SENATOR DUFFY: The charge, the trial and the verdict  (part 2)
                                                      

On Monday, April 25^th I presented to my readers part 1 of the judge’s verdicts with respect to Senator Duffy’s trial. In that article I described his background, the 31 charges he was facing and the issue of the credibility of the senator while he was testifying in court. 

Today, April 27, I will present to you two of the specific charges (Counts 1 and 2)  he was facing and the decisions of the judge—Mr. Justice Charles H. Vaillancourt when reviewing the testimony and the arguments presented to him.

Everything I present to you that are in Italics are my own commentary. The rest are the actual words of the judge. And now, part 2 of the three-part series re the judge`s verdicts.

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The following text message was sent by Duffy to Senator Tkachuk (Senate Caucus Chair and Vice-chair National Caucus (2005-2011) and was submitted as evidence at Duffy’s trial.

David:                                                                                          February 13, 2013

After speaking to my lawyer, I now understand that the issue in question is not whether I own property in P.E.I.; but rather whether my principal residence is there, thus entitling me to expenses for my home in Kanata.

If this is indeed the issue, then this is the first time a concern has been raised with me by anyone.  I have been claiming these expenses routinely, as I was told I could do at the time of my swearing-in in 2009.

However, if there is anything improper about these expense claims, I want to correct it.  I have no interest in claiming expenses to which I am not entitled.

Can we discuss this matter before you issue any media release naming me, as I believe we can resolve this expense issue without the need of an audit.

Mike 

The first charge

It is alleged that the accused (1) between the 22^nd day of December, 2008 and the 6^th day of March, 2013 at the City of Ottawa, in the East Region, being an official in the Senate of Canada , did commit a breach of trust in connection with the duties of his office by filing expense claims and/or residency declarations containing false or misleading information, contrary to section 122 of the Criminal Code of Canada and further (2) that he between the 22^nd day of December, 2008, and the 6^thday of March, 2013, at the City of Ottawa, in the East Region, did by deceit, falsehood or fraudulent means defraud the Senate of Canada of money, exceeding $5000.00, by filing expense claims and/or residency declarations containing false or misleading information, contrary to section 380(1)(a) of the Criminal Code of Canada.

Duffy pleaded not guilty to those charges.

Mr. Holmes noted in his written submissions that with respect to the first two counts on the information (charge sheet) that Senator Duffy created a fiction (lied) that he lived in Prince Edward Island and incurred additional costs to perform his duties in the Senate.

The Crown’s theory in respect of these offences is based on the fact that Senator Duffy, a long-standing, habitual resident of Ottawa, was primarily resident in Ottawa in the period following his appointment to the Senate.  He had resided in Ottawa since the 1970s.  His connection with the Province of Ontario was revealed, not only by his whereabouts, but also by his driver’s licence, passport, provincial health coverage and income tax filings that all portray him as a resident of Ontario.  Mr. Holmes is of the opinion that Senator Duffy’s designation of “10 Friendly Lane” in Cavendish as his “primary residence” is inaccurate, but benign.  The completion of the annual Residency Declaration forms occasioned no payments and thus, standing alone, likely does not represent a criminal fraud. 

   However, the Crown states that the per diem claims are an entirely different matter. The claims are found in Exhibit 2 and represent Senator Duffy’s claims for compensatory payments in connection with the fiction that he had to venture from afar (in this case from P.E.I.) to come to Ottawa to discharge his Senate duties.  It is alleged that as a consequence of his claim for reimbursement of expenses that were never incurred, Senator Duffy was unjustly and fraudulently enriched by approximately $20,000 per year over a period of more than four years.  This annual stipend is designed to compensate members of the Senate for additional expenses incurred in connection with their time spent in the National Capital Region to fulfill their Parliamentary functions.  With his primary residence in Ottawa – Kanata being a suburb of Ottawa, and most definitely not more than 100km from Parliament Hill, therefore Senator Duffy was not eligible to receive these payments.

Mr. Holmes stated that Senator Duffy’s motive in claiming the primary residence designation for his cottage in P.E.I. also fulfilled his desire to establish a link with that province to satisfy constitutional requirements to even serve in the Senate.  He pointed out that the court heard evidence that Senator Duffy’s appointment was decried as constitutionally invalid even before his swearing-in and even before he gave his oath that he was a resident of P.E.I.  Mr. Holmes stated that Senator Duffy was in reality the Senator from Kanata, Ontario and this was the quandary that he faced when he was appointed to represent P.E.I.

