Breach of Trust Theft Sentencing and Debt Collection Strategies

 

Get ready to uncover the intricacies of the legal system with Michael Mulligan from Mulligan Defence Lawyers as we dissect a fascinating case of breach of trust theft. Ever wondered why embezzling from an employer gets a harsher sentence than other types of theft? This episode promises to enlighten you on the significant emphasis courts place on general deterrence, especially when trust is violated. We break down the sentencing, guilty pleas, and the crucial distinction between serving time in a penitentiary versus house arrest.

But that’s not all! We also tackle the essential tools for debt collection—garnishing orders—exploring how creditors can secure payments even before a trial. Michael shares his expertise on maneuvering these legal remedies, their strategic application, and how to avoid the pitfalls of unpaid strata fees. Through captivating cases and expert insights, you’ll learn the financial repercussions of neglecting obligations, and why responding promptly to strata fees is vital for communal harmony. Don’t miss this engaging discussion that sheds light on the complexities of law, responsibility, and financial prudence.

 

Legally Speaking with Michael Mulligan is live on CFAX 1070 every Thursday at 10:30 a.m. It’s also available on Apple Podcasts or wherever you get your podcasts.

 

Legally Speaking Nov 7, 2024

Adam Stirling [00:00:00] It’s time for our regular segment, Barrister and Solicitor with Mulligan Defence Lawyers Michael Mulligan joins us. It’s Legally Speaking, on CFAX 1070. Morning, Michael. How are we doing?

Micahel T. Mulligan [00:00:09] Hey, I’m doing great. It’s good to be here.

Adam Stirling [00:00:11] So interesting items on the agenda. Up first, it says a Victoria legal assistant receiving a three year sentence for breach of trust theft. Is that a special kind of theft?

Micahel T. Mulligan [00:00:21] It is, in this sense. I mean, the offence, if you look it up in the criminal code, would just be theft. We have theft under $5,000 of theft over $5,000.

Adam Stirling [00:00:31] mm.

Micahel T. Mulligan [00:00:32] But the law does treat a breach of trust theft in a different way from a sentencing perspective than it treats a theft that doesn’t involve a breach of trust. And the idea there is, let’s see somebody in some, you know, opportunistic way, let’s say they walk by a car, see the door unlocked and they steal money from the car, for example.

Adam Stirling [00:00:54] Yeah.

Micahel T. Mulligan [00:00:54] That’s bad. You shouldn’t do that, obviously. But it would be taken much more seriously from a sentencing perspective. If somebody is in a position of trust, like let’s say somebody is a, you know, person’s accountant or a person’s employee, somebody who works for somebody for a long time and takes advantage of that position of trust to steal the same amount of money would be treated more seriously on the basis that, well, if you make a few considerations, one would be there’s just it’s more morally wrong to be stealing from a person who you’ve entrusted with something, your accountant or somebody lawyer or somebody doctor, nurse or somebody, or it would be considered more bad for somebody to do that. And this particular case involved a woman who was a long-time paralegal who worked for a lawyer in Victoria. Apparently, she was employed in that capacity from 2010 to 2022. And then she picked up it would look like an alcohol and cocaine problem, which led to over a four-year time period. Her beginning to steal money from the lawyer she worked for. And she did that by making payments to herself and disguising them as office expenses, claiming they were things like court fees or litigation support vendors or an office cabinet or various things. And over that four-year time period, she wound up embezzling a little over $343,000. So, a lot of money. She had no criminal record. She was 49 years of age. As I mentioned. She had those drug and alcohol problems, and she pled guilty to doing it. There’s no doubt she did it. And she took relatively early responsibility for doing it, which then led to the issue of what sentence should be imposed. And in this case, the crown was seeking a sentence of three years, which would be a penitentiary sentence in jail. And defence counsel was seeking a sentence of two years less a day to be served conditionally. And it’s important to explain what that’s all about. The way that works is that if you receive a sentence of two years or less a day, the judge determines that’s the appropriate sentence. And if a judge determines that you would pose no risk, you would not be at risk of serving the sentence in the community. The judge can impose what’s called a conditional jail sentence, which some people would refer to as house arrest. Right.

Adam Stirling [00:03:18] Yes.

