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 - Misappropriat Total Amou 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 startecheme knme 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 rs requiring ring a house to be built were then required to pay a further sum of K1500.00 as a deposit. Any person who wasa memas was required to pay a deposit of K3500.00 for basic houses to be built. The The accused miopriateriated the monies ovperiod of 18 months.

Held

(1) ; The offencffeaces are sere serious and prevalent offences an immediate punitive and deterrent custodial sentences waes was appropriate.

(2) Tne see encrsieanmhoold beld be impe imposed,osed, and and that no part of the sentence be suspended.

(3) ҈ A restirestitution ordoulm be maere tis not, on the evidence ence to whto which tich the sehe sentencntence may have regard for the purpose, of the rights of the respective pa.

4)҈ Proper eve must must be cabe cabe 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 guil 19 c 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 individand the Eastern Highlands Rural Housing Scheme Inc. T60; The ch were laid purs 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.

Tcts of the case are set outt 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 8216;EHRHS’). n or about rd September 19er 1993 1993 you incorporated that organisation which became known as the Eastern Highlands Rural Housing Scheme Incorporated (hearin after called ‘EHRHS Inc’). You the Managing Director ctor of that organisation. The evidence that you eveu even proceeded to and publicised the scheme as providing low cost permanent ng for Papua New Guineans. You invitmbers of thef thef the public to become members of the group, and subsequently you set up an office and employed staff. The bas the scheme was thas 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 ofe members requiring ring a house to be built were then required to pay a further sum of between K1500.00 as a deposit towards thl cost of a house.. Any non memho wishes to hato have his or her house built was to p to pay the sum of K3,500.00 as deposit for the house. The deposits were he basicbasic 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 ture packageckages were avae and were to be included. Once a meor a non memn memn member paid the required deposit, you undertook to have a house of theirchoice built at an area chosen by that particular person.&#on. The rent rate was K10.00 p.00 per month for members and K20.00 per months for non members. The schem had put into plao place meant that without interest it will take 21 years to pay off a costhe basic house but with inth 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 Pro participatedpated 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 evi showt once once once they become ‘members’, they were then enticed to pay furt further moneys as deposits towards the co a house.

The evidence shows that subsequently you built a house at Seigu with a viea view to encourage further people to take part in the scheme. Apart that house no other ther houses were built for those people who have deposited their monies. D 1994 some of the people ople who had deposited with you became suspicious as no houses had been built. When they made enq with ofur office staff your office informed them that either you were not available able or that there were no funds to repay membership fees or their deposits. facts give rise to countsounts 1 to 6 inclusive,sive, 8 & 9 & 11 to19 inclusive.During the same period, and using same scheme you convincevinced 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 Upayaat yoat you would help him buy a dump truck if deposited those monies and you would give him a contract work for the truck to trrt timber for the building of the houses that you said you were going to construct. T60; The eve shows that afat after the money was withdrawn you and Steven Upayaka went to Port Moresby, where your nephew headed the IBD Section at Credit Corporation. Theence shows that the money was then deposited in an Interesterest Bearing Deposit and on the 13 July 1994 you went and withdrew the money yourself with interest totalling K10,077.90. You then nestly used that that money for your own purposes. Those facts the basis for for count number 7.

In relation to count number 10 the evidence shows that you convinced one NeSeineive ys NatioNational Provident Fund Housing advance cheque totalling K1805.95. A60; After fter he gau theu the cheque, you dishonestly used it for your own purposes. This also occurred between 19 January 1993 and 2 August 1994.

The basis for countis that the accused misappropriated the sum of K56,575.00 b.00 being membership fees, members of the public had paid to become memberEHRS Inc. The evidencidence shoat beat 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 expresseorse fore 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 circumstaI considonsider that your plea of guilty on all 19 counts is a genuine plea. I furtheept in youour that that yout you are a first offender. For the past 32 yeou have have been a man of good character. But your pgood charaloosesooses its significance because of the seriousness of the offence or offencefences for which you have been convicted aich ymmitted.