Many of the comments in this Chapter (tax legislation) apply to determinations of residence status for provincial, as well as federal tax purposes. Generally, an individual is subject to provincial tax on his or her worldwide income from all sources if the individual is resident in a particular province on December 31 of the particular tax year. An individual is considered to be resident in the province where he or she has significant residential ties.

In some cases, an individual will be considered to be resident in more than one province on December 31 of a particular tax year.  This situation usually arises where an individual is physically residing in a province other than the province in which the individual ordinarily resides, on December 31 of the particular tax year. For example, an individual might be away from his or her usual home for a considerable length of time on a temporary job posting or in the course of obtaining a post-secondary education.  An individual who is resident in more than one province on December 31 of a particular tax year will be considered to be resident only in the province in which the individual has the most significant residential ties, for purposes of computing his or her provincial tax payable.     

Mr. Holmes honed in on the fact that the evidence revealed that Senator Duffy maintained Ontario health coverage during the period up to January 2013 and only applied for health coverage in P.E.I. after the Senate insisted on confirmation that Senators had coverage in the provinces for which they were appointed.  Indeed, the proof of residency that Internal Economy would ultimately request of all Senators was confined to driver’s licence, provincial health coverage, residency asserted for purposes of income tax and a declaration of voting.      

The Crown (prosecutor) takes no issue with Senator Duffy’s claim for health coverage in Ontario since it accords with their position (Crown’s position) that Senator Duffy is and was a resident of Ontario throughout the period of time under review.

Prince Edward Island doesn’t have a Health Plan that is equal to the one in Ontario. Now what follows is a point that the Crown made that had validity to it. It describes the requirement need to be given an Ontario Health Card.  

Regulation 552 relating to the Health Insurance Act includes a definition for “primary place of residence” which is applicable from April 2009 forward and it reads as follows:

“Primary place of residence” means the place with which a person has the greatest connection in terms of present and anticipated future living arrangements, the activities of daily living, family connections, financial connections and social connections, and for greater certainty a person only has one primary place of residence, no matter how many dwelling places he or she may have, inside or outside Ontario.”

Mr. Holmes noted that Senator Duffy testified that he became a resident of P.E.I. on the 22nd of December 2008 for all purposes.  However, in addition to health coverage, Senator Duffy portrayed himself as a resident of Ontario for the purpose of income tax until the end of 2012 although he testified that he sought to have his income tax paid in Prince Edward Island but his accountant “refused to do that as a professional, because he said that was illegal.”

That would mean that he had to pay his taxes in Ontario

The Crown also highlighted the fact that when Senator Duffy made application for a new passport in February 2012, he listed his “current home address” as the residence at 47 Morenz Terrace, Kanata, Ontario.

 Clifford Dollar’s (contractor who build Duffy’s home in PEI) suggestion that Senator Duffy used 10 Friendly Lane (as a temporary home) from April through late October is supported by the entries in Senator Duffy’s diary.  The diary reveals other travel to Charlottetown during the off season.  However, during those times, since the property was largely inaccessible, Senator Duffy stayed in various hotels. Exhibit 7 reveals a pattern of actual use of 10 Friendly Lane, which showed Senator Duffy’s arrival in the spring and a final departure, usually in the late summer or fall.

The Crown took the position that prior to his appointment to the Senate, when Senator Duffy described himself as a resident of Ontario, Senator Duffy said he used the property at Cavendish on a seasonal basis and with the exception of three nights in December 2012 that’s precisely how he used the property following his appointment.

The Senate typically breaks in mid-December and suspends its sittings until February, about six weeks per year.  The sitting schedule can be determined from Exhibit 66, entered in the course of Diane Pugliese’s testimony.  Mr. Holmes highlighted Senator Duffy’s whereabouts during the winter breaks between 2009 and 2012.  Overall he spent 14 days in P.E.I. during that period.  The break period is more than 28 weeks.  He did not make it back to P.E.I. at all during the 2010/2011 break.  However, Mr. Holmes pointed out that Senator Duffy did spent 10 days in P.E.I. during the 2012 / 2013 break at a time when the Senate expense issue had attracted the attention of the media.

I have visited Cuba twice (1998 and 1999) and I will be in Cuba this year  for only a week each time. I couldn’t claim that Cuba is my prime residence even though some of my costs for the visits are property tax costs paid to Cuba. So why can Duffy claim that his cottage in PEI is his prime residence? Duffy and I do have something in common. We both pay income taxes on places we don’t live at on a more permanent basis—him in PEI and me in Cuba. Admittedly, Duffy pays property taxes on his properties in PEI and in Ontario. I have a friend who lives six months in a trailer park in Florida and six months in a trailer park in Ontario. He pays property taxes in Florida and in Ontario. He can legally claim that he lives permanently in Florida and Ontario since he spends six months in each of the two locations. He is retired so he doesn’t have to pay income tax.

