Gorea, The State v [1996] PGNC 120; [1996] PNGLR 141 (30 April 1996)

PNG Law Reports 1996

[1996] PNGLR 141 - The State v Henry Gorea

[1996] PNGLR 141

N1450

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

THE STATE

V

HENRY GOREA

Waigani

Passingan AJ

18-19 April 1996

22 April 1996

24 April 1996

29-30 April 1996

CRIMINAL LAW - Criminal Code - Misappropriation s 383A - Defence of honest claim of right s 23(2) - Rejected.

Facts

The accused was employed by a firm of accountants and his duties were to provide consultancy services to the clients of the firm. The accused having been assigned to provide consultancy services for a landowner company a request was made to the company by the firm for payment of fees. A cheque in part payment of those fees was received by the accused, drawn in his name. He deposited it in his wife’s bank account. A subsequent cheque payable to cash was given to the accused who paid that cheque also into his wife’s account. No payment was ever received by the accounting firm. In his defence the accused claimed that there was no evidence to show that the accounting firm had a claim of right to the two cheques and raised the defence of a honest claim of right under s 23(2) of the Criminal Code Act.

Held

On the evidence the accused had no right to undertake private consultancies whilst employed by the accounting firm and the evidence taken as a whole indicated that the accused did not have an honest belief that he was entitled to acquire and use the two cheques.

Cases Cited

Papua New Guinea cases cited

Regina v Malagu [1974] PNGLR 188.

Tiden v Tokavanamur - Topaparik [1967-1968] PNGLR 231.

Belawa v The State [1988-89] PNGLR 496.

Other cases cited

R. v Bernhard (1938) 2 KB 270.

R. v Pollard [1962] QWN 13.

Counsel

L Maru, for the State.

M Miva, for the accused.

30 April 1996

PASSINGAN AJ: The accused was charged with one count of misappropriation pursuant to s 383A of the Criminal Code.

The State case is that between January, 1993 and January, 1994 the accused was employed by Kolta and Associates. Kolta and Associates is a registered Accounting Firm which has various divisions. The accused was employed in its Consultancy Division as a manager or supervisor. His duties were to provide consultancy services to the Firm’s clients. A landowner company, Milupol Development Corporation engaged the services of Kolta and Associates. The accused was assigned to provide the services. Two invoices or memorandum of professional fees were forwarded to the Milupol Development Corporation for payment. Payments were made.

The first payment of K10,000.00 was made by a Papua New Guinea Banking Corporation Cheque No. 007726 dated 26 October, 1993. This cheque was made payable to the accused personally “Henry Gorea”. The accused endorsed the cheque and deposited it into his wife’s account at the Westpac Bank (PNG) Limited Branch at Waigani. The final payment of K10,000.00 was made by a “pay cash” Cheque No.007746 dated the 13 of January, 1994. Again the accused deposited the cheque into his wife’s account at the same bank.

The State evidence consisted of the sworn evidence of Patrick Kolta the owner of the firm of Kolta and Associates. His evidence was that the firm is an accounting firm, as well as involving in auditing, management, consultancy and so forth. The various divisions are managed by a Manager or a Supervisor. The accused was recruited from Lae towards the end of September, 1993. He was employed as a consultant in the Consultancy Division of the firm. His term and conditions of employment included a yearly salary of K14,000.00 to K15,000.00, accommodation and a company vehicle.

Kolta and Associates was engaged by a landowner company namely, Milupol Development Corporation to undertake consultancy work on its behalf. On Mr Kolta’s instructions the accused provided consultancy services as requested. Two Invoices or Memorandum of Professional Fees were issued. The first was in October, 1993 for K10,000.00 and the other in January, 1994 for K10,000.00. Payments were made by Milupol Development Corporation but never received by Kolta and Associates. Investigations by office management revealed that the two invoices have been paid and received by the accused.

The following witnesse’s statements were tendered by consent: Francis Miso’s statement as the Corroborating Policeman to the Record of Interview (Exhibit “A”), Steven Yamura’s statement as the Arresting Officer (Exhibit “B”), Eddie Pao’s statement as the Accountant of the Westpac Bank (PNG) Limited (Exhibit “C”) and Robinson Nurvue the Accountant of the Papua New Guinea Banking Corporation Branch at Kimbe (Exhibit “D”).

Finally in the State case the following documents were tendered by consent:

Exhibits:

N2>“F”-    PNGBC Bank Cheque No. 007726 dated 26th October, 1993 for K10,000.00.

N2>“G”-    PNGBC Bank Cheque No. 007746 dated 13th January, 1994 for K10,000.00.

N2>“H”-    Westpac Bank (PNG) Limited Transaction Record of Joyce Pele Gorea’s account.

N2>‘I”-     Westpac Bank (PNG) Limited Transaction Record of Joyce Maira.

N2>“J”-     Copy of letter of Engagement dated 18 October, 1993 addressed to one Joe Kuri, General Manager of Milupol Development Corporation.

