Date of Release: June 25, 1992 No. CC920074
IN THE SUPREME COURT OF BRITISH COLUMBIA
HER MAJESTY THE QUEEN ) REASONS FOR JUDGMENT
AGAINST ) OF THE HONOURABLE ASSOCIATE
WILLIAM VANDER ZALM ) CHIEF JUSTICE CAMPBELL
Counsel for the Crown: P.C. Freeman, Q.C.
R.H. Wright, Q.C.
Counsel for the Accused: P.W. Butler, Q.C.
Dates and Place of Trial: May 19, 20, 21, 22, 25, 26, 27 and 28, June 1 and 2, 1992
Vancouver, British Columbia
The accused, who at all material times was the Premier of the Province of British Columbia, is charged pursuant to s. 122 of the Criminal Code:
THAT, in or about the months of MARCH, 1990 THROUGH October, 1990, at or near the Cities of Victoria, Vancouver, and the Municipality of Richmond and elsewhere in the Province of British Columbia, being the Premier of the Province of British Columbia, did unlawfully commit a breach of trust in connection with the duties of his office by using his public office to assist or promote his personal and financial interest in the sale of the property known as Fantasy Gardens ...
Section 122 provides:
122.Every official who, in connection with the duties of his office, commits fraud or a breach of trust is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years, whether or not the fraud or breach of trust would be an offence if it were committed in relation to a private person.
At the outset it should be observed that the foundation of our system of criminal law is the presumption of innocence in favour of an accused person. That presumption remains unless and until the Crown proves each and every element in the particular charge beyond a reasonable doubt. Unless the Crown has met that onus on all the evidence adduced at trial, an accused person must be acquitted.
Reasonable doubt, as judges must instruct juries, is doubt for which a reason can be given; that is, a doubt which is rational and reasonable under the circumstances. The standard is not proof beyond any possible doubt.
The elements of the charge here which the Crown must prove are:
1. That Mr. Vander Zalm held public office as the Premier of the Province.
2. That he had certain duties in connection with that office.
3. That by act or omission he breached those duties in using his public position to further his private and personal interests.
4. That there was a connection between those duties and the act or omission.
As to the first element, there is no doubt that Vander Zalm held public office as premier and his oath of office filed as an exhibit is documentary proof of that fact. While there is little, if any, direct evidence of his duties in connection with his office, I have no difficulty in recognizing that the office of premier of a province entails a duty and responsibility to the citizens of that province to use that office to further the interests of the public at large to the exclusion of, as Crown counsel puts it, the influence of concealed, pecuniary self-interest. Thus, the second element is proven.
The third element, i.e., the breach of his duty by the use of public position to further private interests, has been judicially defined in cases such as R. v. Arnoldi (1892), 23 O.R. 201 (Ch.D.); R. v. Cyr (1987), 9 Q.A.C. 107 (Que. C.A.). As Boyd J. stated in Arnoldi, supra, at p. 212:
The gravity of the matter is not so much in its merely profitable aspect as in the misuse of power entrusted to the defendant for the public benefit, for the furtherance of personal ends.
The fourth element, namely, the connection between the duties of office and the acts or omissions, was described in this way by Easton J. in R. v. Tucker (unreported), January 17, 1992 (Nfld. S.C.):
The offence under s. 122 of the Criminal Code of Canada becomes an offence only if the fraud or breach of trust is done in connection with the carrying out of the duties of his office. If one is not either overtly or ostensibly carrying out the duties of his office, any fraud or breach of trust surely cannot taint his office...
I must also determine the degree of fault required under s. 122 of the Criminal Code. The Crown, while conceding that subjective mens rea is required, submits that breach of trust is a crime of general intent where not only intention but wilful blindness or recklessness will suffice to convict. Counsel for the accused, on the other hand, contend that breach of trust is a crime of specific intent and, thus, in order to convict, the Crown must prove that his acts or omissions were committed with the specific intention of promoting his personal and financial interest in the sale of Fantasy Gardens.
This issue was the subject of lengthy submissions by counsel for the accused in which numerous authorities were cited and analyzed. While I have carefully reviewed those submissions, no useful purpose is served in repeating them here. I note and apply the observations of Doherty J.A. in R. v. Greenwood and Tsinonis (1991), 5 O.R. (3d) 71 (C.A.) at p. 79 where he states:
In interpreting a section of the Criminal Code, the court must look first to the language used in the section. Assistance in interpreting that language may be found by reference to the statutory history of the section, the language used in related provisions, the purpose underlying the prohibition created by the section, and the relevant case law.
On its face, there is nothing in the language of s. 122 to indicate that it is anything but a general intent offence.
The statutory history of the section is set out in The Queen v. Ouellette,  R.J.Q. 810. The English translation provided by Crown counsel states at p. 3:
The history of Section 111 [now 122] is simple. It is the codification of the common law offence which one of the first man-ifestations must have been the decision of Lord Mansfield in R. v. Bembridge. The crime of "misbehaviour in public office" becomes Section 135 of the 1892 Code, 160 of the 1927 Code, 103 of the revision of 1955 and finally 111, currently. Few changes were made in the content of the offence: only the words "affecting the public" were abandoned in Section 103.
The present s. 122 remains unchanged from the former s. 111.
