IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           Theresa Derworiz is charged with defrauding the Province of B.C., Ministry of Housing and Social Development, of a value in excess of $5,000 between May 1, 2010 and November 30, 2012.

[2]           The Crown alleges that Ms. Derworiz collected more than $20,000 in income assistance under circumstances where she was not eligible to do so. The evidence disclosed that she was working full time while receiving income assistance from 2010 through to 2012.  Ms. Derworiz did not dispute that she was working and receiving social assistance at the same time.  Rather, she testified that she tried a number of times to alert the Ministry to her new status as a fully employed person, but the Ministry did nothing in response and her social assistance cheques continued to be deposited in her bank account.  Ms. Derworiz agrees that she owes the Ministry over $20,000, but says that she did not have the requisite mens rea for the offence of fraud, as there was no dishonest withholding of information, or deceitful behavior.

[3]           I make the following findings of fact.  In October 1999, the accused Theresa Derworiz applied for and received social assistance.  In November 1999 she applied for disability status, and was initially denied.  She appealed that decision, and in January 2000 she was approved as a person with disability (or PWD), and thereafter received social assistance in that capacity.

[4]           In her initial application (Exhibit 1, Tab 1) Ms. Derworiz she acknowledged under the heading “My responsibilities” that she must report all income that she received every month. 

[5]           Recipients of social assistance must file a monthly reports, declaring any change of circumstances, accumulation or disposition of assets, whether they are still looking for work, and must declare all income from all sources.  If they receive a paper cheque, this report or stub is included in the envelope.  The recipient then must file the “stub” or report within five days, disclosing any change of circumstances.  If a person has their social assistance directly deposited into their bank account, they still receive a monthly report in the mail, and still have to fill out the stub and return it.

[6]           If a person has been designated as a person with disabilities or PWD, there is no requirement that they file a monthly report if no change in their circumstances has occurred.  For example, if a PWD recipient earned $300 in one month, and reported it, and earned $300 the next month, a report would not be necessary for the second month.  $300 would continue on as the “declared income” until the recipient filed a new report with a changed income.

[7]           A person in receipt of PWD assistance was permitted to earn $500 in income each month, until October 2012, when it increased to $800 a month, without their monthly income assistance being affected.

[8]           The Ministry keeps records with respect to each client, who is identified by a unique identification number.  The Ministry’s MIS computer records reflect each contact that a Ministry employee makes with the client.  I am satisfied that the Ministry records are generally accurate, but like everything in life, are not perfect.  There exists a chance that an employee doesn’t input every contact with a client, and there exists a chance that paperwork occasionally goes missing.

[9]           As I stated earlier, the monthly report forms are completed by social assistance recipients and dropped off at their local social assistance office.  At the Dilworth branch in Kelowna, there are drop off boxes inside the office on the counter, and outside the office.  Those boxes are regularly emptied and the report forms inside are filed according to name and month.  These records are stored onsite for a year or two and then moved to a secure storage area.  Once they are dropped off, the contents of the monthly report forms (i.e. reported changes) are noted in the clients’ file records in the MIS computer programme.

[10]        The Ministry has a cooperation agreement with Canada Revenue Agency (CRA), in that CRA allows Ministry employees to access its records insofar as income declared on individual tax returns.  That number is checked against the income a social assistance recipient declares to the Ministry.  When the income declared on an income tax return does not match the income declared to the Ministry, an investigation into the discrepancy can occur. 

[11]        15 years ago, the Ministry conducted annual reviews with social assistance recipients.  All of their circumstances, including employment, were reviewed so that continuing eligibility could be established.  I am satisfied that Georgina Baker had such a review, in person, with Ms. Derworiz on November 1, 2000.  During that review, Ms. Baker discussed Ms. Derworiz’s responsibility to report her income every month. 

[12]        Ms. Derworiz worked part time on and off during most of her time on social assistance.  She reported income to the Ministry, using the stubs, starting in March 2001, and continued on making reports about her income in 2002, 2003 and 2004. 

[13]        In May 2004, Lori Hickson audited or reviewed Ms. Derworiz’ s file and found that Ms. Derworiz had not properly declared all of her income. As a result, she had received an overpayment of $1,374.04 of income assistance.  Ms. Hickson spoke with Ms. Derworiz, discussed the overpayment and arranged for Ms. Derworiz to repay the amount. She concluded Ms. Derworiz did not deliberately mislead the Ministry, rather Ms. Derworiz lost track of what income she earned and did not accurately report it from 2001 to 2004.  A repayment agreement was reached and Ms. Derworiz’s income assistance cheque was reduced by $50 a month until the sum was repaid.  Ms. Hickson’s evidence was that her practice during the meeting with a client in such a situation was to go through all of the documentation, in particular all of the paystubs, in the review.

