In R. v. InfoSpec Systems Inc., the Court of Appeal for
British Columbia overturned a lower-court fraud conviction in
relation to the use of devices that were alleged to have been
designed to allow businesses to under-report income and evade
This decision illustrates the dangers faced by companies that
develop, manufacture and sell products that are lawful but may
nevertheless be used in connection with the commission of a
criminal offence. Such companies may be exposed to criminal
liability notwithstanding the fact that no provisions exist
prohibiting the manufacturing, possession and sale of their
product. The danger lies in the ultimate use of the product and the
companies' understanding of why their product is being
purchased and what the intended use of their product is.
InfoSpec is a B.C. company that developed and marketed a
computer program that restaurants and retailers use to keep track
of sales. It also made available a "zapper" that allows
for selected cash transactions to be deleted from the sales records
and that in turn allows businesses to under-report income. InfoSpec
sold zappers to two businesses in Winnipeg, Manitoba, and although
there was no evidence that these particular devices were ever
installed or used, it was found that InfoSpec understood that the
zappers were being purchased to evade taxes.
InfoSpec was charged under section 380(1)(a) of the Criminal
Code (the Code), which makes it an offence to defraud the
public or any person by "deceit, falsehood or other fraudulent
means." At issue in this case was the actus reus
of fraud within the third head of the offence, namely other
fraudulent means. The court remarked that the existence of other
fraudulent means is determined by what "reasonable people
would consider as dishonest."
Justice Frankel, writing for the court, found it noteworthy that
the making, possession or sale of a zapper is not prohibited by
law. This is in contrast to a number of other devices, including
those used to produce counterfeit money and to falsify credit
cards, the manufacture, possession and sale of which is prohibited
under the Code. As a result of the lawful nature of the sale of a
zapper, Justice Frankel was unable to conclude that people would
consider InfoSpec to have acted dishonestly and left it open to
Parliament to enact provisions prohibiting such devices.
InfoSpec's fraud conviction was set aside and an acquittal
entered. However, Justice Frankel remarked that had it been found
that a zapper had been used by either of the Winnipeg businesses
for tax evasion, InfoSpec would be a party to fraud as a result of
aiding its customer in committing that offence. In that situation,
the dishonest act is not the sale of the zapper but rather its
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