The underlying purpose of the prohibition created by the section is as stated in the excerpt from R. v. Arnoldi quoted earlier at p. 3.
Clearly, the purpose of s. 122 is, as Crown counsel states, to preserve the integrity of government and to prevent public officials from dividing their loyalties between their private interests and the interests of the public.
None of the cases cited which deal with this section have held that the offence is one of specific intent. In fact, all have applied a general intent requirement. In R. v. Hebert,  R.J.Q. 236 (Que. C.A.) at p. 3 (again relying on the English translation provided by Crown counsel) the court said:
By entrusting duties to a civil servant it employs, the State imposes on him certain duties which by their very nature become obligations with respect to the public whom the State represents. If the trust shown him on this occasion is betrayed by acts or omissions that go beyond simple incompetence or ordinary negligence, there is breach of trust in the context of sec. 111.
And in R. v. Ouellette, supra, this comment was made at p. 7 of the translation:
I believe that the text of incriminations within Section 111 can nevertheless remain and target only, from now on, the intentional or reckless act of the accused which he can foresee the natural consequences.
I therefore conclude that the offence created by s. 122 is a general intent offence. What then is the proper mens rea standard to be applied? In my view, the answer is contained in the observation of Dickson J. (as he then was) in R. v. City of Sault Ste. Marie (1978), 40 C.C.C. 353 (S.C.C.), at p. 362:
Where the offence is criminal, the Crown must establish a mental element, namely, that the accused who committed the prohibited act did so intentionally or recklessly, with knowledge of the facts constituting the offence, or with wilful blindness toward them. Mere negligence is excluded from the concept of the mental element required for conviction.
In other words, it must be proven that Vander Zalm knew or was reckless or wilfully blind to the consequences of his acts. It need not be shown that he knew his actions were in breach of trust or that he intended to act dishonestly.
In this case, there is little dispute as to the facts. At issue are the inferences and conclusions to be drawn from those facts. The Crown relies on eleven incidents or transactions which, collectively, it says provide proof of the mixing by Vander Zalm of his public duty and private interests which should result in a conviction. The Crown submits that these transactions prove that Vander Zalm offered preferential treatment to Mr. Tan Yu, the purchaser of Fantasy Gardens, and that he accepted money from Tan Yu knowing Tan Yu was interested in having dealings with the Government of British Columbia at the same time that he was purchasing Fantasy Gardens.
Before turning to an analysis of these eleven transactions, it may be helpful to provide some background as revealed by the voluminous evidence, both documentary and viva voce.
Vander Zalm was for some years active in politics in this province and at one time was a member of the provincial cabinet. He retired from politics for several years and returned in 1986. While out of politics, he and his wife developed a theme park known as Fantasy Gardens on a site in Richmond, British Columbia, and operated it through a corporation, Fantasy Garden World Inc. Vander Zalm was the president and majority shareholder of this corporation. His wife was the secretary and a minority shareholder. Upon his return to politics in 1986, he sought professional advice on the restructuring of his affairs and on complying with the provisions of the Financial Disclosure Act. As a result of this advice, he resigned as a director and officer of the corporation.
From his re-entry into politics until the sale of Fantasy Gardens, Vander Zalm took little, if any, active part in the day-to-day management of the corporation. That function was handled by his wife and other members of his family.
As a result of demonstrations of a political nature which had an adverse effect on the operations of Fantasy Gardens, including those of tenants and concessionaires, Mr. and Mrs. Vander Zalm in late 1989 decided to dispose of this property. Although there was apparently no formal real estate listing, interested parties began to make offers on the property. These offers to purchase were rejected. While certain of these offers remained outstanding, Mrs. Faye Leung, who was known to Mr. and Mrs. Vander Zalm on a casual basis, entered the picture. It is not clear who approached whom, but that is not material here. In any event, Mrs. Leung, a licensed real estate salesperson who had contacts in Taiwan, set out to find a purchaser.
Some time early in June 1990, Mrs. Leung produced an offer to purchase dated June 2, 1990 on behalf of a Taiwanese interest which was ultimately revealed to be Mr. Tan Yu. There followed a series of offers and counter offers and a trip to Taiwan by Mrs. Leung and her husband. While in Taiwan, Mrs. Leung sent some of these offers by facsimile transmission ("fax") to Mr. and Mrs. Vander Zalm, who, in turn, responded by the same method. As well, there was a veritable blizzard of letters and other messages sent by fax to the Vander Zalms from Mrs. Leung. There were also numerous telephone calls between them. Most of these communications dealt with changes in the terms of the proposed purchase of Fantasy Gardens, including purchase price, proposed closing dates, amount of deposit and the identity of the proposed purchaser.
It was ultimately arranged that Mrs. Leung would return to Vancouver accompanied by Tan Yu and meet with Mr. and Mrs. Vander Zalm.
I pause here to say that I am satisfied that at that point, i.e. just prior to the arrival of Tan Yu, Vander Zalm thought a sale had been arranged pursuant to the interim agreement of June 2, 1990, namely, an all cash deal. What Tan Yu thought the arrangements then were cannot be determined as I have not had the benefit of his evidence. There is some evidence, through Mrs. Leung, that he or his representatives believed the arrangements were those contained in the interim agreement of July 8, 1990, which involved vendor financing.