When considering the issues surrounding residency, it is useful to consider Senator Duffy’s connection with Prince Edward Island.  His family has had roots in the Province for many years and he himself was born and raised in the Charlottetown area.  After leaving high school, Senator Duffy pursued journalistic endeavours that eventually brought him to national prominence.  This career path resulted in Senator Duffy having to leave his home province.  However, he returned regularly to Prince Edward Island to visit friends and family.  Senator Duffy advised the court that it was always his intention to return permanently to Prince Edward Island once he retired from media journalism.  With this goal in mind, he and his wife, Heather purchased the property at 10 Friendly Lane, Cavendish Beach, P.E.I. in 1998.

The uncontradicted evidence that Senator Duffy and his wife spent $98,292.49 of their own personal money to fund the extensive renovation of 10 Friendly Lane is also entirely inconsistent with an intent to defraud in order to gain what the evidence reveals was approximately $80,000 in living expenses over the next 4 fiscal years (2008-09; 2009-10; 2010-11; 2011-12).  Mr. Bayne contents that it is simply unreasonable to believe that a fraudster, motivated to deceive in order to gain money, would spend a considerable sum of personal money (the evidence reveals the Duffys are not wealthy people nor do they live a lavish lifestyle) in order to effect a risky scheme to gain a relatively modest annual expense amount.  This evidence is inconsistent with proof beyond reasonable doubt of the required mens rea for fraud or breach of trust, but is wholly consistent with the fact and belief of Senator Duffy that 10 Friendly Lane was his permanent and primary residence in the Province he now represented as a Senator.

The Duffy’s current residence in the NCR is at 47 Morenz Terrace, Kanada, Ontario.  This property was purchased in 2003. That means that they own two properties; one in PEI and the other in Ontario and would be paying property taxes on both properties.

  In anticipation of his appointment to the Senate representing P.E.I., Senator Duffy ended his career in journalism on December 22, 2008 and “became a resident of Prince Edward Island” at 10 Friendly Lane, Hunter River, RR2, P.E.I., and was issued a P.E.I. driving licence on January 2, 2009.  As Senator Duffy put it in his testimony,”I was a Prince Edward Islander and wanted to have a Prince Edward Island driver’s licence.” He would also have to get an Ontario driver’s licence once he moved to Ontario.

Mr. Bayne noted that Senator Duffy maintained his Ontario Health Insurance Plan card to facilitate his treatment and care for his various health issues.  In 2013, the Senate rules changed so that a provincial health card from one’s home province was required.

 Senator Duffy advised the court that he spoke with a number of individuals including: Stephen Harper, the Prime Minister of Canada; Senator Tkachuk, the Vice-chair and then Chair of the Internal Economy Committee “The Committee is responsible for the good internal administration of the Senate. Senator LeBreton, the Conservative Senate caucus leader and her constitutional assistant Christopher McCreery regarding issues surrounding residency and that he relied on their opinions and statements with respect to the residency issue.

Senator Duffy testified that he met Prime Minister Stephen Harper on December 8, at which time the Prime Minister suggested to then Mr. Duffy that he (Duffy) should consider a P.E.I. Senate appointment.  The Prime Minister and Mr. Duffy discussed Mr. Duffy’s and his wife’s intention to return permanently to P.E.I. once his journalism career ended and where he had owned his proposed permanent retirement home at 10 Friendly Lane for a full decade.  The Prime Minister suggested that Mr. Duffy “speed up” the permanent move to the P.E.I. residence through the acceptance of an appointment – i.e. an appointment as a P.E.I. Senator would both require and effect a change in the status of the P.E.I. residence.  Mr. Duffy said he would have to discuss and consider this with his wife Heather.

Senator Duffy further gave evidence that he again met Prime Minister Harper, this time at the Centre Block, on December 16, 2008  to discuss the proposed Senate appointment.  Mr. Duffy raised an issue of potential local political opposition to his appointment as he had been living in Ottawa as part of his journalism career, although he owned the residence at 10 Friendly Lane in P.E.I. and had intended to make it his permanent home when his journalism career ended.  The Prime Minister replied, “They’ll get over it,” and went on to advise Mr. Duffy that accepting the appointment as a P.E.I. Senator simply “accelerated” or “speeded up” making the P.E.I. residence the permanent residence, since being sworn in as a Senator from P.E.I. made P.E.I. (10 Friendly Lane) the permanent and primary residence.  The Prime Minister advised Senator Duffy that, upon appointment as a Senator from P.E.I., the effect would be “this is now your primary residence.  This is where you live and this is what you represent, the area you represent in the Senate of Canada” Mr. Duffy would, on appointment, be representing the Province of P.E.I. (an important Constitutional and legal reality of “regional representation” by appointed Senators. “The system of regional representation in the Senate was one of the essential features of that body when it was created and his P.E.I. residence would thus, on appointment, become the permanent one just as Mr. Duffy and his wife had intended for a decade.