N2>“K”-    Copy of Memorandum of Professional Fees dated 13 January, 1994 for K10,000.00 on Kolta & Associates Letterhead and addressed to Joe Kuri.

N2>“L”-    Copy of Fax on proposed settlement by accused of K20,000.00 through his lawyers.

The defence case on the other hand consisted of the sworn evidence of the accused and another witness. The accused was in Lae operating his own business under the name “National Business Consultant Pty Ltd”. Then he made a proposal to Kolta and Associates. The proposal was accepted by Mr Kolta. The accused moved to Port Moresby where he was allocated an office (Conference Room), accommodation at Gerehu and a second-hand vehicle which he kept for the purpose of transporting Kolta and Associates employees.

On the 7 October, 1993 he was approached by his people from West New Britain (East Arawe Timber Resources). They attended at Kolta and Associates’s office to discuss proposals to obtain shares from Odin Mining and Investment in Malaysia. Mr Kolta agreed with the proposal and authorised the accused to accompany them to Malaysia. The accused told the Court that Milupol Development Corporation was never a client to Kolta and Associates. That he was dealing with East Arawe Timber Resources.

He left Papua New Guinea for Malaysia with six landowners to assist them with the negotiations. He met one Joe Kuri, the General Manager of Milupol Development Corporation. Mr Kuri asked the accused for advise and was given verbal advise. On their way back to Papua New Guinea they met again at Singapore. Mr Kuri then told the accused that he was pleased with the advise and that he would give the accused a commission. On their return to Papua New Guinea Mr Kuri asked the accused to write him a letter to confirm the discussions. The accused did (Exhibit “J”).

On the 26 October, 1993 Mr Kuri rang the accused up telling him that his cheque was available. After dinner at a local hotel Mr Kuri gave him the cheque dated 26 October, 1993. The cheque was deposited the next day into the family account under his wife’s name.

The accused’s evidence in relation to the second cheque for K10,000.00 was that Mr Kuri visited the accused at his house and requested advise. The accused advised him on the procedures. In the course of their discussions the accused’s wife told Mr Kuri that they needed a vehicle. Mr Kuri agreed and gave them a “pay cash” cheque for K10,000.00. They bought a vehicle for K9,500.00. The vehicle was registered under the accused’s wife’s name. She only looked after the vehicle for the Milupol people.

In relation to payment of fees by East Arawe Timber Resources, the accused said K11,500.00 was paid to the accused and handed over to Mr Kolta in the presence of Mr Deb Kumara. Mr Patrick Kolta was not cross-examined on this in his evidence.

The issue, to be decided is whether or not the property, namely the K20,000.00 belonged to Kolta and Associates. Defence Counsel submitted that there is no evidence to show that Kolta and Associates has a claim of right to the cheques in question. That the accused has a claim to the two cheques. This is a defence under s.23(2) of the Criminal Code. Section 23(2) provides:

“A person is not criminally responsible, as for an offence relating to property, for an act done or omitted to be done by him with respect to any property in the exercise of an honest claim of right and without intention the defraud”.

I have to consider whether the accused had established a bona fide claim of right within the meaning of s 23(2) of the Criminal Code.

What is the evidence on this point? The accused does not deny his employment as a consultant with Kolta and Associates. But he denied that within the relevant period Milupol Development Corporation was a client of Kolta and Associates. His trip to Malaysia was organised by East Arawe Timber Resources. He met the Managing Director of Milupol Development Corporation (Mr Joe Kuri) accidentally in Malaysia and gave him verbal advise. He was later given a cheque for K10,000.00 as his commission.

In my view the full contents of Exhibit “J” is relevant:

EXHIBIT “J”

“Date: 18th October, 1993.

Mr Joe Kuri,

General Manager,

Milupol Development Corporation

P O Box 593

KIMBE

West New Britain Province.

Dear Sir,

ENGAGEMENT

Further to our discussion, I wish to accept my appointment as your Consultant in the current negotiation exercise with Land and General regarding the acquisition of share capital in Odim Mining and Investment Ltd.

As you know my involvement in the negotiation so far has resulted in Land & General agreeing to offer your company a substantial number of shares in Odin Mining & Investment. Much work needs to be done before the deal can be finalised. However, with my involvement I will ensure that your company gets the very best of the deal.

As agreed during our discussion in Singapore your company will compensate me for my time and resources in securing this deal with Land & General. My once off fee for this move is K10,000.00. Your prompt payment of this amount will be greatly appreciated.

Yours faithfully,

KOLTA & ASSOCIATES

HENRY R. GOREA

Management Consultant”.

In relation to the second cheque for K10,000.00 dated 13 January, 1994 the contents of Exhibit “K” is relevant in my view.