In the blizzard of faxes received by Vander Zalm from Mrs. Leung, there was an indication that Tan Yu was interested in further investment in British Columbia and, as a result, Vander Zalm asked for and received from Mr. Couvelier, the Minister of Finance, written information on the regulatory requirements for the establishment of financial institutions in the province. As well, in April, he had arranged for Mrs. Leung to meet with the Minister of International Business and Immigration, Mr. Veitch, concerning some inquiries that she wished to make on behalf of clients. I will have more to say about these arrangements later.
On the arrival of Mrs. Leung and Tan Yu from Taiwan, they met with Mr. and Mrs. Vander Zalm over dinner at the Bayshore Hotel in Vancouver on August 1 and again at Fantasy Gardens the next day. There is a conflict as to when or if Vander Zalm delivered documents containing the information requested from Mr. Couvelier to Tan Yu. I will return to that issue later.
The discrepancy as to the terms of purchase as contained in the two interim agreements of June 2 and July 8 referred to earlier resulted in further discussions being held on August 3, 1990 involving Mr. and Mrs. Vander Zalm, Mrs. Leung and Tan Yu. Those discussions took place between Mr. and Mrs. Vander Zalm and Mrs. Leung in the latter's room at the Bayshore and lasted for several hours into early August 4. The discussions focused mainly on a change in the purchase terms from all cash to part cash and vendor financing over a ten year term. During the evening Vander Zalm consulted at length by telephone with his solicitor, Mr. Kendler. Later the discussions moved to Tan Yu's suite where the Vander Zalms were in one room and Tan Yu in another with Mrs. Leung shuttling between them. Ultimately, an agreement was reached with Vander Zalm and Tan Yu shaking hands to signify their agreement. That agreement was documented as shown by the interim agreement dated August 3, 1990. Before that meeting broke up the sum of $20,000 U.S. cash was delivered from Tan Yu through Mrs. Leung to Vander Zalm. I will return to that later.
A parcel of land adjacent to Fantasy Gardens was owned by Petro-Canada. This property was referred to at trial as the Petro-Canada site. It is clear from the evidence that this site would be a valuable adjunct to Fantasy Gardens. Accordingly, Petro-Canada had received inquiries concerning this site from the Vander Zalms and from other interested purchasers. Subsequent to August 4, Tan Yu, through Mrs. Leung, requested Vander Zalm to acquire this site and then sell it to him at the same price. This request resulted in a telephone call from Vander Zalm to the President of Petro-Canada, Mr. Hopper. Tan Yu subsequently acquired this site in a transfer direct from Petro-Canada to his British Columbia corporation, Asiaworld (Canada) Development Corp. I will return later to this transaction.
The formal closing on the sale of Fantasy Gardens was to take place on September 7. On September 6, Tan Yu met with Mr. and Mrs. Vander Zalm, Mr. Couvelier, the Minister of Finance, and the Deputy Premier, Mr. Emerson, and others, including Mrs. Leung, in the Premier's office at Victoria. The meeting was arranged through Vander Zalm and its purpose was to discuss the steps required for Tan Yu to pursue further financial interests in British Columbia. After introductions, Vander Zalm left the meeting and did not return until its conclusion. Later that same day, by arrangements made through the Premier's office, Mr. and Mrs. Vander Zalm together with Tan Yu and others in his party, including Mrs. Leung, had lunch with the Lieutenant-Governor and other guests of the Lieutenant-Governor at his official residence, Government House.
On September 7 there was a formal announcement of the sale of Fantasy Gardens at a press conference at the Bayshore Hotel, Vancouver. That evening a reception was held at Fantasy Gardens attended by Vander Zalm, Tan Yu, various government officials and others. The evidence indicates both of these functions were orchestrated by Mrs. Leung.
It was discovered shortly before September 7 that the formal completion of the sale of Fantasy Gardens would have to be delayed because of the provisions of the Investment Canada Act. The transaction was therefore completed in a fashion characterized by all counsel as "in escrow". This I understand to mean that all transfer documents were executed and, together with the money to change hands, held by a neutral party pending approval of the transaction pursuant to the terms of that Act. That approval was eventually forthcoming and the transfer documents were registered in the appropriate places and the money released on October 17, 1990.
The activities surrounding Vander Zalm's dealings with Tan Yu were the subject of much media comment and speculation, particularly from August 1, 1990 on. In October or November 1990, Mrs. Leung became involved in a law suit which resulted in funds due, or allegedly due, her for her part in the Fantasy Gardens sale being paid into court. Some time in March 1991, in the course of those proceedings, the receipt of the $20,000 by Vander Zalm from Tan Yu on August 4, 1990 became public knowledge.
This revelation, as well as the well publicized events of September 6 and 7, resulted in public allegations against Vander Zalm of conflict of interest. Vander Zalm then appointed Mr. E.N. Hughes, Q.C. as a commissioner to investigate these allegations.
Mr. Hughes in the course of his investigation examined numerous witnesses under oath. These included many of the same witnesses who testified before me.
