and Ms. Skordakis to prove where the key
    documents came from, but neither recalled having seen these documents.

[20]

On February 23, 2016, during the defences case,
    defence counsel raised the second IBM invoice again and said he would bring a
    motion to stay the Scotiabank charges. After receiving a copy of the index for
    Tab 18 of the Crown disclosure from the defence, the Crown finally conceded
    that the documents had in fact been retrieved from Mr. Karahojitis home.

The Mistrial Application

[21]

The next day the defence applied for a mistrial,
    and/or a stay, and to reopen the s. 715(1) application. Defence counsel argued
    that the Crowns concession contradicted and nullified Mr. Karahojitis
    preliminary inquiry testimony. He also asserted that had the Crown not required
    the defence to establish continuity of possession of the second invoice, he
    would not have called Mr. Ellis to testify.

[22]

The trial judge maintained his original ruling
    on the s. 715 application and dismissed the mistrial and/or stay application.
    He stated that he was not satisfied that the timing of the revelation of the
    source of the second IBM invoice and associated documents adversely affected
    the appellants ability to make a full answer and defence. The trial judge
    considered that a strong
Vetrovec
warning
    would be sufficient and he would point out the fact that the documents were
    found in Mr. Karahojitis residence in the
Vetrovec
warning. He also expressed his view that the information about the
    source of the documents, which took the form of an agreed statement of fact,
    enhanced the defences position that Mr. Karahojitis had framed the appellant
    and was complicit in the offence.

Discussion

[23]

The trial judges decisions now being challenged
    were discretionary and attract appellate deference:
Saleh
, at paras. 87, 90;
Jones-Solomon
,
    at para. 46.

[24]

The appellant asserts that his trial counsel
    would not have called Mr. Ellis to testify if the Crown had admitted that the
    second invoice came from Mr. Karahojitis residence. This is because the
    defence had a problem with Mr. Ellis evidence: although Mr. Ellis could
    establish the continuity of the second IBM fraudulent invoice linking Mr.
    Karahojitis to the fraud, he could also provide what the appellant describes as
    harmful evidenceidentifying the Appellant as Glenford Jones and denying
    that he knew the Appellant or met him and Jones together.

[25]

However, this is hindsight reasoning. The trial
    judge rejected this assertion in argument on the mistrial application. He found
    that the defence would have called Mr. Ellis in any event, because:

[T]heres
    overwhelming evidence that the primary reason for calling Wayne Ellis was to
    show that he was a corrupt banker in cahoots with Dean [Karahojitis]. That was
    the primary reason. And if anything, this concession makes your case in terms
    of making that point even stronger than it did before Wayne Ellis, than at the
    end of the case. Right? So, you know, I am having difficulty understanding how
    that point puts you in an inability to make full answer and defence.

[26]

Although the second IBM invoice was positioned
    by the defence as new evidence, it was in the Crown disclosure from the outset.
    It is not known why preliminary inquiry defence counsel either did not notice
    the document, or decided not to cross-examine Mr. Karahojitis on it. Trial
    defence counsel was left to make the best of it.

[27]

The trial judge took the view that trial defence
    counsel had made the strategic decision to pursue a theory of an alternate
    suspect defence positioned around Mr. Ellis and Mr. Jones.

[28]

The trial judge decided that a strong
Vetrovec
warning about Mr. Karahojitis testimony would be sufficient to
    balance the absence of cross-examination on the second invoice. This was not an
    unreasonable assessment. In my view the trial judge made no error in principle
    in allowing the Crowns s. 715(1) pre-trial application, and in rejecting the
    defence applications for a mistrial, and/or a stay, and to reopen the s. 715(1)
    application. I would dismiss this ground of appeal.

Issue Two: Did the trial judge fail to relate the
    evidence to the individual counts in his jury charge, rendering the verdict
    unreasonable?

[29]

The governing principles concerning the
    assessment of the adequacy of jury charges are well known. Appellate review
    must consider the context of the trial as a whole. Watt J.A stated in
R.
    v. P.J.B
.
, 2012 ONCA 730,
    298 O.A.C. 267, at para. 49, that:

Appellate review
    on this issue includes consideration of the complexity and volume of the
    evidence adduced at trial, the extent of its review by counsel in their closing
    addresses, the length of trial proceedings, the issues to be resolved by the
    jury, the effect of a more complete and balanced review of the evidence, and
    whether counsel objected to the charge on the ground advanced on appeal. The
    test is one of fairness:
Daley
, [
R.
    v. Daley
, 2007 SCC 53] at para. 57. Provided the evidence
    is left to the jury in a way that will permit the jurors to fully appreciate
    the issues raised and the defences advanced, the charge will be adequate:
Daley
, at para. 57.