Micahel T. Mulligan [00:03:19] With the idea that if the person is going to abide by those conditions, you know, they can be monitored. You can punish the person in that way to put them in jail. But the judge needs to consider, first of all, what length of sentence is appropriate, because if it’s more than two years, a judge cannot impose a conditional sentence. They would also have to consider, obviously, would this person be a risk to the community? Would they follow the house arrest conditions? But the judge in this case also pointed out that there is a difference in terms of the seriousness and the deterrent effect of a sentence served in an actual prison from one served on house arrest, a conditional sentence. And one of the things which I thought was an important analysis the judge went through in this case, and I should say some of these principles are set out, there sort of codified. So, if a judge sentencing somebody and looks at the criminal code, there’ll be a whole bunch of things the judge needs to think about, which are not always pointing in the same direction. Like a judge would have to consider things like deterring the person from doing it again, deterring other people from doing it. General deterrence is a separate thing. You know, rehabilitation, denunciation or a whole series of things a judge has to put into the hopper when deciding what sentence would be appropriate. And here, even though the judge the judge accepted there was a pre-sentence report, a psychiatric report prepared accepted the proposition that this particular person appeared to be at a low risk of re-offending. The judge went on to analyse that concept of general deterrence, deterring other people, not just this person from doing something, and the judge analysed it in this way. He concluded that, well, the concept of general deterrence, deterring other people is going to be more important for some categories of offences than others. And pointed out, I think quite correctly that, you know, many offences are described in this way. Many offences are committed in the heat of the moment without a forethought by a person who’s lost control of himself. Right. You know, somebody gets in a fight or pushing somebody or there’s a road rage incident or, you know, something happens to them on the quick, right.

Adam Stirling [00:05:26] yeah.

Micahel T. Mulligan [00:05:26] And as Judge pointed out, such offences are less likely than others to be deterred by the prospect of a jail sentence because at the time of the offence, the person is not really a rational actor weighing the consequences and are they going to get caught and what might the penalty be? If I do this right, the person who’s here gets into a heated argument and shoves somebody right is probably not thinking about what what sentence were imposed as opposed to previous shoving incident and will it get caught for the shove? They just kind of lost control. But the judge pointed out that this kind of a crime, sort of embezzlement carried over, carried out over a period of years is the sort of offence where a person is got a plan that it’s not just something on the quick right that’s really thought about. You’ve been doing it for years, right.

Adam Stirling [00:06:09] Yeah.

Micahel T. Mulligan [00:06:10] And so the judge pointed out that deterrence was a more significant consideration for this kind of an offence where sort of a long term planned thing where a person might well weigh up when they heard on the radio that, you know, somebody received a long jail sentence, they might actually deter them. And so that was one of the key considerations here. The judge used to determine that it was not appropriate to impose the conditional house arrest sentence, but instead imposed the three-year penitentiary sentence, which was recommended by the prison. And indeed, that’s what the judge did. And in doing so, the judge also pointed out that one of the other principles of sentencing, a long, long list of things, which is one that I think most people, when you think about it, would think, yeah, that’s about right. There’s the principle that similar people being sentenced for similar offences in similar circumstances ought to be treated in a similar way. That’s part of the beauty of the common law system that we have. The idea is that judges should do similar things to what happened for other people in similar circumstances. It shouldn’t be a random, random walk of what’s going to happen. And the judge pointed out that there is a long line of authorities in British Columbia and elsewhere talking about breach of trusts theft and just how they are more, you know, deserving of longer punishment that might occur with somebody do something on the quick or somebody did something to a person they didn’t have a particular trust relationship with. And so, on that basis as well, looking at authorities and what was done in previous cases, the judge imposed a three-year penitentiary sentence and also ordered there be a what’s called a restitution order in the full amount that was stolen, $343,000 and change. I should just comment on that. The restitution order is something that a sentencing judge in a criminal case can impose if there’s a clear economic loss that could just be readily calculated. You know, a judge in a criminal case can’t be imposing money for like, you know, mental distress or something. But if it’s clear like, look, you took $343,077.28 and you’ve been convicted or pled guilty on a criminal standard, the idea is to avoid the necessity of a parallel civil claim, which would be in a much lower standard of proof balance of probabilities. And so, a judge could just impose a restitution order, which then has the same effect as a civil judgement. And so, the person who was out the $343,000, they can now go about trying to collect the money, assuming there is anything to collect from. So that is the latest sentence in case dealing with that concept of a breach of trust, trust, breach of trust, theft, embezzlement, some people would call it, and how sentencing would work even for somebody with no previous record on a guilty plea to actually just a sentencing decision from Victoria.

