Facts[]
Théroux was a businessman involved in developing a new subdivision. He took deposits from people towards building a house in the subdivision and told them that their deposits were insured. He even had posters about the insurance on the wall in his office. Unfortunately, the deposits were not insured and he knew this, however, he honestly believed that the project would be completed and therefore that the deposits would be safe. The project was not finished as his company went bankrupt. Many people completely lost their deposits. He was convicted of fraud under s. 380(1) of the Criminal Code and his appeal was dismissed by the Quebec Court of Appeal.
Issue[]
- Does the fact than an individual honestly believed there was no risk and money was not in danger negate the necessary mens rea of a charge of fraud under s. 380(1) of the Code?
Decision[]
Appeal dismissed.
Reasons[]
McLachlin, writing for the majority, delivers a very clear outline of the offence of fraud for the majority. She states that it is clear that the defendant committed the two actus reus elements of the offence: dishonest act and deprivation. The dishonest act is proved by proof of deceit, which is clear in this case as he knew that there was no insurance. The deprivation is proved because there was a risk of deprivation of the depositors’ funds caused by the deceit.
However, the mens rea issue is trickier. Generally, to prove mens rea the Crown must prove that the defendant subjectively understood the consequences of the act and committed the actions anyway. This does not mean that the defendant’s subjective view of whether these outcomes were morally wrong or not is of any consideration. If you know that you will kill someone, but think that killing is permitted, you can still be charged with murder. The question is whether one subjectively understands that their actions could result in a prohibited outcome. The mens rea for fraud consists of the subjective awareness that one was undertaking a prohibited act that could cause deprivation in the sense of depriving another party of property, or putting that property at risk. The fact that the defendant didn’t think that the deprivation would occur does not matter. McLachlin also says that recklessness will result in this criminal responsibility. She goes on to say that you can draw an inference that a defendant understood that their action could lead to a prohibited outcome and that this inference can be rebutted. The inference cannot be rebutted in this case.
After rejecting English case law that said that fraud requires someone subjectively realizing that his or her conduct falls below a reasonable standard of care, McLachlin finishes by stating that this definition of fraud is pragmatic. When someone deceives another, they should not be able to escape conviction just because they didn’t think that the deceit would result in loss, even though they realized that it could. The defendant satisfied the actus reus and mens rea necessary for conviction in this case. He knew his statement to be false, and it can be inferred that he knew that he was placing the depositors' money at risk.
Ratio[]
- To prove mens rea for fraud the Crown must prove that the defendant subjectively was aware that their actions could lead to a prohibited outcome; their view of the morality of this outcome is irrelevant.
- The mens rea for fraud requires the subjective awareness that you are putting others' property at risk.
- The actus reus for fraud has two elements: a dishonest act, and the dishonest act must cause deprivation.