[14]        Ms. Derworiz continued to submit stubs declaring her income after May 2004, filing reports in June, July, August, September, October, November and December 2004.  She continued to file stubs for earned income in all months but October in 2005, and for many months in 2006.  The income declared varied in amount each month.

[15]        In January 2007 Amy Moore did an annual review with Ms. Derworiz over the telephone.  She went over all of Ms. Derworiz’s details, updated them and then instructed Ms. Derworiz that she had to attend the Dilworth office to sign an updated re-application form for continued social assistance.  I accept Ms. Moore’s evidence that she routinely discussed the need to declare income earned by the 5^th of each month with each client she dealt with, and I accept that Ms. Moore spent between 45 minutes and an hour on the phone with Ms. Derworiz, discussing her details and obligations.  Ms. Derworiz went into the office on February 9, 2007, met with Melanie Hanett, and signed the reapplication form (Exhibit 2, tab 5).  That form, similar to the first one she signed, clearly stated that she was obliged to report all money and assets she received every month.  Following that meeting, Ms. Derworiz submitted reports declaring her earned income from February to December 2007.  The income declared varied in amount each month.

[16]        The MIS computer records show that Ms. Derworiz contacted the Ministry in January 2008, indicating that she was off work for three months.  Ms. Derworiz declared income in May, June, July, August, September, October, November and December 2008.  In 2009, she declared income in January, February, March, April, May, including some workers’ compensation benefits.  She declared income for July, August, September and December.  The income declared each month varied in amount.

[17]        In January 2010 Ms. Derworiz’s file was reviewed by Ms. Hickman again.  Ms. Hickman had some difficulty getting payroll information from Canada Safeway, Ms. Derworiz’s current employer.  It wasn’t until May 2010 that Ms. Hickman received all of the information, and calculated an overpayment of social assistance of $219.26.  Ms Hickman requested that Ms. Derworiz come into the office.  She sent her a letter (Exhibit 1, tab 9).  In that letter Ms. Hickman stated that Ms. Derworiz was “required to accurately report your circumstances and to declare any changes on your Monthly Report form”.  The letter went on to state that Ms. Derworiz’s Canada Safeway income may have caused an overpayment of social assistance.  Also included in that letter was an overpayment chart.  That chart clearly sets out Ms. Derworiz’ s earned income, income declared, her PWD exemption and the amount of social assistance she received.  Ms. Derworiz failed to show up for the appointment.

[18]        Ms. Derworiz declared some income on stubs in April 2010 and May 2010.  On May 3, 2010, she declared an income of $576.73.  That appears to be the last stub that the Ministry has any record of receiving.

[19]         In May 2010 Ms. Derworiz began to work more hours as a cashier at Canada Safeway.  She continued to receive social assistance.  Because of the nature of the reporting requirements for PWD, the $576.73 remained as her “declared income”, as she did not supply any reports indicating that it had changed.  Ms. Derworiz remained on income assistance continuously until November 2012.  Each month between July 2010 and September 2012, she received an income assistance cheque of $829.69. Each month she received by mail, a monthly report or stub.

[20]        In October 2012 the PWD exemption rose to $800 a month, and consequently in October and November 2012, she received social assistance cheques of $906.42 each.

[21]        These social assistance cheques were deposited directly into her bank account at Interior Savings.  I am satisfied that Ms. Derworiz was mailed a hard copy of her monthly bank statement as part of her account package.

[22]        Gilbert Alook works in the investigative unit of the Ministry.  A CRA conflict in reported income triggered his investigation in 2010.  Mr. Alook gathered Ms. Derworiz’s Revenue Canada documentation, her paycheques from Canada Safeway and other documentation.  On September 14, 2012 he sent Ms. Derworiz a letter, indicating her file was being reviewed.  In that letter, he outlined the discrepancy in her reporting and the CRA information, and noted she had reported no income in 2011.  He requested certain documentation from Ms. Derworiz.  She provided some, but not all of it.  He made further requests in November.  When the information was not forthcoming, Mr. Alook wrote to Ms. Derworiz in December to advise her she was no longer to receive social assistance.

