State v Nae [1996] PGNC 34; N1474 (18 September 1996)

Unreported National Court Decisions

N1474

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

CR 1217 OF 1995
THE STATE
V
BYGONNES TUSE NAE

Goroka

Sawong J
10 September 1996
18 September 1996

CRIMINAL LAW - Sentence - Plea of Guilty - 19 counts of misappropriation - Misappropriation - Total Amount misappropriated K103,587.71 - Restitution Orders - Considered not appropriate - Sentence - Custodial sentence appropriate.

The accused a 32 year old father of 3 children with ages ranging from 2 - 7 years pleaded guilty to 19 counts of dishonestly applying to his own use the total sum of K103,587.71, the property of several individuals. The accused started a scheme known as the Eastern Highlands Rural Housing Scheme Incorporated (ENRHS INC) and he invited members of the public to become members and pay as membership fees amounts ranging from K50.00 to K200.00. Any of those members requiring a house to be built were then required to pay a further sum of K1500.00 as a deposit. Any person who was not a member was required to pay a deposit of K3500.00 for basic houses to be built. The accused misappropriated the monies over a period of 18 months.

Held

(1) The offences are serious and prevalent offences that an immediate punitive and deterrent custodial sentences was appropriate.

(2) The sentence of 4 years imprisonment should be imposed, and that no part of the sentence be suspended.

(3) A restitution order should only be made where there is no doubt, on the evidence to which the sentence may have regard for the purpose, of the rights of the respective parties.

(4) Proper evidence must be called to establish ownership and status of properties, before the Court should be invited to make restitution orders.

The accused pleaded guilty to 19 counts of misappropriation and the following reasons were delivered on sentence.

Cases Cited

Wellington Belewa v The State [1988 -89] PNGLR 496

Counsel

Mrs C Ashton-Lewis for the State

Mr D Umba for the Accused

DECISION ON SENTENCE

18 September 1996

SAWONG J: You have pleaded guilty to 19 counts that between 19 January 1993 and 2 August 1994 you dishonestly applied to your own use the total sum K103,587.71 the property of various individuals and the Eastern Highlands Rural Housing Scheme Inc. The charges were laid pursuant S. 383 A (1) (a), (2) (d), of the Criminal Code Act Chapter No 262.

These are serious offences and you could be jailed for up to 10 years imprisonment.

The facts of the case are set out in the various witnesses statements, your records of interviews with the police and other documentary evidence which are all contained in the court depositions. The witnesses statements and the other evidence reveal the following:

In early 1993 you started a scheme called the Eastern Highlands Rural Housing Scheme (hearing after referred to as ‘EHRHS’). n or about the 3rd September 1993 you incorporated that organisation which became known as the Eastern Highlands Rural Housing Scheme Incorporated (hearin after called ‘EHRHS Inc’). You were the Managing Director of that organisation. The evidence shows that you even proceeded to and publicised the scheme as providing low cost permanent housing for Papua New Guineans. You invited members of the public to become members of the group, and subsequently you set up an office and employed staff. The basis of the scheme was that interested members of the public who were interested in participating the scheme, should pay a membership fee ranging from K50.00 to K200.00 to become members or member of that organisation. Any of those members requiring a house to be built were then required to pay a further sum of between K1500.00 as a deposit towards the full cost of a house.. Any non member who wishes to have his or her house built was to pay the sum of K3,500.00 as deposit for the house. The deposits were for the basic house to be built. Included in the scheme was that there were several plans for several different type of houses whose costs ranged from K37,00.00 to K45,000.00. In some cases furniture packages were available and were to be included. Once a member or a non member paid the required deposit, you undertook to have a house of their own choice built at an area chosen by that particular person. The repayment rate was K10.00 per month for members and K20.00 per months for non members. The scheme you had put into place meant that without interest it will take 21 years to pay off a cost of the basic house but with interest at 10% it would never have been possible for anyone to repay the cost of the house at the rate of K10.00 or K20.00 per month.

As a consequence of this scheme being introduced and put into place by you, a large number of people from all walks of life in the Eastern Highlands Province participated in the scheme. Between 19 of January 1993 and the 2 August 1994 these people deposited certain amounts into the scheme to become members of ENRHS Inc. Furthermore, the evidence shows that once they become ‘members’, they were then enticed to pay further moneys as deposits towards the cost of a house.

The evidence shows that subsequently you built a house at Seigu with a view to encourage further people to take part in the scheme. Apart from that house no other houses were built for those people who have deposited their monies. During 1994 some of the people who had deposited with you became suspicious as no houses had been built. When they made enquires with your office staff your office informed them that either you were not available or that there were no funds to repay their membership fees or their deposits. Those facts give rise to counts 1 to 6 inclusive, 8 & 9 & 11 to19 inclusive.