EXHIBIT “K”

“KOLTA & ASSOCIATES

Registered Public Accountant

Date: 13 January, 1994

Mr Joe Kuri

General Manager

Milupol Development Corporation

P O Box 593

KIMBE

West New Britain Province.

MEMORANDUM OF PROFESSIONAL FEES

Our fees for providing professional services rendered in:-

N2>*        Making personal representation to the Managing Director of the Forest Authority to seek clarification on the new forestry guidelines;

N2>*        Making personal representation to the PNGBC Management regarding the Company’s proposal to establish an Agency at Animete Camp site;

N2>*        Continuation of negotiation with Cakara Alam and Land and General regarding the Odin Mining and Investment deal.

K10,000.00

With due care and attention.

P.........

H.G. GOREA   

Managing Consultant”.

I now turn to the defence raised under s.23(2) of the Criminal Code in light of decided cases on the point.

In Tiden v Tokavanamur-Topaparik (1967-1968) PNGLR 231, Frost, J. (as he then was) re-affirmed what the law is when a defence of a claim or right (then under s 22, Qld adopted) is raised. At page 236 of the report His Honour said:

“I am content to accept the law as laid down in two Queensland decisions. That in R. v Bernhard [1938] 2 KB at p 270 the Count of Criminal Appeal said that a person has such a claim or right “if he is honestly asserting what he believes to be a lawful claim, even though it may be unfounded in law or in fact”.

And that in R. v Pollard [1962] QWN 13 Gibbs J., with whom the other members of the Full Court of Queensland agreed, stated “that it is well settled that a claim of right sufficient to relieve a person of criminal responsibility need only be honest and need not be reasonable”.

The above decisions were later followed by His Honour Frost, J. (as he the was) in the case of Regina v Magalu [1974] PNGLR 188.

“The State must establish beyond reasonable doubt that the accused acted in the exercise of an honest claim of right and without intention to defraud ... An accused person acts in the exercise of an honest claim of right, if he honestly believes himself to be entitled to do what he is doing:” Tiden v Tokavanamur-Topaparik (supra).

On the evidence before me I make the following findings:

N2>(a)      that the accused was employed by Kolta and Associates in its consultancy division during the relevant period;

N2>(b)      that the accused was on a yearly salary of K14,000.00 to K15,000.00, was given accommodation, an office, a company vehicle and other normal employment entitlements;

N2>(c)      that the accused was employed by Kolta and Associates for all business purposes of the Company;

N2>(d)      the accused had no right to operate side consultancy businesses whilst in the employ of Kolta and Associates;

N2>(e)      that Milupol Development Corporation was a client of Kolta and Associates and had engaged the firm to undertake consultancy services on its behalf;

N2>(f)      the trip to Malaysia was authorised by Kolta and Associates in the business of Milupol Development Corporation and the accused went on the authority of the Firm;

N2>(g)      the accused was paid his salary and travelling allowance to undertake business commitments on behalf of Kolta and Associates; and

N2>(h)      the two cheques Nos. 007726 and 007746 were paid by Milupol Development Corporation in respect of services provided to it by Kolta and Associates through its employee, the accused.

Having seen and heard the accused in the witness box, I am unable to accept his evidence as to his claim that he was entitled outside of his employment to the K20,000.00.

On all of the evidence before me I am satisfied beyond reasonable doubt that:

N2>(a)      the accused did not believe he was entitled to the two (2) cheques and that he dishonestly acquired and used them for his own purposes; and

N2>(b)      the accused did not act in the exercise of an honest claim of right in receiving the two cheques from Milupol Development Corporation and depositing them into his wife’s savings account.

Accordingly, I convict the accused of the offence charged.

Verdict: Guilty as charged.

On sentence I take into account that this is your first offence, that you have a good employment record of some 17 years and all that you said in your allocutus about the various senior positions you held and your community involvements as well. Your counsel submitted that the Court take into account the circumstances of the case as to how the money came into your possession. That this was not an organised scheme to defraud Kolta and Associates. There is no dispute that you have repaid the sum of K3,000.00 and the balance of K17,000.00 is outstanding. I note your willingness to refund the balance in full if given the opportunity.

In considering what would be an appropriate sentence I am guided by the consideration in the case of Belawa v The State [1988-1989] PNGLR 496. The facts of your case attract a term of imprisonment of two to three years.

Having considered the various aspects of your case and the necessary adjustments that need to be made I consider a term of imprisonment appropriate. The sentence of the Court therefore, is 18 months imprisonment in hard labour.

ORDERS

I order that your sentence be suspended in full on the following conditions:

N2>(a)      that by virtue of s 19(1)(b) of the Criminal Code, that you pay a fine of K800.00 within seven days (by 7th May, 1996);

N2>(b)      that you repay the sum of K17,000.00 to Kolta and Associate within eight months (by 7th December, 1996);

and

N2>(c)      that your bail be refunded.

Lawyer for the State: Public Prosecutor.

Lawyer for the accused: Moses Miva Lawyers.