[23]        I am satisfied that Mr. Alook’s calculations are accurate, and that between May 1, 2010 and November 30, 2012, Ms. Derworiz received an overpayment of income assistance of $23,908.09.

[24]        Lorel Fisher is the assistant manager of Canada Safeway.  He has worked with Ms. Derworiz since April 2010.  He testified that, although Ms. Derworiz is designated as part time, she normally works 40 hours a week and will continue to get those hours for the foreseeable future.  In fact, Ms. Derworiz has worked full time hours since 2011.

[25]        Ms. Derworiz testified.  She stated that she suffers from post-traumatic stress disorder, fibromyalgia, arthritis, depression, migraines, high blood pressure and heart problems.  She had a roommate who was verbally and physically abusive.  He died in 2010 and Ms. Derworiz began to feel better.  She also no longer had someone sharing the rent.  She decided she wanted to work full time, and discovered that her health is better when she does.  She now makes $16.70 an hour.

[26]        It was Ms Derworiz’s evidence in chief that she tried to get off social assistance in 2010.  She made a 1-800 phone call to the Ministry in August 2010 and told someone that she wanted to get off social assistance.  She provided her name and social insurance number to this person on the phone.  According to Ms. Derworiz, this employee took her information and said good luck.  Ms. Derworiz then received another social assistance cheque.  She testified that she next went into the Dilworth office in August or September 2010 and filled out a stub, stating that she no longer needed social assistance.  Ms. Derworiz added that she submitted a similar stub earlier in July, also indicating that she no longer needed social assistance.  She recalled that she put in $1,400 as her income on that stub. 

[27]        For six months after she started working full time, Ms. Derworiz withdrew her social assistance payments soon after she received them.  She testified that she set them aside in case she had to pay them back.  She also contemplated taking the money and putting it in the night deposit slip at the Ministry office.  She then decided that was too risky. In January she stopped withdrawing the social assistance money from her bank account and setting it aside.  She testified that she came to the conclusion that perhaps the Ministry was helping her out because she no longer had a roommate.  She thought she was entitled to the money.  She spent the money she had set aside.  She added that she did not know what else she could have done to stop the social assistance arriving every month.

[28]        In cross examination, Ms. Derworiz acknowledged that she knew the Ministry only permitted a total monthly income of $1,400 - that is, a combination of wages and social assistance.  She acknowledged that any amount above $1,400 would be clawed back by the Ministry.  She acknowledged sending in monthly reports for 11 years.  She acknowledged that there is clear wording on the stubs that she was to report any changes of income, and that there is wording on the stubs that as a person with a disability, she only needed to report changes to her income.  She said she never saw that wording, stating that she concentrated on the smaller wording at the top of the form, which applies to regular recipients of social assistance.

[29]        When asked why she did not make more diligent efforts to tell the Ministry that she was working full time, such as going into the office a second time, she said that she was saving her energy to go to work, and didn’t leave her home other than to go to work.  When asked why she didn’t make an appointment at the Ministry, she stated that she could have, but she felt worthless every time she went into the office. 

[30]        By way of an explanation as to why she thought she was entitled to the social assistance, Ms. Derworiz stated that she thought her rent stipend had gone up, but when confronted with the stubs which showed no increase in rent stipend, she had no explanation. 

[31]        Ms. Derworiz insisted that she spoke to Ms. Hickman on the phone in May 2010, and denied speaking to Amy Moore.  Ms. Derworiz stated that she couldn’t hold a phone for 45 minutes, and her roommate must have given her information for her over the phone.  She did not recall the in-person meeting with Ms. Hanett following the telephone annual review with Ms. Moore, but did acknowledge that she had signed the re-application form. 

[32]        When asked why she stopped in January 2011 putting aside the monthly social assistance she received, Ms. Derworiz replied that she thought she was finally living like everyone else, and she was entitled to the money.  She added that she couldn’t even attempt to write a letter to the Ministry, explaining that she was working full time, and she is not educated like everyone else. 

[33]         Ms. Derworiz acknowledged that she had had to repay overpayments of social assistance twice in the past, and she was aware that the Ministry pursued any overpayment diligently.  Ms. Derworiz acknowledged that she knew if she told the Ministry how much money she was making, she would stop receiving social assistance. 

[34]        When it was put to her that she knew it was not proper for her to keep the social assistance, she responded that she was at a place where she didn’t care about anything anymore.

[35]        Finally, she acknowledged that she knew that if she had not received social assistance during the relevant time period, that the Ministry would have had the money to distribute to other individuals on social assistance.