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I take note of your own person antecedents and your family history.&#1y. Yre educated up to grade 1ade 10 and that your completed at the Kainantu High School in 1985. In you attended the Timberimber Training College in Lae.&#160er your training in 1986 you came back and lived in the vile village and were involved in small projects in the Timber Industry up unou started the Eastern High Highlands the Rural Housing Scheme. You have pleaded guilty to and have been convicted of serious and prevalent offence. The monie misappropriate aate and benefited from were monies received by you for a specific purpose.

Your lawyer has submitted that this court should use thee the sentencing guidelines in Wellington Belawa v The State [1988-89] PNGLR 496. Although I accept that, ofam of the view that the guidelines are of persuasive value. entencing discretion of thof 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 properroper perspective, I would discussed the factors in the order followed by eyer J and Barnett J in Wellington Belawa Case. The pThe princin Belawawa’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 s 1 to 6 inclusive, the amoe 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 t you misappropriated ated is K10,077.99.

In count 1 misappropriated the sum of K56,575.00. These were moneys paid by various members of s of the public who paid moneys to become rs of EHRHS Inc.

Thep>The total amount misappropriated by you is K103,587.71. It is in my viete a substaubstantial amoun>

2. THE DEGREE OF TROF TRUST

The principal here is that if the offender holds a higher position of trust then the g the culability will be attached. In my view your cour 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.&#1he victims I have no doubt oubt trusted you and deposited their monies only to be misappropriated by you. Most of the victim wedinardinary Papua New Guineans who were self employed or who websistence farmers and thnd they placed alot of trust in youlity to fulfilled what you said you would do. Unfortunately for them betu betrayed thed the trust to their detriment and they host their monies.

3. THE PERIOD OVER WHICH THE OFFENCE WAS COMMITTED

The offences were committed over a perf 18 months. This wass was not e of a sf a sudden impulse but rather it appears to me, was a case that you had thought out and had it executed. You devised theme and put put into effect the scheme over that relevant period in time. I consider that yourons wens were not a spur of the moment criminal act. Rathconsihis wais was a ca a case where a series of dishonest aere committed over a period of 18 months.

4. THE USE TO WHICH THE MONEY WAS PUT TPUT TO

There is evidence that sf they was no doubt usbt used byed by you personally. There is also nce to suggesuggest that you may have used part of the money to construct the demonstration house at Seigu. There is also evidehat he t he used the money for the purposes of ordering or ting bamboo flooring from Crom China and paying for freight and other associated costs there with. I no evidence to sugges maes may have used monies for ofor other purposes such as gambling or anti social behaviour or activities.

5. THE EFFECT ON THEIMS

I consider that the persons who deposited thed the monies with you and the organisation quite clearly suffered financial loss. The evidence showt some ofme 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 quiteain that each ofch of them has suffered financially. In some ofr statements thes they have expressed their fustrations at g being misled and having lost their money.

6. THE EFFECT ON THE OFFENDER HIMSELFMSELF

The effect of these on yoquite obvious. And thnd that is firstly atly 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 ndence to suggestggest that as a result of these convictions it may be difficult for you to obtain employment in the future. HowI accept your lawyerer’s submission that your actiave and will have some effe effects on your family as they would naturally suffer the humiliation and shame that is associated with aicted person and having to g 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 younsel has submitubmitted 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 you have stolen the monies and misappropriated. Th0; These a are said incl 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 K300 also located at Usana Vina 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 insta do not know whet 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 avae for sale.

I note that in Belawa's case the suggestggested tariff was between 3-5 years imprisonment for an offender who misappropriates an amount between K40,000.00 and K150,000.00. was decided in December 19er 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 e maning positions of s of trust and who are first offenders.

It has been urge upon the cthe court by counsel for the accused that the court imposed a partial suspended sentence. Counsel fo state has supposupported that submission principly on the basis that the victims would preferred to be reimburse. That can onlpen if the sene sentence is partially suspended to enable tisoner to dispose of his asis assets to repay the victims.

I have carefully considered whether any part of the sentence ought suspended. There hase has beenissionssions 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. Hmitted that part of the sthe 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 indivi from whom you had misapproappropriate 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 weie briefly as follows. The appe was convicted of d of participating in a Armed Robbery in which a security van was attacked and about 40,000 pounds was st&#160was sentenced to 14 years imprisonment and a rest restitution order was made against him, rim, 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. ox have been taken into thto the possession of the police several days after the appellants arrest but it was conceded that it was not the proceedings of the ro, Salmon LJ at said:

“The principles which shoh 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 trut that case was dwas decided under the Larceny Act 1916 which gave similar powers to make orders for restitution to those contain the Theft Act, although no doubt the Theft Act extend those power to some extent.