By agreement of counsel, a transcript of Vander Zalm's evidence before Mr. Hughes has been filed here as an exhibit. Vander Zalm appeared before Mr. Hughes or his representative on two occasions, March 1, 1991 and March 24, 1991. On the first occasion no mention was made of the $20,000 U.S. received by him on August 4. There was then public disclosure of that payment through the Leung court proceedings and Vander Zalm made a second appearance before Mr. Hughes when he gave his explanation of that transaction. Again, I will deal with that later.
Counsel did not indicate the precise basis on which Vander Zalm's testimony to Mr. Hughes was before me. I am treating it as an admission of fact filed pursuant to s. 655 of the Criminal Code and thus admissible for the truth of its contents. I will treat the statements filed as the evidence of the Lieutenant-Governor, Mr. Simms and Mr. Leung in a similar fashion. Thus, when I refer to the evidence of any of those four persons I am, of course, referring to it as contained in those admissions which are filed as exhibits.
Although I do not have it directly in evidence, it is common ground that the report of Mr. Hughes found that there had been a conflict of interest on the part of Vander Zalm between his office as Premier and his dealings with Tan Yu. This resulted in Vander Zalm resigning as Premier of the Province. This charge followed many months later.
I pause here to note that Mr. Hughes' investigation presumably dealt with the Conflict of Interest Guidelines for Ministers and Parliamentary Secretaries which are filed here as an exhibit. The standard of conduct and the burden of proof required by those guidelines are not as stringent as those which must be met in a charge under the Criminal Code.
I turn now to the various transactions the Crown alleges prove the allegation of breach of trust. I will deal with these, so far as possible, in chronological order.
LETTER OF APRIL 5, 1990
There is no question that Vander Zalm wrote a letter to the then Minister of International Trade, Elwood Veitch, requesting that he meet with Dean and Faye Leung to discuss various ideas concerning investment and development. It is also clear that by this time, Mrs. Leung and Vander Zalm had been discussing the potential sale of Fantasy Gardens. According to Mrs. Leung's evidence, she had contact with Vander Zalm as early as January 1990 concerning the Fantasy Gardens sale and he subsequently telephoned her to ask for her help after one proposed sale collapsed. From this the Crown suggests that Vander Zalm was prepared to make introductions to government for Mrs. Leung who was then representing him on a personal and private matter.
The evidence, however, does not satisfy me that, at the time the Veitch letter was written, it has been proven that Mrs. Leung was in fact representing Vander Zalm on the Fantasy Gardens sale. Michael Horsey testified that the final offer by Bayonet Point Holdings was prepared within three days of the first draft dated March 30, 1990. The closing date for the offer was May 31, 1990. The offer from Bayonet was still outstanding as of the date of the April 5th letter to Veitch. As the defence suggests, it is unlikely that Mrs. Leung could have been of assistance to Vander Zalm at this time, and I am therefore unable to conclude his request to Mr. Veitch was made for an improper purpose. In any event, it has not been proven that Mrs. Leung was representing Vander Zalm at the time of the April 5th letter.
LETTER OF JULY 18, 1990
On July 18, 1990, Vander Zalm wrote to the Minister of Finance, Mr. Couvelier, requesting information on the incorporation and establishment of a trust company in British Columbia. At this time it is clear that Mrs. Leung was representing Mr. and Mrs. Vander Zalm in some capacity in seeking prospective purchasers in Taiwan and, at the same time, she was seeking information from the government on behalf of a potential purchaser of Vander Zalm's private holdings.
It is reasonable to infer from the evidence of Vander Zalm that he did not regard this letter as anything out of the ordinary. This is supported by the evidence of Couvelier, who testified that such requests were not unusual. The letter is consistent with the theory that Vander Zalm's intention was simply to use this as an opportunity to encourage investment in British Columbia. This conclusion is supported by the evidence of Bakker, Gilchrist, Hudson, Veitch, Couvelier, Lory, Emerson and Lambert, who all testified that Vander Zalm was a "salesman" for British Columbia. Thus, I am unable to conclude that the request to Couvelier was made for an improper purpose.
MEETING WITH TAN YU ON AUGUST 1, 1990
Despite the defence submission that the Crown has failed to prove that this meeting even occurred, the fact that Vander Zalm testified before Mr. Hughes concerning this dinner meeting compels the conclusion that there was such a meeting on August 1, 1990 which was attended by Vander Zalm, Mrs. Leung and Tan Yu.
The most damaging aspect of this transaction is, of course, that it occurred just prior to, at least what Vander Zalm says he believed was, the sale of Fantasy Gardens. Therefore, if in fact Vander Zalm passed the briefing material concerning trust companies in British Columbia to Tan Yu during dinner on August 1, 1990, it might be inferred he did so for an improper purpose. Vander Zalm clearly requested the information, but it is not clear exactly when he received it.
Vander Zalm's evidence is that he does not believe that he delivered the briefing material to Tan Yu at dinner, although he may have sent it to Mrs. Leung prior to that meeting. At trial, Mrs. Leung testified that the briefing material was handed over to Tan Yu at dinner. I have difficulty with her credibility since she stated before Mr. Hughes that she did not believe that the information was given to her on August 1. I should add, parenthetically, that I have difficulty with her credibility in most areas of her testimony.