[30]

The adequacy analysis was further explained by
    Laskin J.A. in
R. v. Newton
,

2017 ONCA
    496, 349 C.C.C. (3d) 508, at para. 13:

On appeal, the
    standard of review is adequacy, not perfection. An appellate court's approach
    is "functional". It assesses the adequacy of the charge in the light
    of its purpose. Even if a trial judge strays from the ideal, the fundamental
    question an appellate court must ask is: has the jury been "left with a
    sufficient understanding of the facts as they relate to the relevant
    issues" Or, are we satisfied "that the jurors would adequately
    understand the issues involved, the law relating to the charge the accused is
    facing, and the evidence they should consider in resolving the issues" If
    the answer to either question is "yes", then the charge will be
    upheld on appeal, despite any imperfections. If the answer is "no",
    then the accused will have been denied a fair trial and any convictions must be
    set aside.

[31]

In assessing adequacy two questions are to be
    addressed: Would the jury appreciate the potential significance of the evidence
    to the issues from the perspectives of both the Crown and defence? Was the
    instruction fair, in the sense that it represented an even-handed treatment of
    the evidence as it related to the issues the jury had to decide? See
R.
    v. Figliola
, 2018 ONCA 578, 141 O.R. (3d) 662, at para.
    11, per Doherty J.A.

[32]

The assessment of adequacy must advert to the
    necessary components of a criminal jury charge, which Laskin J.A. set out in
Newton
, at para. 11:

In addition to general instructions on the
    presumption of innocence, the burden of proof, how to assess the credibility
    and reliability of witnesses' testimony and the like, the charge on the
    particular case should contain the following five components:


i.

the legal framework, typically the elements of
    the offence or offences with which the accused is charged;


ii.

the factual issues arising out of the legal
    framework that the jury must resolve;


iii.

the material evidence relevant to these issues;


iv.

the position of the Crown and defence on these
    issues; and


v.

the evidence supporting each of their positions
    on these issues.

[33]

This list of components aims to link the
    elements of the offence with the factual issues in the case, with the relevant
    evidence, and with the respective positions of the parties. In
R. v.
    Cudjoe
, 2009 ONCA 543, 251 O.A.C. 163, Watt J.A. said, at
    para. 152:

The role of the
    trial judge in instructing a jury generally, and in reviewing and relating the
    evidence to the issues in particular, is to decant and simplify. The trial
    judge should not simply leave the evidence in bulk for the jury, assigning to
    them responsibility for determining the relationship between the evidence and
    the issues that arise for their decision.

[34]

Justice Watt noted, at para. 173: Relating the
    evidence to the issues requires the trial judge to apprise the jurors of the
    essential features of the evidence that they may apply in resolving the issues
    that are theirs to decide and that will lead them, ultimately, to their
    verdict. He said, at para. 175: A crucial constituent of this scheme
    involves linking the critical features of the evidence to the issue or
    essential element to which the evidence relates. He added: Said somewhat
    differently, what must be proven (the essential element) is mated with what is
    offered to prove it (the evidence).

[35]

The necessary links should be made in the jury
    charge, but where this task is not adequately performed, the issue on appeal is
    whether the functional purposes of a proper charge were nonetheless
    accomplished in the context of the trial as a whole, including the live issues
    in the trial, the nature of the evidence, the content of the jury addresses of
    counsel, and the jury charge.

The Jury Charge

[36]

The jury charge covered over 300 pages of
    transcript and took about four and a half hours over two days to deliver.
    Consistent with best practice, the trial judge gave counsel a draft of the
    charge and took submissions on the text. Counsel did not object to the
    structure or content of the charge, a copy of which was provided to the jury.
    The trial judge also amended the written charge during the breaks in response
    to comments from counsel as he proceeded through it.

[37]

The trial judges charge had three main
    sections, apart from the standard first section generally describing the jurys
    duties. He conducted a lengthy review of the evidence witness-by-witness without
    relating the evidence to the counts. Next, he read out each of the counts,
    explained the legal elements which the Crown was obliged to prove, and
    mentioned briefly the individuals involved, but without linking the related
    evidence in any detail. He ended with a review of the positions of the parties.

[38]

In the text of the jury charge, the defence
    position was organized on a count-by-count basis and did make detailed links to
    the evidence. The Crown position was organized not by counts but by victim,
    with a section for each of Ms. Lo, Mr. Jones, and Scotiabank. The links between
    each of the counts and the related evidence was carefully laid out.

[39]

In discussing Mr. Karahojitis testimony, the
    trial judge reminded the jury that the defence did not have an opportunity to
    cross-examine him at trial, and that the jury did not see or hear him testify.
    He also gave a
Vetrovec
warning about Mr.
    Karahojitis testimony. He specifically mentioned some problems with the
    testimony, including the following:

·
Mr.
    Karahojitis testified that the chartered accountant had prepared a financial
    statement of Laers Inc., but the accountant testified and denied preparing it
    or even speaking to him;

·
Mr.
    Karahojitis testified that he called IBM to verify that Laers had purchased a
    server, but an IBM witness testified that the invoice was fraudulent;

·
Mr.
    Karahojitis claimed that he only knew the appellant as Jones, but the
    appellants proper identification was found in Mr. Karahojitis residence;

·
All the documents
    submitted in support of the loan application were fraudulent.