During the same period, and using same scheme you convinced one Steven Upayaka to withdraw K10,000.00 from his savings account (pass book) and deposited in and interest bearing deposits (IBD) with Credit Corporation in Port Moresby. You told Steven Upayaka that you would help him buy a dump truck if deposited those monies and you would give him a contract work for the truck to transport timber for the building of the houses that you said you were going to construct. The evidence shows that after the money was withdrawn you and Steven Upayaka went to Port Moresby, where your nephew headed the IBD Section at Credit Corporation. The evidence shows that the money was then deposited in an Interest Bearing Deposit and on the 13 July 1994 you went and withdrew the money yourself with interest totalling K10,077.90. You then dishonestly used that money for your own purposes. Those facts form the basis for count number 7.

In relation to count number 10 the evidence shows that you convinced one Newton Seine to give you his National Provident Fund Housing advance cheque totalling K1805.95. After he gave you the cheque, you dishonestly used it for your own purposes. This also occurred between 19 January 1993 and 2 August 1994.

The basis for count 11, is that the accused misappropriated the sum of K56,575.00 being membership fees, members of the public had paid to become members of EHRS Inc. The evidence shows that between 19 January 1993 and 2 August 1994 the accused misappropriated K56,575.00.

The evidence shows that the total amount misappropriated by the accused on the relevant dates was K103,587.71.

After hearing yourself when I administered the allocatus to you and listening to what your lawyer said on your behalf, I adjourned sentencing you to consider those submissions.

This case has caused me considerable concern because of the large amount of money that was misappropriated and that the crimes were committed over a long period of time.

I note what you have said in your allocatus. Your have expressed remorse for your conduct and you have told me that this was your first time to appear before the National Court or for that matter any other court.

I accept in your favour your counsel’s submissions that you have pleaded guilty to all 19 counts. Your guilty pleas is consistent with your admissions you made to the police during the investigations. In those circumstances I consider that your plea of guilty on all 19 counts is a genuine plea. I further accept in your favour that you are a first offender. For the past 32 years you have been a man of good character. But your prior good character looses its significance because of the seriousness of the offence or offences for which you have been convicted and which you committed.

I take note of your own person antecedents and your family history. You were educated up to grade 10 and that your completed at the Kainantu High School in 1985. In 1986 you attended the Timber Training College in Lae. After your training in 1986 you came back and lived in the village and were involved in small projects in the Timber Industry up until you started the Eastern Highlands the Rural Housing Scheme. You have pleaded guilty to and have been convicted of serious and prevalent offence. The monies you misappropriate and benefited from were monies received by you for a specific purpose.

Your lawyer has submitted that this court should use the sentencing guidelines in Wellington Belawa v The State [1988-89] PNGLR 496. Although I accept that, I am of the view that the guidelines are of persuasive value. The sentencing discretion of this court has not been removed by the guidelines set out in that case. The crime of misappropriation is a prevalent offence.

To put all the matters and other factors in their proper perspective, I would discussed the factors in the order followed by Bredneyer J and Barnett J in Wellington Belawa Case. The principal in Belawa’s case is that the bigger the amount that is misappropriated the higher the sentence ought to be.

1. THE AMOUNT TAKEN

The amounts taken and set out in counts 1 to 6 inclusive, the amounts set out in counts in 8 to 10 inclusive, and the amounts misappropriated as contained in counts 12 to 19 inclusive range from K1200.00 - K4555.37.

In count 7 you used deceitful and fraudulent means to obtained the money and then misappropriated it for your own purposes. The amount you misappropriated is K10,077.99.

In count 11 you misappropriated the sum of K56,575.00. These were moneys paid by various members of the public who paid moneys to become members of EHRHS Inc.

The total amount misappropriated by you is K103,587.71. It is in my view quite a substantial amount.

2. THE DEGREE OF TRUST

The principal here is that if the offender holds a higher position of trust then the grater the culability will be attached. In my view your counsel has quite properly conceded that there was a degree of trust placed upon you when you created the organisation and went about enticing members of the public to invest their monies with you. The victims I have no doubt trusted you and deposited their monies only to be misappropriated by you. Most of the victim were ordinary Papua New Guineans who were self employed or who were subsistence farmers and they placed alot of trust in your ability to fulfilled what you said you would do. Unfortunately for them, you betrayed the trust to their detriment and they have lost their monies.

3. THE PERIOD OVER WHICH THE OFFENCE WAS COMMITTED

The offences were committed over a period of 18 months. This was not a case of a sudden impulse but rather it appears to me, was a case that you had thought out and had it executed. You devised the scheme and put into effect the scheme over that relevant period in time. I consider that your actions were not a spur of the moment criminal act. Rather I consider this was a case where a series of dishonest acts were committed over a period of 18 months.

