Legally Speaking with Michael Mulligan
Legally Speaking with Michael Mulligan
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.
Follow this link for a transcript of the show and links to the cases discussed.
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? Hey, I'm doing great. Always good to be here. Some 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?
Michael Mulligan:It is in this sense. I mean the offense, if you look it up in the criminal code, would just be theft. Right, we have theft under $5,000 and theft over $5,000. 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 that let's say somebody in some opportunistic way, let's say they walk by a car, see the door unlocked and they steal money from the car, for example. 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. Seriously, from a sentencing perspective, if somebody is in a position of trust like, let's say, somebody is a person's accountant or a person's employee, right, if somebody 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, a few considerations. That well, a few considerations, one would be there's just more morally wrong to be stealing from a person who you've entrusted with something. Right, you know your accountant, or somebody's lawyer, or somebody's doctor or nurse or somebody, right, it would be considered more bad for somebody to do that, and this particular case involved a woman who was a longtime paralegal who worked for a lawyer in Victoria. Apparently, she was employed in that capacity from 2010 to 2022. And then she picked up what would look like an alcohol and cocaine problem, which led to, over a four-year time period, her beginning to steal money from the lawyers she worked for. Her beginning to steal money from the lawyers 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 was no doubt she did it and she took relatively early responsibility for doing it, which then led to the issue of well, what sentence should be imposed?
Michael Mulligan:And in this case, the Crown was seeking a sentence of three years, which would be a penitentiary sentence in jail, and Defence Council was seeking a sentence of two years, less a day to be served conditionally, and that's important to explain what that's all about. The way that works is that if you receive a sentence of two years less a day right, if a judge determines that's the appropriate sentence and if a judge determines that you would pose no risk to you know you would not be a risk serving the sentence in the community the judge can impose what's called a conditional jail sentence, which some people would refer to as like house arrest right. Yes, with the idea that if the person's going to abide by those conditions you know they can be monitored you can punish the person. In that way, we don't have 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?
Michael Mulligan: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 right, 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 in, they're sort of codified. So a judge sentencing somebody and looks at the criminal code, there'd be a whole bunch of things a 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 it's a separate thing. You know, rehabilitation, denunciation. There are 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 accepted that there was a pre-sentence report and a psychiatric report prepared, accepted the proposition that this particular person appeared to be a low risk of reoffending.
Michael Mulligan:The judge went on to analyze that concept of general deterrence deterring other people, not just this person from doing something. And the judge analyzed 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 offenses than others and pointed out I think quite correctly that you know many offenses are and Judge described it this way many offenses are committed in the heat of the moment, without forethought, by a person who's lost control of himself, right that's, you know somebody gets in a fight or they start pushing somebody, or there's a road rage, incident or you know something happens sort of on the quick right. And, as Judge pointed out, such offenses are less likely than others to be deterred by the prospect of a jail sentence, because at the time of the offense the person's 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 gets into a heated argument and shoves somebody right, they're probably not thinking about well, what sentence were imposed for previous shoving incidents, will I get caught for this shove? They're just kind of lost control.
Michael Mulligan:But the judge pointed out that this kind of a crime, like sort of embezzlement carried out over a period of years, is the sort of offense where a person has 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. And so the judge pointed out that deterrence was a more significant consideration for this kind of an offense, where it's sort of a long-term planned thing where a person might well, you know, weigh up when they heard on the radio that you know that somebody received a long jail sentence. That 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 impose the three-year penitentiary sentence which was recommended by the Crown.
Michael Mulligan: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 list of things, which is one that I think most people, when you think about it, think yeah, that's about right. There's the principle that similar people being sentenced for similar offenses in similar circumstances ought to be treated in a similar way. Right, that's part of the beauty of the common law system that we have. Right? The idea is that judges should do similar things to what happened for other people in similar circumstances.
Michael Mulligan:It shouldn't be a random walk of what's going to happen, and the judge pointed out that there's a long line of authorities in British Columbia and elsewhere talking about breach of trust, thefts and just how they are more, you know, deserving of longer punishment. That might occur with somebody did something on the quick or somebody did something to a person they didn't have a particular trust relationship with Right, particular trust relationship with right, 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. A restitution order is something that a sentencing judge in a criminal case can impose if there's a clear economic loss that can 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.
Michael Mulligan: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 at a much lower standard of proof, balance or probabilities, and so a judge could just impose a restitution order which then has the same effect as a civil judgment and so the person who's out the $343,000, they can now go about trying to collect the money, assuming there's anything to collect from. So that's the latest sentencing case dealing with that concept of a 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. So that's the latest sentencing decision from Victoria.
Adam Stirling: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. Back in a moment, back on the air here at CFAX 1070, legally Speaking with Michael Mulligan from Mulligan Defense Lawyers. Michael, up next on the agenda pre-judgment it says garnishment, taking money before a trial. What's the story?
Michael Mulligan: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.
Michael Mulligan: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, it's sort of hey, you owe me $5,022.11, right, hey, you owe me $5,022.11, right. Rather than, 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, yeah. But where you're suing somebody for a liquidated sum like, hey, I lent you $10,000 and you did not pay me back, right. Then there's a provision for under an act called 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 should 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, like 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 that gets served with a garnishing order to do what's required, and commonly garnishing orders would be served on entities like banks, that would be an obvious one, right. So let's say the defendant has $20,000 in a bank account and a 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.