Discussion

[40]

The appellant argues that the trial judges jury
    charge did not provide sufficient assistance to the jury in the context of this
    lengthy and complex 5-week fraud trial, in which there were three different
    complainants involved in multiple transactions. Sixteen witnesses testified and
    there were hundreds of documentary exhibits. The appellant testified, and gave
    what his counsel described as a complicated denial of the allegations.

[41]

The appellant argues that in the face of this
    complexity, the trial judge did nothing to relate the evidence to each count.
    The appellant points out that the trial judge ended his review of the essential
    elements with a boilerplate paragraph:  This same passage
word-for-word
was repeated 25 times, often multiple times per count, for each
    element of the offence:

I have previously
    provided an extensive summary of the evidence relevant to this offence.
    Remember that if your recollection of the evidence varies from my recollection
    of the evidence it is your recollection of the evidence that must prevail. Do
    not place any undue emphasis on any evidence that I have included or any
    evidence that I may have excluded. You are to consider all the applicable
    evidence to determine if the Crown has discharged its burden of proof beyond a
    reasonable doubt.

[42]

The appellant submits that this situation was
    well described by Watt J.A. in
Cudjoe
, at
    para. 172, when jurors are numbed into near automatistic states by a mindless
    recitation.

[43]

The appellant points out a remark by the trial
    judge to the jury: I am going to repeat the same instruction six times. At
    some point you are going to say this judge is insane. He then added: This is
    our process, okay? So bear with me. Its something that I have to do, all
    right?

[44]

With respect, such repetition is neither
    necessary nor helpful to the jury. Nor does it serve to appeal-proof a jury
    charge. This charge is far from a model to be followed in other case. But that
    does not mean it was inadequate. The adequacy of a charge is to be assessed on
    a case-specific basis.

[45]

In my view, despite the infirmities in the
    charge, the jury would have appreciated the potential significance of the
    evidence to the issues from the perspectives of both the Crown and the defence.

[46]

First, contrary to the submissions of the
    appellant, the fraud charges were not complex. They were relatively simple and
    were not particularized in a confusing manner. While there was voluminous
    evidence, there were really only three credibility contests before the jury:
    the first was between the appellant and Ms. Lo; the second was between the
    appellant and Mr. Jones; and the third was between Mr. Headley on the one hand,
    and the witnesses he implicated in the Scotiabank fraud, Mr. Karahojitis, Mr.
    Ellis and Mr. Jones. The evidence relating to each of these opposed pairs was
    relatively simple.

[47]

Second, while the trial judges treatment of the
    elements of each count was laborious, the fraud at the core and the credibility
    of the witnesses related to each count, would not have been lost on the jury.

[48]

Third, the charge must be read as a whole. On
    balance, it did communicate the legal framework. A witness-by-witness
    recitation or summary of the evidence, without explaining how the significant
    parts of the evidence relate to the particular issues in the case has been
    criticized by this court as generally ineffective and unhelpful: see e.g.
Newton
,
    at paras. 15-19;
R
. v. Dieckmann
, 2017
    ONCA 575, 355 C.C.C. (3d) 216, at para. 41. In this case, however, the trial judges
    approach of summarizing the evidence witness-by-witness did no harm.

[49]

Take, for example, the Scotiabank fraud, to
    which the bulk of the appellants arguments were addressed. The Crowns key
    witness was Mr. Karahojitis; his preliminary inquiry evidence was extensively
    treated by the trial judge and by the parties in their jury addresses.
    Moreover, their positions were well laid out in the jury charge in digestible
    form. The very nature of the Scotiabank count was to link it with the evidence
    of Mr. Karahojitis, Mr. Ellis and Mr. Jones as against the appellants
    testimony.

[50]

Fourth, the instruction was fair and represented
    an even-handed treatment of the evidence relating to the issues:
Figliola
, at para. 11.

[51]

Did the jury have before it an understanding of
    the law and the evidence necessary to make the credibility determinations
    necessary in this case? In my view, it did. The lack of objection to the jury
    charge in draft, or after it was delivered, is indicative that trial counsel
    had the same sense. In this case, the lack of an objection is material: see
R.
    v. P.J.B
.
,

at para.
    49;
Cudjoe
, at para. 155.

[52]

I would dismiss the appeal for these reasons.

Released: November 15, 2018

P. Lauwers J.A.

I agree. Robert J. Sharpe J.A.

I agree. K. van Rensburg J.A.





[1]
Tab 18 is described as saying that the documents were variously discovered,
    found and retrieved from Mr. Karahojitis residence but the meaning is
    clear: the documents were found at his residence: see e.g. February 1, 2016
    Transcript, p. 52; February 2, 2016 Transcript, p. 3; February 11, 2016
    Transcript p. 72.