4. THE USE TO WHICH THE MONEY WAS PUT TO

There is evidence that some of the money was no doubt used by you personally. There is also evidence to suggest that you may have used part of the money to construct the demonstration house at Seigu. There is also evidence that he used the money for the purposes of ordering or importing bamboo flooring from China and paying for freight and other associated costs there with. I have no evidence to suggest you may have used monies for other purposes such as gambling or anti social behaviour or activities.

5. THE EFFECT ON THE VICTIMS

I consider that the persons who deposited the monies with you and the organisation quite clearly suffered financial loss. The evidence shows that some of the victims were and are ordinary Papua New Guineans who have lost their savings. In one case quite a large sum of money was lost.

Ordinary Papua New Guineans who had participated in the scheme had over long time of periods save their monies only to be deposited with you and which monies were misappropriated by you. I am quite certain that each of them has suffered financially. In some of their statements they have expressed their fustrations at having being misled and having lost their money.

6. THE EFFECT ON THE OFFENDER HIMSELF

The effect of these on you is quite obvious. And that is that firstly although you have a prior good character, the convictions that I have recorded against you will be with you for the rest of your life. There is no evidence to suggest that as a result of these convictions it may be difficult for you to obtain employment in the future. However I accept your lawyer’s submission that your actions have and will have some effects on your family as they would naturally suffer the humiliation and shame that is associated with a convicted person and having to fend for themselves whislt you are in jail.

7. RESTITUTION

In this case no actual restitution nor any attempted restitution has been made to any of the victims. However your counsel has submitted that if the court orders you to make resitution you would be able to disposed of some of your assets in order to repay those people from whom you have stolen the monies and misappropriated. These assets are said include a walkabout sawmill together with sawmill accessaries located at Usana Village, Salamaua, Morobe Province valued at approximately K22,000.00, a gold dredger valued at K3,500.00 also located at Usana Village, Morobe Province, a H63 house valued at K30,000.00 located Piswara Settlement, Goroka and building materials valued at K15,000.00 in the custody of the police at Goroka.

There is no evidence before me as to what is the state of the walkabout sawmil, the sawmill accessories, and the gold dredger. For instance I do not know whether this can be sold and what the current value is, apart from the bold assertion of the estimated value and whether these are in fact available for sale.

I note that in Belawa's case the suggested tariff was between 3-5 years imprisonment for an offender who misappropriates an amount between K40,000.00 and K150,000.00. That was decided in December 1989. More than six (6) years have gone by and it is my experience that the crime of misappropriation has become prevalent and it is invariable committed by mature man holding positions of trust and who are first offenders.

It has been urge upon the court by counsel for the accused that the court imposed a partial suspended sentence. Counsel for the state has supported that submission principly on the basis that the victims would preferred to be reimburse. That can only happen if the sentence is partially suspended to enable the prisoner to dispose of his assets to repay the victims.

I have carefully considered whether any part of the sentence ought to be suspended. There has been submissions by your counsel that you have assets worth about K80,500.00 which are located both in the Morobe Province and in the Eastern Highlands Province. He submitted that part of the sentence should be suspended to enable you to make arrangements to dispose off your assets and applied the proceeds of the sale of the assets to repay those individuals from whom you had misappropriate their funds.

It has not been cited to me any statutory provisions or authorities upon which this court can properly exercise it's discretionary powers on sentence especially where the offender seeks part of his sentence to be suspended to enable him make restitution or repay the monies that have been misappropriated.

In R v Ferguson [1970] 54 Cr App R 410 the question of restitution was discussed. The facts of that case were briefly as follows. The appellant was convicted of participating in a Armed Robbery in which a security van was attacked and about 40,000 pounds was stolen. He was sentenced to 14 years imprisonment and a restitution order was made against him, requiring the payment to the owners of the security van of 2,000.00 pounds found in a safe deposit box in his name at the bank. The box have been taken into the possession of the police several days after the appellants arrest but it was conceded that it was not the proceedings of the robbery, Salmon LJ at said:

“The principles which should be followed in considering wheth er or not the discretion to make the order of restitution should be exercised are set out Stamp v United Dominions Trust Ltd. In [1967] 1QB 418. It is true that that case was decided under the Larceny Act 1916 which gave similar powers to make orders for restitution to those contained in the Theft Act, although no doubt the Theft Act extend those power to some extent.

The same principles, however, apply as to how the discretion should be exercised. If there is any doubt at all whether the money or goods in question belong to a third party, a criminal court is not the correct forum in which that issue should be decided. It is only in the plainest cases, when there can be no doubt that the money belonged to the convicted man, that the court would be justified in exercising its discretion in making an order for restitution. To do so in any case of doubt might cause the gravest in justice to a third party because the third party to whom the money may belong has no locus standi to appear before a criminal court. Nor is there any appropriate machinery available in the criminal courts for deciding the issue as to who is the true owner. Discovery is sometimes very important part of the necessary machinery for resolving issues of that sort, and iscovery for this purpose can be obtained only in the civil courts. A civil court is the correct forum for deciding matters of this kind.” (Emphasis added).