On all the evidence, I am unable to conclude exactly when Tan Yu received the briefing material. However, even if he did receive this information on the night of August 1, did Vander Zalm possess the necessary intent or mens rea for this to be considered a breach of trust? Here again, his conduct is consistent with the evidence that he was a salesman, intent on fostering investment in British Columbia, and I am not prepared to find he was, in this instance, using his office to further his private interests.
THE OVERALL NEGOTIATIONS WITH TAN YU
It is the defence contention that Mrs. Leung was purporting to represent the vendors to whom she submitted a cash offer (the June 2 offer) while at the same time representing Tan Yu, and then presented the Vander Zalms with various offers culminating in the July 8 interim involving vendor financing. The evidence supports this theory. First, there is the documentary evidence. The interim agreement dated June 2, 1990 executed by Vander Zalm was markedly different than the Shui Tzer interim agreement of July 8, 1990 executed by Mrs. Leung, who was purportedly acting through I.A.A. Investment & Development Inc. ("I.A.A."). Shui Tzer was, on Mrs. Leung's evidence, Tan Yu's nominee. It is clear from the decisions of McColl J. and Donald J. in Lin and Lin v. Leung et al. (unreported), Van. Reg. No. C906346, February 6, 1991 and February 17, 1992 respectively, that Mrs. Leung must be considered the alter ego of I.A.A. Her cross-examination before me confirms their conclusions. The July 8, 1990 interim agreement was never signed by the Vander Zalms. It calls for a fully refundable deposit. This is clearly contrary to all of the correspondence between Vander Zalm and Mrs. Leung wherein Vander Zalm continuously seeks a greater deposit.
In addition there are the actions of Mrs. Leung as revealed by the various faxes and her signing the July 8 interim on behalf of I.A.A. Mr. Vegt, the Vander Zalms' chartered accountant, testified that during the Fantasy Gardens visit on August 2 Mrs. Leung advised him that the terms of the transaction were not to be discussed with Tan Yu. In her letter of July 30, 1990 to Mr. and Mrs. Vander Zalm, Mrs. Leung tells them not to discuss any of the details of the deal "even to his children".
When this evidence is considered with the circumstances of the evening of August 3 and the early morning of August 4 in which the deal was being negotiated with Tan Yu and Vander Zalm in different rooms while Mrs. Leung was acting as go-between, the defence theory must be accepted. This is the most logical explanation for the marked differences in the two interim agreements.
Apart from the ramifications of the $20,000 transaction, the proof of the Crown's case necessitates it establishing that as of August 3-4, 1990 the agreement for the sale of Fantasy Gardens was incomplete. The formal documentation closed in escrow on September 7, 1990 and the transaction was not finalized until October 17, 1990, upon receipt of regulatory approval pursuant to the Investment Canada Act. The Crown stresses the continuing financial obligation between Tan Yu and Vander Zalm until September 7, 2000, and suggests that this vendor financing is the best evidence that there is no separation between the sale of Fantasy Gardens and Tan Yu's access to government. On the Crown's theory, it was important for Vander Zalm to comply with what he understood were Tan Yu's wishes or the Fantasy Gardens deal would collapse. Crown's submissions to the contrary, I consider the vendor financing arrangements a most tenuous basis on which to find the necessary connection between public office and private interest.
It is the defence submission that there was an agreement reached in the early morning of August 4, 1990. Counsel referred to this in the vernacular as a "done deal". Vander Zalm testified before Mr. Hughes that he believed that he had an agreement when he shook hands with Tan Yu. His evidence was corroborated by Mr. Kendler who testified that all that was left to be done was normal lawyers' housekeeping and paperwork. As well, the evidence of Bourbonnais and Vegt supports this conclusion.
Apart from the evidence that the documentary closing date was to be September 7, 1990, there is little to support the Crown's submission that the deal was still tenuous as of August 4. Indeed, the weight of the evidence is to the contrary. I am satisfied that Vander Zalm considered the deal closed as of August 4 and that it in fact was then completed. All that remained were the legal formalities and documentation.
ACCEPTANCE OF $U.S.20,000 AUGUST 4, 1990
Without the evidence of Tan Yu, the true circumstances surrounding the $20,000 may never be known. What is clear, however, is that $20,000 was given to Vander Zalm in the early morning of August 4, 1990, following lengthy negotiations with Tan Yu conducted through Mrs. Leung as intermediary.
The fact that the sale was then to all intents and purposes completed makes it difficult to conclude that the $20,000 was connected with assisting or promoting the sale of Fantasy Gardens.
Mrs. Leung gave evidence at trial that the $20,000 was to compensate Vander Zalm for the loss of interest incurred as a result of the renegotiated deal which favoured Tan Yu. Crown counsel made no reference to this aspect of her evidence in his submissions, but rather submits that this payment was made at a time when Vander Zalm was dealing with Tan Yu on a private matter, had recently obtained government information for him and had set about providing additional access to government and presumably preferential treatment. The submission is that even if the deal was ostensibly completed when the parties shook hands on the morning of August 4, 1990, the exchange of the $20,000 was so closely connected in time as to constitute a breach of trust if there was an improper use of office for personal gain.