Adam Stirling [00:09:06] All right. Let’s take our first break here, Michael, and then we’ll resume our next two matters right after this. You’re listening to Legally Speaking on CFAX 1070.

[00:09:14] COMMERCIAL.

Adam Stirling [00:09:14] Back in a moment. Back on the air here at CFAX 1070, Legally Speaking, with Michael Mulligan from Mulligan Defence Lawyers. Michael up next on the agenda, prejudgement. It says garnishment taking money before a trial. What’s the story?

Micahel T. Mulligan [00:09:29] So this is something I think many people may not be aware of, and it’s a legal remedy that’s available where there’s a civil claim for what’s referred to as a liquidated sum. And so, what is that all about? The idea here is that if you were suing somebody for a liquidated sum, which means like an amount of money that you can determine by you know, simple arithmetic, right.

Adam Stirling [00:09:55] yes.

Micahel T. Mulligan [00:09:55] Hey, you owe me $5,022.11. Right. Rather. And for example, hey, I’m suing you for my injured neck and my sore knee after I slipped on your icy steps or something. Right. Which would require a judge to determine. Well, how much should that be? Right.

Adam Stirling [00:10:12] Yeah.

Micahel T. Mulligan [00:10:13] But where you’re suing somebody for a liquidated sum, like, hey, I lent you $10,000 and you did not pay me back.

Adam Stirling [00:10:21] Yeah.

Micahel T. Mulligan [00:10:21] Then there is a provision for, under the act, or the Court Order Enforcement Act, and it allows for a person to apply to garnish that money even before there’s been a trial or anything to determine the merits of the claim. And where that kind of an application is made. First of all, I can say what a garnishing order is. A garnishing order essentially means if somebody else owes money to a defendant and you get a garnishing order and serve the person who owed the money to the defendant, that person no longer owes the money to the defendant. They must instead pay it into court, pay it to the court registry. And interestingly, if they don’t do that, that person or entity can become responsible for that amount of money. So, it’s really not optional if you’re an entity to get served with a garnishing order to do what’s required. And commonly garnishing orders would be served on entities like banks. So, it would be an obvious one, right? So, let’s say the defendant has $20,000 in a bank account and the plaintiff gets a garnishing order and serves it on the bank for $10,000, the bank must take $10,000 out of the person’s bank account and pay it into court. And that’s most common. But garnishing can be other things as well. It could be, in some circumstances, wages that are due. It could be money owed by a tenant to a landlord like somebody who’s suing a landlord. You could get a garnishingorder, for example, against the tenant of the landlord who owes them rent. And then the rent is not due to the landlord anymore. It’s paid into court.

Adam Stirling [00:11:56] Yes.

Micahel T. Mulligan [00:11:56] And so they can be used in a variety of ways and there can be garnishing orders after a case is done. Like if you win or you get like we talked about another case earlier, a restitution order. One thing that could be done would be to then go in, garnish somebody’s bank account or wages or rent or anything else due to them to collect on your your debt. But prejudgement garnishment order, which can only be used, as we said, in cases where there’s a liquidated sum due and the recent case on that dealt with exactly that issue. It was a case of a manufacturer of looks like metal railings who had been providing railings to an installer of metal railings. And the claim was based on, hey, we’ve been supplying these things to you, and you haven’t paid for them basically.

Adam Stirling [00:12:44] Yeah.

Micahel T. Mulligan [00:12:45] And it looks like what was going on is there was some agreement to sell them and the person would have the company getting them would pay for a portion immediately and then they have 30 days to pay the rest of the invoice, at which point interest would accrue and it looks like they were making payments, but the supplier of railings realized, my goodness, they’re just getting further and further behind. They’re never going to be able to pay us. And so there ultimately was something just shy of $400,000 due by the railing installer. So, the railing manufacturer sued the installer, I guess after the business relationship broke down, that’s probably the end of that. And then when he got one of these Prejudgement garnishing orders and served it on the banks that the railing installer dealt with, and indeed they had some money in the bank. It was, I think some 20 some odd thousand, $28,000. So, one of the banks just took all the money out of the bank account of the defendant and paid it into court. Now, when that happens, prior to a trial, there are provisions in that act to apply to a judge to ask to set aside the garnishment, because it’s clear that’s going to produce a reaction when the defendant company realises their bank accounts empty.