The Prime Minister’s explicit advice was believed and relied upon reasonably by Mr. Duffy.  This was not some minor bureaucratic official speaking but the Prime Minister of Canada.  This advice made sense.  If you are the Senator from P.E.I., representing P.E.I., your address in P.E.I. would now be your prime and permanent address.  The advice of the Prime Minister was reinforced by the written and oral advice of Mr. Audcent, the Senate Law Clerk, to Mr. Duffy on December 23^rd, 2008, that, owing to the requirements of the Constitution Act, 1867 (See Exhibit A, Tab 1), the soon-to-be appointed P.E.I. Senator had a “duty to reside at all times in Prince Edward Island. The Prince Edward Island residence was of primary constitutional importance going forward.

You will note that the judge in the aforementioned statement said in his verdict; The Prime Minister’s explicit advice was believed and relied upon reasonably by Mr. Duffy. 

Mr. Bayne contended that, if Senator Duffy was confused and conflated constitutional residence with primary residence for living expense claims, that does not make out the deceitful and corrupt mens rea (criminal intent) required for fraud or breach of trust.  He was not alone in conflating and confusing the issues.

Mr. Bayne stressed that Senator Duffy’s evidence about the aforementioned meetings was not contradicted. The Crown called no evidence, either from former Prime Minister Harper or from Ray Novak who was present at the December 8^th meeting, to challenge or contradict Senator Duffy’s account of the meetings.

This means that the judge was satisfied with Duffy’s statement with respect to his meetings with the prime minister and as such, there was no mens rea on Duffy’s part to defraud the Senate or the taxpayers by receiving expense money for his trips to PEI to visit his permanent residence even though he was living a good part of his time in a house he bought in Ontario near Ottawa while he served in the Senate.

Senator Duffy pursued the residency issue further.  On January 6^th 2009 Senator Duffy testified that he attended the office of his Senate Leader and member of the Harper Cabinet, Marjorie LeBreton, to resolve the matter.  When he explained his understanding that there was and could be no minimum time requirement to be spent at his residence at 10 Friendly Lane for it to be his primary residence in the Province for which he was to be appointed (because of the Senate attendance requirement in Ottawa and travel on Senate business), he was assured by Senator LeBreton that 10 Friendly Lane fully qualified and there was no such time requirement.

There is a lesson to be learned here. You will note that Duffy took steps to re-confirm that his home in PEI was his permanent home.

Many years ago, I was a process server in which I was serving court documents on people who were being sued or had been sued and were getting more documents. One day, the husband of the woman I served with a multi-million dollar claim, assaulted me and told me to take the document back. Naturally I refused. He began dragging me back to his apartment so I punched him in the face and knocked him out. I was charged with assault and impersonating a peace officer. The assault case was dismissed.

The law in Canada defines a peace officer as including a person who is employed to serve civil process—which was exactly what I was doing. The prosecutor told the judge that the office of the Attorney General of Ontario disagreed. Fortunately, I took steps to verify my claim. I wrote an official in Ottawa and arranged a meeting between a justice of the peace and the senior prosecutor in his court.  It was established that I was a peace officer. When I was the deputy bailiff of a court, I was also peace officer. I presented a transcript of a trial in which a defendant had assaulted a process server. He was convicted of assaulting a peace officer. When  the trial judge in my case read the transcript  and  also read the document from the senior person in the office of the Attorney General of Canada, confirming that I was  peace officer, my judge then dismissed the case  against me.   

What I am saying to you is this. If the issue is one that will be before a court, get all the evidence you can get your hands on. That is what Duffy did and that is why the charge he was facing re the permanent resident issue was dismissed and why the charge of impersonating a pace officer was also dismissed. Don’t presume that all judges can interpret the law all of the time. That is why lawyers go to the trouble to get proof wherever they can get it to assist the judge in making his or her decision.

Motive is a question of fact for the trial judge and its weight will in each case turn on its own facts.  The evidence of motive here is so negligible as to approach “proved absence of motive”; which is “an important fact in favour of the accused.