In R v Calcutt and Varty [1985] 7 Cr App R (S) 385, the second appellant in (V) was convicted after a trial on 4 counts of theft. The first appellant (C) pleaded guilty to 1 count of handling. V had been employed as a cashier and consol operator at a petrol station, and over a period of time stole a substantial sum of money by failing to ring certain purchases on the till. The first count of the indictment charged V with stealing 26,842 pounds over a period of 12 months. V & C were living together, and V gave C 100 pounds weekly as house keeping money. Many of the items where they lived had been bought with the money which had been stolen. When the house was searched, a total of something over 22,000 pounds was found in various containers and a further 6,875 pounds was held in various banks and building society accounts in the joint names of the appellants. V was sentenced to 2 years immediate imprisonment; and C to 12 months imprisonment, suspended. A restitution order for 6,342 pounds and 58 items of property was made against each applicant. Woolf J said:

“With regard to make restitution orders, this court has repeatedly emphasized that a restitution order should only be made where it is clear that the money or goods in question fall within the statutory provisions to which we have just referred. It is important that if there is doubt the court should not make an order since injustice can be caused, particularly to third parties who have no rights to intervene in the criminal proceedings. Further more, the criminal courts are not the appropriate forum in which to satisfactorily ventilate complex issues as to the ownership of such monies or goods. In cases of doubt it is better to live the victim to pasue his civil remedies or, alternatively, to apply to the magistrates courts under the Police (Property) Act 1897. On the other hand, in appropriate cases where the evidence is clear, it is important that the court should make the proper use of the power to order restitution since this can frequently avoid unnecessary expense and delay in the victim receiving the return of his property.” (Emphasis added).

In my judgment the principles set out in the above cases are quite appropriate and applicable in this particular case. I considered the submissions by the counsel for the accused from the bar table of various assets alleged to be owned by the prisoner are not evidence nor proof of the fact that those assets are infact owned by the prisoner. Further more Mr Umba informed the court that, for instance, the walkabout sawmill, the sawmill accessories, and gold dredger equipment are with a Mr Mua at Usana Village Salamua in the Morobe Province. I am not convinced or satisfied that those properties are owned by the accused alone or infact owned by him. A third partie's name has been mentioned and he is not a party to the proceedings before me. I hold the same view inrelation to the building materials and the house at Piswara Settlement.

There is no evidence before me as to the state of conditions of the assets. There is no evidence before me that you infact own those assets. There is also no evidence before me that for instance the walkabout sawmill, the sawmill accessories, and the gold dredger and the building materials are infact in existence. The sumbissions from counsel from the bar table are not and cannot be regarded as evidence.

In those circumstances I am not prepared to suspend any part of the sentence nor order restitution to be made to the victims. If there was a clear evidence of the ownership of the properties, I will have no hesitation in making an order for restitution to avoid unnecessary expense and delay in the victims bringing civil proceedings to recover the monies which had been misappropriated by the accused.

I consider that the 19 counts can be categorised into three because of their nature and characteristics. The first category is counts 1 to 6 inclusive, 8 to 10 inclusive and 12 to 19 inclusive. These relate to deposit paid by ‘members’ and non members of the EHRHS Inc and its predecessor the EHRHS, as deposits towards the overall cost of a house.

The second category is the offence contained in count 7. This relates to the misappropriation of K10077.99 being moneys belonging to Seteven Upayake.

The last category is count 11. This count relates to the amount of ‘membership fees’ paid by various individuals to become members of EHRHS and it's successor the EHRHS Inc.

I consider that because of the nature and characteristics of each category of offences, a separate sentence ought to be imposed on each category.

For the reasons I have given:

(1) In respect of the counts 1-6 inclusive, 8 to 10 inclusive and 12 to 19 inclusive, I sentence you to 2 years imprisonment in hard labour.

(2) In relation to count 7, I sentence you to 2 years imprisonment in hard labour. This is to be served concurrently with the sentence imposed in paragraph (1) above.

(3) In relation to count 11, I sentence you to 4 years imprisonment with hard labour.

I order that the sentences set out in paragraphs (1) and (2) above are to be served concurrently with the sentence in paragraph 3.

I consider that the offences arose out of the same or closely related facts. Consequently I order that those sentences be made concurrent to the sentence of 4 years.

The total effective sentence is 4 years imprisonment in Hard Labour. However I deduct the period of 21 months and 17 days leaving a balance of 2 years two months and thirteen days imprisonment.

Lawyer for the State: Public Prosecutor

Lawyer for the Accused: Acanufa & Associates