Vander Zalm's story concerning the $20,000 is plausible, or at least raises a reasonable doubt. According to him, he accepted the money for safekeeping. This evidence is consistent with what he said to Mrs. Leung in a telephone conversation which she recorded. This conversation was put to him by Mr. Hughes and a transcript is an exhibit here. In that conversation, Vander Zalm informed Mrs. Leung that he was not going to touch the money. He said it was to be kept in trust in the safe. If this is accepted (and to do so is compelling since there is no indication he knew that Mrs. Leung was taping their conversation), then there cannot be a breach of trust since his receipt of the $20,000 was not with an intention to use his public office to further his private or personal interests or for any other improper purpose.
There is no evidence as to the disposition of this money, or at least $17,500 remaining after deduction of $2,500 which I will refer to in a moment. According to Vander Zalm's evidence, it may still be in the safe at Fantasy Gardens since the Vander Zalms at that time had the only access. While there is no evidence that it has been returned to Tan Yu, neither is there any evidence that it has not. There is simply no evidence before me in this regard.
There remains the matter of the $2,500. An undated note in Vander Zalm's handwriting is in evidence. This states that $2,500 of the $20,000 was used for a trip to the U.S. The note reads as follows:
We owe company $2500 U.S. for money-cash for U.S. trip. This money was received on account of sale of jade rock to AsiaWorld - total of sale $8000. U.S.balance of money to be paid April, 1991. " Bill."
It is the Crown's submission that there are only two possible explanations for this note. First, the note is true and, therefore, Vander Zalm accepted a benefit of at least $2,500 and is guilty under s. 122. Alternatively, the note was fabricated after the revelation of the $20,000 in an attempt to hide the true facts and his true involvement and this constitutes a breach of trust.
While the circumstances surrounding the locating of the note are certainly suspicious, there is simply not sufficient evidence to make a finding of fact that the note was fabricated.
The question of why Vander Zalm made use of the $2,500 remains. The note indicates this amount was used for a trip to the United States. It also indicates he owes "the company" (presumably Fantasy Garden World Inc.) this amount. Before Mr. Hughes he stated the $2,500 was to be used to pay for the crating and shipping of a jade stone purchased by Tan Yu. However, Mrs. Bakker's evidence indicates these charges were paid by Asiaworld.
In these circumstances I must conclude Vander Zalm used the $2,500 for a U.S. trip and the issue I must decide with regard to it is whether he, in these circumstances, received a benefit in the legal sense, and, if so, such constitutes a breach of trust under s. 122 of the Criminal Code.
The Crown says the personal use of this money is proof in itself he received a benefit and since that would constitute guilt under s. 121(1)(c) thus, according to the Crown, because the purpose of that section is so closely tied to that of s. 122, by extension, it constitutes a breach of trust under s. 122.
It relies on passages from the judgment of the Ontario Court of appeal in R. v. Greenwood, supra, a case dealing with charges under s. 121(1)(c).
I must therefore consider whether at law he received a benefit. In the Greenwood case Doherty J.A. stated that a profit should be present before a finding is made that something is indeed a benefit. He states at p. 85:
In my view, the word "profit" found in both the definition of "advantage" and "benefit" sounds the keynote for the meaning of those words in the context of s. 121(1)(c). A government employee receives an advantage or benefit when that employee receives something of value which, in all of the circumstances, the trier of fact concludes constitutes a profit to the employee...
Did Vander Zalm make a "profit" of $2,500? While he used this money for his own purposes, the note earlier referred to can be interpreted as an I.O.U. His evidence is that he believed that he was to hold the $20,000 in safekeeping. There is no evidence he was asked to hold this money "in trust" in any usual legal sense of this phrase. It could be inferred that he believed that he could use this money as long as $20,000 was returned to Tan Yu.
If the note is evidence of an intention to repay the $2,500, there is no evidence it was not paid back. On all the evidence I cannot conclude beyond a reasonable doubt that Vander Zalm profited from the use of the $2,500.
Assuming I am incorrect in this conclusion, I also find compelling the defence submission that the Crown has failed to prove beyond a reasonable doubt an essential element of the offence here, namely, that the receipt of the $2,500 by Vander Zalm was "in connection with the duties of his office". Although the Crown did not address this issue directly, it would be fair to say that its argument is that $2,500 of Tan Yu's money was being personally used by Vander Zalm at the same time that he was offering Tan Yu access to government and negotiating to purchase Fantasy Gardens. Thus, this mixing of a personal interest with his public duty would prove this element of the offence.
The use of this $2,500 occurred well after the effective Fantasy Gardens deal completion date of August 4, 1990. What little evidence there is as to when the $2,500 was used by Vander Zalm indicates this was at least after November 1, 1990. Thus, whatever else it may be, any profit or benefit can hardly have been in connection with the duties of his office and connected with the Fantasy Gardens sale. It follows that his state of mind regarding the $2,500 is irrelevant to the charge before me.