[36]        Ms. Derworiz had some difficulty testifying.  She claimed that she did not remember many events.  Her explanations for certain actions she took were inconsistent, illogical and simply unbelievable.  I do not accept that, having collected social assistance for 11 years, with monthly filling out of the stubs, she failed to read the large print on the stub which clearly directs PWD recipients that they need not file a stub if there was no change in their income.  This wording on the stub is directly beside where she wrote comments, her signature and her monthly income.  The notion that she would instead concentrate on a different part of the stub, with far smaller writing, and fail to notice the PWD direction is unbelievable.  She followed the directions for reporting her income, as it changed, every month for 11 years.  She was audited twice for overpayment.  The notion that somehow Ms. Derworiz believed that she was entitled to social assistance while working full time, and making over $1,400 a month is fanciful at best.

[37]        It is possible that the two stubs where she stated she no longer wanted social assistance went missing.  It is possible that an employee forgot to make note of the telephone call she made to a 1-800 number advising of her full time work.  It is possible that an employee also failed to make note of the office visit where she also advised she no longer wanted social assistance.  However, if one combines all of these possibilities, they become improbabilities.

[38]        While I accept some of Ms. Derworiz’s evidence, many parts of her testimony are not credible.  Based on her long history of collecting social assistance and declaring income, I find that she knew she was ineligible for social assistance if she earned above a certain amount.  Her actions in putting aside her social assistance for the first six months after she earned more than $1,400 clearly shows she knew she was not entitled to the money.  She conceded as much.  She then decided to spend that money instead of returning it to the Ministry.  She continued to collect social assistance, without declaring any changes in her income.  She received stubs every month which set out her declared income.  She knew she was earning more than was declared on the stub, yet she made no efforts to disclose this to the Ministry.  Even if I were to accept her evidence that she made some efforts to let the Ministry know of her increased income (which I do not), those efforts were inadequate.  She should have persisted, by either making an appointment to see someone at the Ministry to disclose her increased income, or by writing a clear letter to that effect.  I do not accept that she was unable to write a letter, or that her disabilities are such that they prevent her from doing these things.  She was working 40 hours a week as a cashier at Safeway (and still is).  She works the evening shift.  She had more than enough time on any given day to attend at the Ministry office to disclose her income.  Alternatively, she could have continued to file stubs each month, accurately setting out her income.  She did none of these things.

[39]        The law concerning the actus reus and mens rea for fraud was established by the Supreme Court of Canada in the following cases: R. v. Olan 1978 CanLII 9 (SCC), [1978] 2 S.C.R. 1175 (SCC); R. v. Zlatic 1993 CanLII 135 (SCC), [1993] 2 S.C.R. 29 and R. v.Theroux 1993 CanLII 134 (SCC), [1993] S.C.J. No. 42.

[40]        In Olan, Mr Justice Dickson reviewed the jurisprudence on the actus reus of fraud and set out the following principles:

[41]        Mr. Justice Dickson held that what constitutes a lie or deceitful act for the purpose of the actus reus is judged on the objective facts, so the “other fraudulent means” in the third category is determined objectively, by reference to what a reasonable person would consider to be dishonest.  Economic loss is not essential to the offence, risking an economic interest is sufficient, even though no actual loss has been suffered. 

[42]        Olan was viewed as establishing fraud as an offence of general scope, encompassing a wide range of dishonest commercial activities.

[43]        The Supreme Court of Canada next considered the elements of fraud in Theroux and Zlatic.

[44]        In Theroux the Court discussed the mens rea of fraud, asking the questions: is the test for a guilty mind objective or subjective? Does an honest belief that no one will be harmed establish the absence of mens rea? And, must the accused subjectively believe that his or her act is dishonest before he or she will have the requisite mens rea?

[45]        McLachlin J. (as she then was) writing for the majority, first discussed Olan, and the jurisprudence regarding the actus reus that followed it.  At paragraph 18 McLachlin J. stated:

[46]        She went on to add:

[47]        McLachlin J. then went on to discuss the mens rea of fraud.  She stated that the question is not whether the accused believed the acts or their consequences to be moral.  A defrauder will not be acquitted because he or she believed that what they were doing was honest. Mens rea for fraud consists of the subjective awareness that one was undertaking a prohibited act (the deceit, falsehood or other dishonest act) which could cause deprivation in the sense of depriving another of property or putting that property at risk. 