Michael Mulligan: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 garnishing order, for example, against a tenant of the landlord who owes them rent, and then the rent is not due to the landlord anymore, it's paid into court. 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 in the other case earlier a restitution order, one thing that can be done would be to then go and garnish somebody's bank account or wages or rent or anything else due to them to collect on your debt.
Michael Mulligan:But the judgment garnishing order, which can only be used, as I 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 it 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 right.
Adam Stirling:Yeah.
Michael Mulligan: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'd 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, oh 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, because that's probably the end of that and then went and got one of these prejudgment 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 $28,000. So one of the banks just took all of the money out of the bank account of the defendant and paid it into court.
Michael Mulligan: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 that's going to produce a reaction when the defendant company realizes their bank account's empty, right, yeah, and because a prejudgment garnishing 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's sort of like a desk order signed off by a registrar at the court registry. It's like, well, have you done this? Have you done this? Have you done this? Is this a liquidated sum?
Michael Mulligan:Okay, here's your garnishing order. Good luck, liquidated some? Okay, here's your garnishing order. Good luck, right. And so once that happens and the defendant realizes their money's been paid into court, they can apply to a judge to ask to set it aside. And because it is that kind of an exceptional remedy, it's something gotten before there's a trial. And it's gotten, obviously, ex parte, because if you tell the other party, hey, I'm going to go get a garnishing order for your bank account, guess what happens?
Adam Stirling:yeah, they go to the bank first, they empty it yeah, they're running to the bank.
Michael Mulligan:Yeah, it's not their lawyer's office, so that's why it's done in that way. But and so judges have. Judges have determined that there has to be strict compliance with all the things that need to be there to get one of these prejudgment garnishing orders to avoid abuse of that process and finally, there could be there's authority to for a judge to release the money if they determine that sort of the interest 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 well, hey, this isn't a debt due. You can't calculate this by interest by simple math. There's some 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 responded to your claim with a counterclaim saying well, that might be, so we deny it, but we say you owe us $5,000 for some other purpose. They have to be set off right, and the judge found that that didn't happen here.
Michael Mulligan:And then that final issue, that issue of sort of is it you know? The interests of justice require 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 judgment if you succeed, which would be a compelling argument if you were suing Microsoft or something right, why do you need to garnish the money into court? They can obviously pay if you win One of the challenges. When they're arguing and often the arguments like in this case, are well, my God, this will be devastating to our business, you've taken all of our money, right, but the converse of that is well, that's all the money you had. How am I ever going to collect this thing if I win? And so, in this case, the judge didn't accept any of those things.
Michael Mulligan: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, that's one of the claims being argued here.
Michael Mulligan:Is that the formula in the contract for like 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 $400,000 to just under $400,000.
Michael Mulligan: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 that people are aware of that and if you're 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. That's 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 then 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 out of business and fled the country. So that's what a prejudgment garnishing order is Important to be aware of on either side of that kind of a dispute.
Adam Stirling: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?
Michael Mulligan: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 the owner of a strata condo just stopped paying her strata fees and that wound up totaling some $6,000-plus, 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 strata fees that haven't been paid it allows the strata to add to what's due, like it turns ultimately into a lien on the property the legal, actual legal fees of 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 the strata 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, because it's just a common rule to pay for the expenses for the condo or whatever it might be.
Michael Mulligan:And so here this person just, apparently just stopped showing up and stopped paying. It wound up 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.
Michael Mulligan:Yeah, and determined well, this person's 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 sort of a detective, to go and try to find her. They could find her. They were going to court and they eventually had multiple court applications to eventually try to serve her by substitutional service. Then the Strata Corporation realized somebody used her key fob and so then they were trying to serve her in the building again and ultimately back to court to get a substitutional service, or they were just running around all over the place trying to get her.
Michael Mulligan: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 there was a hearing to determine that issue Does she have to pay the legal expenses and how much should those legal expenses be? And her position was that there was 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, that there were other cases where it didn't cost more than $4,000 in legal fees to track somebody down and get a judgment to collect the strata fees that hadn't been paid. You know, get a judgment to collect the strata fees that hadn't been paid. And so the thing went to court and the lawyers who did it had to show up and explain. You know what do 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.
Michael Mulligan:And, interestingly, in this case, the lawyer who was acting for the woman who didn't pay her bills didn't challenge the reasonableness of the fees. He wasn't saying well, those were too much or he didn't spend that time on it that seemed to be common ground and in fact didn't even cross-examine the lawyer about those things he looked up to. Yeah, it looks like you did all these things for two years trying to chase the client down, the client down. And so ultimately the judge said well, look, I can't assess the if you don't take any issue with the, 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.
Michael Mulligan:And so the judge had to sort of said well, it's kind of unsatisfactory that if you're challenging how much the lawyer charged 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 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 cost of doing that, and in this case that turned out to be something like double what the fees were. So pay your strata fees and don't expect. The other people in the condo building are going to have to eat the legal costs of chasing you around. So pay your fees and make sure you respond.
Adam Stirling:Michael Mulligan, with Mulligan Defense Lawyers, legally speaking. Thank you, michael, pleasure as always. Thank you so much. Always great to be here.