TELEPHONE CALL TO HOPPER ON AUGUST 20, 1990/FANTASY GARDENS OFFER TO PETRO-CANADA
Having found that the Fantasy Gardens deal was effectively completed as of August 3-4, the telephone call to Mr. Hopper on August 20 is much less significant unless it is proven that the acquisition of the Petro-Canada site by Fantasy Gardens for Tan Yu was a condition precedent to the sale of Fantasy Gardens as of August 4. In other words, the Fantasy Gardens sale would not complete unless Vander Zalm could deliver the Petro-Canada site to Tan Yu as well. The Crown concedes that there is no written term that makes this a condition precedent. However, there is some circumstantial evidence to support this contention. First, there is some evidence that the Vander Zalms had an option on the Petro-Canada property. Vegt testified that Mrs. Vander Zalm told him there was such an option. As well, there is reference to an option in the covering letter by Vegt that accompanied the sales package sent to prospective purchasers. On all the evidence, however, an equally rational conclusion is that the Vander Zalms had no option. All they had was knowledge of the approximate price Petro-Canada wished to obtain for the site. This conclusion is supported by the evidence of Vegt, Vander Zalm, Horsey and even Mrs. Leung on cross-examination, and certainly Hopper had no knowledge of such an option.
In any event, it is clear that Mr. and Mrs. Vander Zalm knew the approximate price Petro-Canada expected to receive for the site. The offers by Dynamic and Bayonet indicate this. Again, the evidence of Vegt, Horsey, Kendler, Vander Zalm and Mrs. Leung supports this conclusion. It is reasonable to infer that the Vander Zalms acquired this knowledge through Mrs. Vander Zalm's conversations with Hopper to which he testified.
The July 13, 1990 fax from Vander Zalm to Mrs. Leung should not be overlooked. There, Vander Zalm states: "We will immediately after receipt of deposit begin the process of purchasing the corner property". This indicates that he believed and represented that he could acquire the Petro-Canada site and from this it might be inferred that the acquisition of the Petro-Canada property was tied in with the purchase of Fantasy Gardens. This is, however, some distance from proof beyond a reasonable doubt that it was a condition precedent of the Fantasy Gardens sale.
Finally, there is the document dated August 4, 1990 written on Westin Bayshore letterhead indicating a 50/50 split on the commission from the flip of the Petro-Canada property. This document is in Vander Zalm's handwriting. However, on his evidence, he was simply recording one of the possible terms to conclude a deal as suggested by Mrs. Leung during the negotiations on August 3-4. According to him, the figures "50/50" were inserted by Mrs. Leung on the afternoon of August 4----after the deal had been completed. Mrs. Leung, on the other hand, testified that she inserted these words while the negotiations were ongoing. In view of the protracted negotiations on August 3-4, it is fair to conclude that this document reflects one of a number of possibilities that Mrs. Leung and Vander Zalm were considering before completion of those negotiations. Nothing of significance turns on this document.
All of the evidence falls short of a conclusion that the Petro-Canada deal was a condition precedent to the Fantasy Gardens sale as of August 3-4. Even if it were, the Crown must still prove that Vander Zalm was using his position as Premier at this time to facilitate the Petro-Canada sale in order to further his private interests, i.e. the sale of Fantasy Gardens. There is insufficient evidence to come to such a conclusion.
If, as Crown submits, the sale was not complete until at least September 7, 1990, then, of course, the Crown's case is considerably stronger. However, as I have concluded the sale was completed, so far as the principals were concerned, on August 4, there is no purpose in a detailed discussion of the evidence on that point. It is clear that Vander Zalm called Hopper on August 20, although he testified before Mr. Hughes that he could not remember such a telephone conversation.
Aside from the note of August 4, 1990 concerning the 50/50 split referred to earlier, there is no evidence that there was ever any agreement that compensation would be paid on this sale. Indeed, the weight of the evidence is to the contrary. Kendler testified that to his knowledge no commission was ever payable to Fantasy Gardens on the Petro-Canada sale. In Petro-Canada's executive summary of the sale, there was no reference to a commission paid on the sale. As well, there is the letter from Vander Zalm to Mrs. Leung of July 5, 1990, wherein he advises her that Fantasy Gardens was prepared to purchase the Petro-Canada site and turn it over at cost. There is no conclusive evidence that there was any monetary benefit to Vander Zalm as a result of the Petro-Canada transaction.
The Crown suggests that the lack of success of Currell and Andrews in obtaining any details of the Petro-Canada site gives rise to an inference that Vander Zalm used his official position to deliver the site to Tan Yu. The totality of the evidence simply does not support that conclusion. I have no doubt that Vander Zalm's position as Premier resulted in his telephone call, and that of Kendler, to Hopper being treated with greater priority than calls from someone holding a lesser position. I am satisfied, however, that that is all he obtained. Other than that it is clear from the evidence of Hopper that Petro-Canada dealt with the matter in a routine way.
MEETING SEPTEMBER 6, 1990
The major consideration here is whether the Fantasy Gardens sale had been completed by the time of the September 6 meeting between Tan Yu, Couvelier and Emerson. The arranging of that access to government, to be of any significance, must have occurred at the same time that the sale of Fantasy Gardens was being negotiated.
The deal did not close "in escrow" until September 7, 1990, one day after the meeting in the Premier's office. If this was the effective date of completion, one might infer there was an improper purpose in arranging this meeting the day before the deal closed. However, as discussed earlier, I am satisfied that, so far as the principals Vander Zalm and Tan Yu are concerned, the deal was completed on August 3-4.