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The same principles, however, apply as to how the discretion should be exercised. If there is aubt at all whll 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 plaineses, when there can be no dono doubt that the money belonged to the convicted man, that the court would be justified in exercising itsretion in making an order for restitution. To do so in any caseoubt mubt might cause ause 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 ther apprte machinechinery avai available in the criminal courts for deciding the issue as to who is the true owner. Discovery is smes vmportanortant part of the necessary machinery for resolving issues of that sort, and iand iscovery for this purpose can be obtainly in the civil courts. A civirt is the correct foct forum for deciding matters of t of this kind.” (Emphasis added).In R vn 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 oft. The first appellant (C) pleaded guilty to 1 count of handling. V had been emen 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 ling 26,842 pounds over a period of 12 months. V & C were livingther,ther, and V gave C 100 pounds weekly as house keeping money. Many of the items where they lived had been bought with the mohich had been stolen. When the was searched, a d, a total of something over 22,000 p000 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 wasenced to 2 years imme immediate imprisonment; and C to 12 months imprisonment, suspended. A resion order for 6,342 p342 poand 58 items of property was made against each applicant. Woolf J sap>

“#8220#8220;With regard to make restitution ordehis court has repeatedly emphasized that a restitution orde order should only be made where it is clear that the money or goods in qun fall within the statutoryutory provisions to which we have just referred. It is important thathere isre 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 crimiroceedings. Further more, the criminal courts are not the athe appropriate forum in which to satisfactorily ventilate complex issues as to the ownership of such monies or goods. In cases of dit is better tter to live the victim to pasue his civil remedies or, alternatively, to apply to the magistrates courts under the Police (Property) Act 1897. Onother hand, in approprcaoprcases where the evidence isce is clear, it is important that the court should make the proper use of the power to order restitution sthis can frequently avoid unnecessary expense and delay in y in the victim receiving the return of his property.” (Emphasded).

In my n my judgment the principles set out in the above cases are quite appropriate and applicable in this particulse. I considered the submissions by the counsel for the accused from the bar table ofle 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 med tmed the court that, for instance, the walkabout sawmill, the sawmill accessories, and gold dredger equipment are with a Mr t Usana Village Salamua in the Morobe Province. I am not convinr satisfiedsfied that 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 befor I hhe same view view inrelinrelation to the building materials and the house at Piswara Settlement.

There is no evidencore mto the state of c of conditions of the assets. There is no evidbefore me e me that yoat you infact own those assets. There is no evidence beforbefore me that for instance the walkabout sawmill, the sawmill accessories, and the gold dredger and the bng mals are infact in t in existence. The sumbissions from counsel from the bar table are 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 vs. If there was a clea 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 categorcounts 1 ts 1 to 6 inclusive, 8 to 10 inclusive and 12 to 19 inclusive. These relate to deposit byid by ‘members’ and non members of the EHRHS Inc and its predecessor the EHRHS, as deposits towards the overall cf a house.

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

The last category is count 11. This count es to the amounamount of &#membership fees’ paid by various individuals to becombecome members of EHRHS and it's successor the EHRHS Inc.

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

For the reasons I have given:

(1) &ـ In resp respect ofct 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) &#1n rel to count 7, I se I sentencntence you to 2 years imprisonment in hard labour. This be served concurrentrrently with the sentenposedaragr1) ab/p>

(3) Ia rel tionoun countc11, 11, 11, I senI sentencetence you to 4 years imprisonment with harour.

I order that 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 othat thosethose sentences be made concurrent to the sentence of 4 years.

The total effective sentence is 4 years imprisonment in Hard Labour. Howevdeduc period of 21 mo21 months and 17 days leaving a balancalance of 2 years two months and thirteen days imprisonment.

Lawyerthe State: Public Prosecutor

Lawyer for the Accused: Acanufa & Associates