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EVIDENCE - Hearsay rule - Exceptions - Expert evidence - Lay persons

Tuesday, March 10, 2020 @ 8:18 AM  


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Appeal by the accused P and C from convictions for conspiracy to affect the public market price of shares with intent to defraud and for affecting the public market price of shares with intent to defraud. Appeal by the Crown from sentences imposed. P was the CEO of KHI, a small publicly traded company. C was legal counsel and lead director of KHI. The trial judge found the appellants engaged in manipulative strategies to artificially maintain the KHI share price. He found that the appellants conspired with B, the company’s stockbroker, and others to fraudulently maintain the share price of KHI stock at artificially high levels through buy-side domination of the market, sales suppression of stock, high closing the stock, the use of incentives to induce the purchase or suppress the sale of stock, parking stock, the use of an account owned by B to buy stock, and the non-disclosure of material information. In 2011, the charges were laid by way of a preferred indictment. The trial began in 2015. The appellants were convicted in 2018. P was sentenced to five years’ imprisonment. C was sentenced to four-and-a half years’ imprisonment. Delay was regarded by the trial judge as the most significant mitigating factor. The appellants argued the trial judge erred in admitting certain evidence and by relying on it. They argued the trial judge erred in dismissing their stay applications due to breaches of ss. 7 and 11(b) of the Canadian Charter of Rights and Freedoms (Charter) and that the trial judge was biased.

HELD: Appeals dismissed. The trial judge did not err in concluding that the net delay was 41 months. The precharge delay did not constitute an abuse of process giving rise to a s. 7 Charter breach. The appellants failed to establish actual prejudice to their ability to have a fair trial and failed to identify what specific evidence was allegedly lost. The trial judge’s assignment of delay did not impair the appellants’ rights of full answer and defence. The net delay identified by the trial judge was supportable on the record. The trial judge’s conclusion that the appellants’ s. 11(b) Charter rights had not been infringed based on his finding that the Crown had justified the delay based on complexity was correct. The trial judge did not err in admitting the evidence of the RCMP investigator or in relying on this evidence. Although this evidence was of assistance to the Crown in establishing who did what, when, and where, the investigator did not offer any insight about whether the appellants intended to manipulate the market with intent to defraud. The trial judge did not err by qualifying E to give expert opinion evidence related to stock market trading practices and techniques utilized to artificially affect or maintain the price of publicly traded shares. The e-mail communications were properly admitted as out-of-court statements of co-conspirators. The trial judge’s view that contemporaneous e-mail communications were akin to contemporaneous intercept communications represented a rational, common sense appreciation of their comparable features. The trial judge’s threshold determinations on necessity and reliability were entitled to deference. The allegations of actual bias were without merit. All trial management decisions were entirely acceptable manifestations of the trial judge’s discretion to control the proceedings before him. The trial judge diligently applied his best efforts to ensure a very complex prosecution was heard in a manner that respected the appellants’ Charter rights. Although the six-year upper end range identified by the trial judge for s. 380(2) offences was too low, the sentences imposed were fit. There was nothing unreasonable in how the trial judge assessed all the factors relevant to determining a fit sentence. There was no fault in his conclusion delay should mitigate the length of the prison sentences he imposed. It was appropriate for the trial judge to treat C’s position as a lawyer as an aggravating factor and to anticipate C was likely to be disbarred. The trial judge was entitled to find less punitive sentences could faithfully serve the primary objectives of denunciation and deterrence in this case. The trial judge undertook a careful balancing of all the factors he was required to consider in crafting proportionate sentences for these offenders. Sentence: For P, five years’ imprisonment; for C, four and one-half years’ imprisonment.

R. v. Potter, [2020] N.S.J. 49, Nova Scotia Court of Appeal, C.A. Bourgeois, E. Van den Eynden and A.S. Derrick JJ.A., February 5, 2020. Digest No. TLD-March92020004