Thus, the arranging of this meeting, which began with a dictated note from Vander Zalm to his secretary, Iris Gilchrist, on August 15, 1990, could not have been for the improper motive of furthering Vander Zalm's personal interests. In his eyes, Fantasy Gardens had already been sold and I thus conclude that he arranged this meeting to encourage and promote investment in British Columbia. The fact that Mrs. Vander Zalm was present at this meeting, while inappropriate, is not sufficient to connect this meeting with Vander Zalm's private affairs, i.e., the sale of Fantasy Gardens, particularly, of course, in view of the finding that the sale was completed August 4.
LUNCHEON AT GOVERNMENT HOUSE SEPTEMBER 6, 1990
Having concluded that the sale was completed as of August 3-4, very little turns on this event. The reasonable inference and conclusion is that this was another example of salesmanship on the part of Vander Zalm. The Crown suggests it is significant that Vander Zalm admitted that the request for the luncheon came from Mrs. Leung. On the other hand, it might be argued it would be more significant or suspicious if the request came from Vander Zalm himself. In addition, the evidence of Government House staff was that the luncheon was set up in the ordinary way according to normal protocol, and certainly Lieutenant-Governor Lam did not perceive anything unusual in having a delegation like Tan Yu's for lunch at Government House.
EVENING RECEPTION SEPTEMBER 7, 1990
The evidence clearly indicates that this reception, which had various government officials in attendance, was arranged and orchestrated by Mrs. Leung. Vander Zalm was involved only through the location and the fact he was a guest. That involvement is a long way from using his office to further his private interests.
It is clear that Vander Zalm throughout the period during which these transactions occurred failed to disclose his involvement with Tan Yu in the Fantasy Garden sale to members of his staff, the Government House staff, the various politicians and deputies involved in the various transactions I have referred to as well as to Hopper. With respect to the $20,000, no disclosure was made to his chartered accountant and his lawyer, as well as Mr. Hughes.
Although Mr. Hughes found Vander Zalm's conduct constituted conflict of interest, that is not the issue before me. The issue is, of course, whether the totality of his conduct throughout constitutes criminal breach of trust. In other words, can significant non-disclosure, which was clearly the case here, in and of itself, constitute a breach of trust?
The imputed conduct does not need to be corrupt, nor does the accused need to benefit from the act: R. v. Cyr (1985), 44 C.R. (3d) 87 (Que. S.C.); appeal dismissed  9 Q.A.C. 107 (C.A.). In this case, a portion of the headnote of the English translation provided by Crown counsel reads as follows:
The breach of trust offence...implies the use of public office by an official for the furtherance of personal ends....The offence can be committed by an official in many other ways: having to satisfy conflicting public and private interests, remaining silent at the time of approval of something which procures him personal benefit, or misuse of his public office.
Again, in R. v. Arnoldi, supra, Boyd J. stated at pp. 209, 211:
The defendant was tempted to do what he did by the prospect of gain,----he profited by his own dereliction of duty, and to accomplish his purpose it was necessary to conceal the actual transaction. This was misbehaviour in office, which is an indictable offence at common law.
* * *
...no concealed pecuniary self-interest should bias the judgment of the officer, and in which the substantial truth of every transaction should be made to appear.
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The language of Lord Mansfield in Rex v. Bembridge is appropriate to this case: "This is not an omission, it is not a neglect, but a gross and actual deceit, if the defendant knew the truth".
Finally, in R. v. McKitka (1982), 66 C.C.C. (2d) 164 (B.C.C.A.), the court adopted the reasoning in R. v. Campbell (1967), 3 C.C.C. 250; aff'd 2 C.R.N.S. 403 (S.C.C.), at p. 170:
...that the work of a public servant must be a real service in which no concealed pecuniary self-interest should bias the judgment of the officer, and in which the substantial truth of every transaction should be made to appear.
These cases seem to suggest that non-disclosure per se may not be sufficient to find a breach of trust. What is needed is concealment of a pecuniary self-interest. The defence, of course, says the non-disclosure, so far as government officials were concerned, was intentional and to avoid the appearance of pressuring those various officials when they dealt with Tan Yu regarding his other projected investments in British Columbia.
The submission is that taking the evidence as a whole I should conclude that Vander Zalm consistently showed his intention to separate entirely the sale of Fantasy Gardens from further investment in the province by Tan Yu and not for any pecuniary self-interest in connection with his office. I agree with that submission and conclude it has not been proven beyond a reasonable doubt that Vander Zalm was concealing information for the purpose of furthering his own pecuniary self-interest.
It follows then that the concealment alleged does not constitute a criminal breach of trust.
As I said at the outset of this judgment, very few facts were in dispute----my task has been to determine the inferences or conclusions to be drawn from those facts. Despite what has been said to the contrary both in, and regrettably, out of the courtroom, I have not found that task an easy one. There have been many issues to consider. While many of Vander Zalm's imputed activities as revealed by the evidence before me might be considered foolish, ill advised and in apparent or real conflict of interest or breach of ethics, for the reasons I have set out, I am unable to conclude from the totality of the evidence that it has been proven beyond a reasonable doubt that he committed a breach of trust in connection with the duties of his office by using his public office to assist or promote his personal and financial interest in the sale of the property known as Fantasy Gardens.
Mr. Vander Zalm is therefore acquitted.
D.H. Campbell, A.C.J.
Vancouver, British Columbia
June 25, 1992