Counsel for Senator Duffy further noted that apart altogether from there being no proof beyond reasonable doubt of the mens rea required for fraud and breach of trust, and apart altogether from Senator Duffy’s extensive and reliable oral and documentary evidence relating to mens rea, the Crown case on Counts 1 and 2 must fail because there is no proof beyond reasonable doubt of the actus reus (criminal act) of fraud or breach of trust, no proof beyond a reasonable doubt of a prohibited act of dishonesty or of a marked and substantial departure from the proven standards expected and accepted of similarly situated officials. (Senators)  

After reviewing the submissions and the facts in this case, I am not satisfied that the Crown has proven the guilt of Senator Duffy in relation to alleged fraudulent residency declarations and/or expense claims in connection thereto  beyond a reasonable doubt and accordingly, Counts 1 and 2 are hereby dismissed.

But should Duffy really represent PEI as a senator?

This trial was not about whether Senator Duffy was or still is legally qualified to be a senator.  It was about whether or not he was a criminal. Whether Duffy is eligible to be a senator for the province of Prince Edward Island remains as a different  question. 

At issue is  Section 23 of the Constitution Act, which sets out the qualifications for appointment as a senator—specifically part five which states that, “He shall be resident in the Province for which he is appointed.” The pronoun “he” also applies to “she”)

Duffy was born and raised in Prince Edward Island, but he had lived and worked in the Ottawa area as a journalist for as many as 70  years before his appointment to the Senate. Duffy does own a cottage in P.E.I., which satisfied the Constitution Act’s requirement of having property in the province a senator represents and he visits it on a number of occasions.

It was in December 2012 that the Ottawa Citizen reported that Duffy was claiming a housing allowance for his residence in Ottawa—the story that set the entire Duffy-Wright affair in motion. And a few weeks after the revelations about his non-resident status; him being on the voter’s list where he lives in Ontario and his Ontario health card, Duffy then announced that he would repay the expense claims that were in\question. He claimed $147,274.61 in travel expenses to P.E.I. in the 28 months since September, 1, 2010. That was what the government wanted back.

Senators who primarily live more than 100 kilometres outside of the National Capital Region can claim up to $21,000 a year in housing allowance to help them maintain a home in the Ottawa area, as well as in the region they represent an in Duffy’s case, Prince Edward Island.

The Senate has asked senators to prove where they live, requiring them to provide copies of driving licences, health cards, tax information and other documents that could prove their primary residence. He has an Ontario driver’s licence, an Ontario Health card and no doubt he pays property tax on his home in Ontario. He des the same in PEI.

If Prime Minister Stephen Harper had appointed Mike Duffy to represent Ontario, instead of P.E.I., that would, in the first place, there would be no question about his eligibility. It may have preempted some of what has ensued since Duffy’s appointment to the Senate.

As the judge noted in his decision, Duffy’s initial reaction to Harper’s offer of a Senate appointment was that he should represent Ontario, which is where he lives and not PEI which is not where his permanent home is located. That was an honest statement on Duffy’s part.

Harper said no. There were Ontario Senate seats open. But none would go to Duffy. If Duffy wanted a Senate position, he would have to represent P.E.I., the province of his birth.

This tells you something about the integrity of these two men. They have none. They had to have known that what they were doing was improper because it was in conflict with the Constitution Act.

Duffy was assured by Harper, by an official in the prime minister’s office and by two senior Conservative senators that everything would be fine after all, Duffy owned a summer cottage in P.E.I. It was unusable in winter and situated on a road that wasn’t plowed. But that didn’t matter. He was told he could claim it as his primary residence and thus meet the constitutional requirements. They too had no integrity either.

In a December 2008 meeting, Harper explained to Duffy the twisted logic succinctly: Since Duffy was being appointed to represent P.E.I. in the Senate, then by definition he must live in P.E.I. He didn’t mean permanently, he meant occasionally. Duffy does spend time living in PEI but hardly as much as when he lives in Ontario.

Flowing from the bizarre scenario, Duffy charged taxpayers tens of thousands of dollars for living in his own, longtime suburban Ottawa home—money that he was given to him to be used  towards his expenses of travelling to his so-called permanent home in PEI.

Duffy isn’t in my opinion, constitutionally qualified to sit as a senator from P.E.I. He may have a P.E.I. driver’s licence. He may even choose to file P.E.I. income tax returns from that province but he doesn’t live there in any real sense. He lives in a suburb of Ottawa.

The taxpayers dumped Harper into the toilet where he belongs so it will be interesting to see what our new prime minister and the Senate is going to do about Duffy’s status in the Senate. In my opinion, Duffy danced too close to the lines of propriety to remain in the Senate.

On Friday, April 29^th, I will deal with some of the remaining charges as briefly as I can and give you the judge’s decision along with my commentary.