[48]        At paragraphs 25 and 26, the Court stated:

[49]        Madam Justice McLachlin summarized the mens rea of fraud at paragraphs 27 and 28:

[50]        The principles established in Theroux were applied in Zlatic.  In Zlatic, the accused had ordered goods from various suppliers and then used the funds he had set aside to pay them for gambling and eventually went bankrupt.  He testified that he had a system which he believed would increase his odds, and allow him to pay back his suppliers.  McLachlin J. noted the principles set down in Theroux and commented at paragraph 32:

[51]        The Court found that the accused knew precisely what he was doing and knew that it would have the consequence of putting his creditors’ pecuniary interests at risk, and this established the necessary mens rea for fraud.

[52]        R. v. Monkman [1980] M.J. No. 488 concerned an accused who made an application for social assistance in Manitoba.  In her application, she listed her income as “nil”.  Manitoba’s relevant social assistance statute and reporting conditions were almost identical to the scheme in place in British Columbia, that is, there was a positive duty on a recipient of social assistance to declare any change of circumstances each month.  The accused’s evidence that she had left a voice message for the worker who was looking after her file about her employment was not believed by the trial judge.  Counsel argued that mere nondisclosure did not constitute the crime of fraud, rather that the offence required a positive misstatement of fact, or deceit.  Jewers C.C.J. applied Olan and held that “other fraudulent means” includes means which are not in the nature of a falsehood or deceit; they encompass all other means which can properly be stigmatized as dishonest.  He went on to add at paragraph 29:

[53]         R. v. Bavarsad [2007] B.C.J. 2333 is a decision of the British Columbia Court of Appeal, again dealing with circumstances where a social assistance recipient did not disclose a number of pertinent details to the Ministry, such as her marital status, living arrangements, rental income, the purchase of a home, and the lease of a car.  The appeal was on two grounds: first, the trial judge had not provided sufficient reasons, and second, that the Crown had not proven mens rea. The Court of Appeal cited Theroux, and stated that it was necessary for the Crown to prove beyond a reasonable doubt that the accused had a subjective awareness that he or she was undertaking a prohibited act which could cause deprivation.  The Court of Appeal held that there was evidence from which the trial judge could conclude that the appellants knew they were providing false information, and that they knew that they would no longer be eligible for social assistance if the proper information was provided to the Ministry.  The conviction was upheld.

[54]        R. v. Vanderveen [2002] B.C.J. No. 397 is a decision of Joyce J. where the husband and wife accused were charged with fraud for obtaining social assistance by misrepresenting that they were no longer living together.  False rent receipts were provided and applications were submitted. The husband claimed he believed that he received the benefits because of his disability rather than the family’s circumstances. Neither accused was found to be a credible witness.  The Court found that both the actus reus and mens rea had been proven, and if the accused had disclosed the true facts, their eligibility for income assistance would have been affected and they would not have received the income assistance they did.

[55]        R. v. L.S.E. [2002] B.C.J. 852 is a decision of Holmes J., where the accused concealed from the Ministry that she was living with a man for 8 years, while collecting social assistance benefits as a single person the entire time.  The accused argued that she did not fully understand the nature and effect of her misrepresentations.  In convicting the accused, Holmes J. found that the accused’s consistent failure to disclose her living arrangements on the monthly stubs indicated a conscious intent to conceal her partner’s presence.  The defence also submitted that the accused may reasonably have assumed that the information she gave to the Ministry was satisfactory or unimportant because she was never challenged or further investigated.  In response to this argument Holmes J. stated at paragraph 57:

[56]        Here, Ms. Derworiz had consistently filed stubs reporting her monthly income for 11 years.  She knew that the Ministry diligently collected any overpayment of social assistance that occurred if her income and social assistance exceeded $1,400 each month.  She knew that if she told the Ministry how much money she was making working at Canada Safeway, she would no longer receive assistance.  I also conclude she knew she was not entitled to social assistance, given her actions for six months in setting aside the money she received.  She knew that the money she received could have been used by the Ministry for other social assistance recipients.  I do not accept her evidence regarding her efforts at alerting the Ministry to her increased income.  Even if I did accept it, those efforts fell far short of her continued obligation to accurately declare her income each month that she received income assistance.  Her nondisclosure caused the Ministry to continue to send her monthly social assistance cheques, which she spent.  This is conduct that reasonable decent people would consider dishonest and unscrupulous.

[57]        I find that the Crown has proven beyond a reasonable doubt both the actus reus and mens rea of the offence of fraud and I convict Ms. Derworiz accordingly.