New trial ordered in Tran fraud case as OCA says credibility ruling at trial procedurally unfair

An Ontario Court of Appeal panel has ordered a new trial for a man convicted of fraud and possession of crime proceeds because the trial judge made a “central credibility finding in a procedurally unfair manner.” The decision also found “materially misapprehended evidence in making that finding.”

These errors resulted in a “miscarriage of justice,” said Justice Jill Copeland writing on behalf of the appeal panel in the case of Quoc Tran. He was charged along with Hai Ha, the latter who had earlier pled guilty to the same crimes.

“I think it’s an important decision in that just because a trial judge makes a credibility finding doesn’t make that credibility finding immune from appropriate appellate review,” says Tran’s lawyer Michael Lacy of Brauti Thorning LLP. “It’s a useful reminder that trial judges’ credibility findings can be reviewed.”

In a 2020 decision following a trial, Ontario Superior Court of Justice trial judge Beth Allen found it was inherently unbelievable – or “far-fetched” – that Tran and Ha had not communicated police charged Tran even though both men were bound by court orders not to do so. This finding, the appellate court deemed, was made in a “procedurally unfair manner.”

The central credibility finding by the trial judge Allen against the appellant “was tainted by two errors that affected the fairness of the verdict,” Justice Copeland wrote in the appeal court ruling, released last week.” First, the central credibility finding was based on an issue that the Crown did not raise in submissions and on which the Crown did not cross-examine either defence witness,” Copeland wrote.

“Further, the trial judge misapprehended material evidence in making the same credibility finding. These errors resulted in a miscarriage of justice that requires a new trial.”

Case dates back to 2011

The case dates back to 2011, when Ha, a customer service representative for a fibreglass insulation company, used false return documents that credited approximately $518,000 from the company to various credit cards, including several cards in the Tran’s name. More than $290,000 was credited to Tran’s credit cards between 2011 and 2014.

The underlying credit card transactions were presented as evidence at trial through an agreed statement of facts supported by documentation for each transaction. The agreed statement of facts made it clear Tran did not contest that the credit card transactions had happened. However, Tran did not admit to knowledge of Ha’s fraudulent acts against the company for which he worked.

Tran testified that in mid-to-late 2010 Ha approached him for a loan, saying his own money was tied up in his business, and he needed money to help his father, who was undergoing medical treatment, much of which was not covered by OHIP.

Tran agreed to lend Ha $240,000. The loan was made in cash over a few months, starting in February 2011, in increments of $60,000. The amount to be paid back would be $300,000, implying an interest rate of 26%. Tran gave extensive evidence indicating he had sufficient funds to make the large cash loan, though there was no written documentation of the agreement.

Tran said that Ha told him he would pay back Tran through credit card transactions from his company and testified that he believed Ha owned the company that gave him the credits.

When the police called Tran at his workplace in September 2015, asking that he turn himself in at a police station without telling him the reason, Tran testified he was shocked, thinking at first it was a joke. He went to the police station to turn himself in and was arrested, with police saying he had accepted money that he should not have received.

Police told Tran not to communicate with Ha, and he testified at trial that he had not communicated with Ha between the time he was charged and his trial.

At Tran’s trial, Ha testified, as a defence witness, that the first time he had ever told Tran that the funds he used to repay the loan were fraudulently obtained was at Tran’s trial. Ha testified that he felt “too ashamed” to tell the appellant the truth until he came to testify. He also testified that his release conditions ordered him not to communicate with any alleged parties to the fraud, including Tran.

Issues at trial

The only issue at trial was whether the Crown had proven beyond a reasonable doubt that the appellant had the mens rea required for fraud and possession of the proceeds of crime. The trial judge, however, rejected the evidence of both Tran and Ha in her decision. Copeland’s ruling said, “She rejected the existence of a loan from the appellant to Ha and found that their evidence was concocted to prevent the appellant from being convicted of fraud.”

The appeal court ruling noted that the Crown had a strong circumstantial case against Tran based on the documentary evidence and the unusual nature of the credit card transactions. “But it was not an overwhelming case. The only contested issue at trial was whether the appellant had knowledge of the fraudulent nature of the transactions.”

The trial judge had to weigh the force of the Crown’s circumstantial case and the credibility of the defence evidence, the appeal court ruling stated, within the context of the entire evidence. Justice Allen “had to decide whether the Crown had met its burden to prove the appellant’s knowledge of the fraudulent nature of the transactions beyond a reasonable doubt.”

However, Justice Allen had ruled it was “impossible to believe that [Tran] only found out about the fraud leading to his arrest when Ha was on the witness stand at [Tran’s] trial.” Justice Allen added she found it “rather far-fetched” that he would say nothing to Tran for five years.

“Further, I do not believe that [Tran] would not make it his business to inquire into the details of what he contends destroyed his life and long-established career.”

Appeal court rules trial judge’s finding procedurally unfair

The appeal court ruled that Allen’s finding was procedurally unfair. Although the Crown challenged the credibility of both Tran and Ha, “at no point” did Crown counsel suggest either of them had communicated after Tran’s arrest. Nor did the Crown, in closing submissions, argue that the trial judge should find that Tran and Ha must have communicated to concoct their evidence.

Thus, the appeal court decision said, a central reason that the trial judge gave for rejecting the evidence of both Tran and Ha – that she found it inherently unbelievable that they had not communicated about the substance of the charges after the appellant was charged – was never raised either in cross-examination or submissions by Crown counsel at trial.

Tran also had no opportunity to address the trial judge’s concerns about “concoction” either in his evidence or submissions at trial. And because of this procedural unfairness and the fact that the issue only arose in the reasons for judgment, trial counsel for Tran had no opportunity to object.

“The appellant ought to have been given an opportunity to respond to these concerns, and would have, had these concerns been raised in his cross-examination,” the appeal court decision said.

Tran’s lawyer Lacy says, “To say that it was implausible or incredulous that the two complied with the court orders [not to communicate] was entirely unfair to them.”

The appeal court ruling also said that the trial judge’s conclusion that the defence evidence on communication was inherently unbelievable “misapprehended” material evidence.

“She failed entirely to address an obvious explanation, for which there was evidence in the trial record, for why the appellant and Ha would not have communicated in that time period – because Ha was subject to release conditions that prohibited them from communicating with each other.” Tran was also told not to communicate with Ha.

“The trial judge was not required to accept this evidence as an explanation for why the appellant and Ha did not speak. But she was required to consider the evidence that they were legally prohibited from speaking before rejecting as inherently unbelievable the evidence of [Tran and Hal] that they had not communicated about the substance of the charges after Tran was charged.”

The appeal court ruling said the judge could reject the defence evidence, but she should have done so in a procedurally fair manner based on the trial record.