Adam Stirling [00:13:55] Yeah.

Micahel T. Mulligan [00:13:55] And because the prejudgement garnishment order is considered sort of an exceptional remedy when you get it, the party getting it has to do an affidavit setting out various things that are required under the act. But then it’s not really a weighing, it is sort of like a desk order signed off by the registry of the court registry. It’s like, what have you done? If you done this, have you done this is just a liquidated sum, okay, here’s your garnish order. Good luck. Right.

Adam Stirling [00:14:19] Yes.

Adam Stirling [00:14:43] Yeah, they go to the bank first. Empty it. Yeah.

Micahel T. Mulligan [00:14:45] They’re running to the bank, to stop their lawyer’s office. So that’s why it’s done in that way. But and so judges have determined that there has to be strict compliance with all the things that need to be there to get one of these prejudgement garnishing orders to avoid abuse of that process. And finally, there could be. There’s authority for a judge to release the money if they determined that sort of the interests of justice would require it. A pretty broad test. Now, the kind of arguments that are made like in this case, one of the common arguments would be like, go, hey, this isn’t a debt due. You can’t calculate this by interest, by simple math. You know, there’s some, you know, complicated assessment done. And they argue that here that didn’t work. Another requirement is that there be what’s called a just discount. So, let’s say you had two parties who had a business dispute, and one claimed that the defendant owed them $50,000, but the defendant claimed hey, the plaintiff owes me $5,000, you know, two different contracts or something. You’d have to set those off, right, If the other person has made like responded to your claim with a counter claim saying, well, that might be so. We deny it, but we say you lost $5,000 for some other purpose. They have to be set off, right?

Adam Stirling [00:16:00] Yeah.

Micahel T. Mulligan [00:16:00] And the judge found that that didn’t happen here. And then that final issue, that issue of sort of is it, you know, the interest of justice requires the thing to be set aside. One of the confounding factors there, of course, is that an argument might be, well, this is just unnecessary. We’ve got lots of money to pay this, you know, judgement if you succeed, which would be a compelling argument if you were suing Microsoft or something.

Adam Stirling [00:16:25] Yeah.

Micahel T. Mulligan [00:16:26] Why do you need to garnish the money into court, they can obviously pay if you win.

Adam Stirling [00:16:29] Yeah.

Micahel T. Mulligan [00:16:30] One of the challenges when they’re arguing and often the arguments in this case are, well, omh my God, this would be devastating to our business. You’ve taken all of our money. Right? But the converse of that is, well, if that’s all the money you had, how am I ever going to collect this thing if I win?

Adam Stirling [00:16:44] Yeah.

Micahel T. Mulligan [00:16:46] And so in this case, the judge didn’t accept any of those things. There was an interesting argument, though, that there is a limit on how much interest you’re permitted to charge. And the judge said, well, there’s well, that’s one of the claims being argued here, is that the formula in the contract for compounding monthly interest, if you don’t pay your invoice after the 30 days, the judge said, well, there’s a reasonable argument here that that might exceed the amount you’re legally permitted to charge. And so, the judge did slightly reduce the amount that could be garnished from 400 and something thousand dollars to just under $400,000. But ultimately, it made no difference because the company only had $28,000 in the bank. And so that was the outcome of this particular case. But I thought it was one that was worth mentioning. So, the people are aware of that. And if you’re, you know, suing somebody for a debt, you need not wait around for them to, you know, flee or spend all the money or do something if they have money like that and it is a claim that you could just calculate by arithmetic. There’s a process to get the money put into court. And so at least it’s not gone. You don’t get it right away, but it’s been protected sitting at the court registry so that if you succeed, you don’t discover that the, you know, railing installer has, you know, gone with the business and fled the country. So that’s what a prejudgement garnishing order is important to be aware of on either side of that kind of a dispute.

Adam Stirling [00:18:10] And our final story with five minutes left has to do with not paying strata fees as well as legal fees for a strata obtaining and enforcing a lien. What happened here?

Micahel T. Mulligan [00:18:22] Well, I guess the important advice for people is if you own a condo or other strata property, don’t stop paying your strata fees and don’t turtle, which seems to be what happened here. What happened is an owner of a strata condo just stopped paying her strata fees and that wound up totalling some 6,000 plus dollars, which prompted the strata to try to collect it. And indeed, under the Strata Property Act in British Columbia, when a strata has to do that trying to collect, you know strata fees that haven’t been paid. It allows the strata to add to what was due, which ultimately turns into a lien on the property. The legal, actual legal fees, are what they have to spend to collect the money. And that’s not just like court ordered costs, which might be a portion of the fees, but like all the money that they had to pay. And the idea there is that it’s not fair that all the other people in the condo building should have to pay the legal expenses to chase somebody around to get the strata fees paid. Right. And it’s just a common pool to pay for the expenses for the the condo or whatever it might be. And so here, this person just apparently just stopped showing up to start paying around up to some $6,000. And the strata, one of the interesting things is the strata, I guess they looked at the key FOBs entries to the building. I guess those were recorded just to remember, this person is just not even showing up here. We can’t find them. And so, they hired a law firm that did various things, and the law firm ultimately spent two years trying to chase this person down. They were trying to locate her; they hired a skip tracer like a detective to go and try to find her.

[00:20:08] ahh.

[00:20:08] They couldn’t find her; they were they were going to court. And eventually you had multiple court applications to eventually try to serve her by substitution of service. And then the strata corporation realised somebody used her key form. And so, then they were trying to serve her in the building again and ultimately back to court to get a substitution service or they were just running around all over the place trying to get her.

Adam Stirling [00:20:29] Yeah.

Micahel T. Mulligan [00:20:30] And eventually she hired a lawyer who responded and offered to and paid the outstanding Strata fees but refused to pay the legal expenses. And so, this was a hearing to determine that issue. Does she have to pay the legal expenses and how much are those legal expenses be? And her position was that there was a quite a substantial bill for all that running around, including hiring skip tracers and going to court multiple times and so on. And she took the position that, well, this is just too much. There were, you know, other cases where it didn’t cost more than $4,000 in legal fees to track somebody down and, you know, get a judgement to collect the Strata fees that hadn’t been paid. And so, the thing went to court and the lawyers who did it have to show up and explain, you know, what did they do and why were they what do they do over that two-year period of time and why were they hiring skip tracers and making these applications and so on? And interestingly, in this case, the lawyer who’s acting for the woman who didn’t pay your bills didn’t challenge the reasonableness of the fees. He wasn’t saying, well, those were too much, or you didn’t spend that time on it. But that seemed to be common ground and in fact, didn’t even cross examine the lawyer about those things. Except. Yeah, looks like you did all these things for two years trying to chase the client down. And so ultimately the judge said, well, look, I can’t assess if you don’t take any issue with what was done or how much was spent or whether it was reasonable or not. How am I supposed to you know, why should I be reducing these even though in some other case, you know, a judge did reduce the amount spent based on what had to be done to collect the money. And so, the judge had to sort of said, well, it’s kind of unsatisfactory that if you’re challenging how much the lawyers charge to do these things, you didn’t even ask any questions about that or take any issue with it. And so, the judge ordered that the woman pay a total of $13,222.31, including a whole bunch of disbursements for, you know, hiring people to try to find this woman to get paid. And so, the takeaway there is if you own a Strata, don’t turtle, don’t fail to pay your fees because if somebody has to spend two years trying to chase you down to get the money, you’re going to have to pay the fees plus all the costs of doing that. And in this case, that turned out to be, you know, something like double what the fees were. So, pay your Strata fees and don’t expect the other people in the condo building. You’re going to have to eat the legal costs of chasing you around. So, pay your fees and make sure you respond.

Adam Stirling [00:23:08] Michael Mulligan with Mulligan Defence Lawyers, Legally Speaking. Thank you, Michael. Pleasure as always.

Micahel T. Mulligan [00:23:12] Thank you so much. Always great to be here.

Adam Stirling [00:23:14] All right. Take care.

Automatically Transcribed on November 8, 2024 – MULLIGAN DEFENCE LAWYERS