State v Kepo [2019] PGNC 74; N7807 (23 April 2019)

N7807

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR (FC) 197 of 2016

THE STATE

V

HILLARY TALOPA KEPO

Lae: Kaumi AJ
2018: 15^th & 19^th October
12^th December
2019: 27^th & 28^th February
13^th March
23^rd April

CRIMINAL LAW – Particular Offence – False Pretence – Not Guilty plea – Trial-Criminal Code Act 1974, Part IV-Offences Relating to Property and Contracts, Division 1-Stealing and Similar Offences-Subdivision F-Obtaining Property by False Pretence - Obtaining goods or credit by false pretence or willfully false promise-Section 404 (1) (a)

CRIMINAL LAW – PRACTISE AND PROCEDURE- For a successful conviction on a charge of false pretence it must not only be proven that the accused by false pretence or willfully false promise obtained property from the complainant but that he did so with an intention to defraud.

The accused pleaded not guilty to false pretence arising out of the sale of a motor vehicle and a trial conducted.

Held:

[1] For a successful conviction on a charge of false pretence it must not only be proven that the accused by false pretence or willfully false promise obtained property from the complainant but that he did so with an intention to defraud.

[2] Acts of fraud and dishonesty go to a person’s state of mind. Fraudulent or dishonest intent supply the mens rea (common law doctrine) required to support a criminal conviction for a criminal offence. Prosecutor’s Request No.4 (1975) PNGLR 365.

[3] In general, criminal responsibility is today attached to moral blame. And according to deeply rooted beliefs blame-worthiness does not depend simply on what a man did or the results his actions caused. It depends upon his knowledge and his intentions when he acted or upon his advertence to the possible consequence of what he was doing or about to do, or his careless ignoring of them: Windmeyer J in Timbu Kolian v R [1967-68] PNGLR 320

[4] It is the criminality of the act that is the gist of an offence involving fraud or dishonesty.

Cases Cited

Prosecutor’s Request N0. 4 [1975] PNGLR 320
SCR NO 1 of 1980 Re S22A (b) Police Offences Act; Biyang v Liri Haro [1981] PNGLR 28
Timbu Kolian v R [1967-68] PNGLR 320

Legislation Cited:

Criminal Code Act 1974

Counsel

Ms. Comfort Langtry, for the State
Mr. Colman Balus Boku, for the Offender

TRIAL

23^rd April, 2019

1. KAUMI. AJ: The accused stands charged that he between the 5^th day of February, 2016 and the 24^th of December 2016 at Lae in Papua New Guinea, by falsely pretending to Paul Kopa that Paul Kopa would have exclusive rights to a 25 seater coaster bus when Paul purchased it and obtained from Paul K55, 000.00 cash with intent to defraud.
   

FACTS

2. The State alleges that the accused, Hillary Talopa Kepo, had obtained a loan from Microbank Limited and used his 25 seater coaster bus bearing registration number P.0369J as security for the loan. The State alleges that Hillary was not allowed to sell the bus until the time he repaid his loan in full because the bank had an interest in it.
   
3. The State alleges that between 5 February 2016 and 28 March 2016 Hillary sold the bus to the complainant, Paul Kopa, for K55, 000.00 cash even though he did not repay his loan in full. At the time Hillary did not tell Paul that the bank had an interest in the bus and Paul found out about it when Hillary did not repay his loan and the bank took the bus back from Paul. When Paul asked for his money back Hillary did not repay it.
   
4. The State therefore alleges that when Hillary made the representation that Paul would have exclusive rights to the bus when he purchased it and obtained K55,000.00 cash from the complainant, Hillary obtained K55,000.00 cash by false pretence and thereby contravened section 404 (1) (a) of the Criminal Code Act.
   

UNDISPUTED FACTS

5. The main facts agreed to by the parties and which I accept as being established beyond doubt are that:
   • (a) Hillary got a loan of K25, 000.00 from Nationwide Micro Bank in Lae to buy the 25 seat PMV bus which he was repaying.
   • (b) Hillary whilst still repaying this loan to the bank put out an advertisement informing of the sale of this bus for K55, 000.00 and put his phone contact on it for interested persons to call.
   • (c) Paul read this advertisement on the side of the bus on 11 February 2015 and called Hillary enquiring about the sale and as a result paid him K55, 000.00 and took possession and ownership of the bus.
   • (d) Whilst the bus was in the possession of Paul, the Nationwide Micro Bank impounded it three times over issues related to the bank loan.
     
6. This is a case in which both parties agree about the main facts but disagree on how the law should apply to these facts.
   
7. Hillary admits taking the monies from Paul but argues that he did not obtain it with the intention to defraud the complainant.
   
8. The accused pleaded not guilty and the trial started on the 15^th October 2018. The prosecution tendered by consent four (4) exhibits and called one (1) witness who gave a sworn testimony and it closed its case on the same day and the accused also gave sworn testimony.
   

ISSUE

9. The issue for determination therefore is whether Hillary obtained K55, 000.00 from Paul by false pretence and with the intention to defraud?
   

LAW

404. Obtaining goods or credit by false pretence or willfully false promise.

“(1) A person who by a false pretence or willfully false promise, or partly by a false pretence and partly by a willfully false promise and with intent to defraud-

(a) obtains from any other person any chattel, money or valuable security;

Is guilty of a crime”.

10. The elements of the offence are:
    • (a) The accused
    • (b) By false pretence or willfully false promise
    • (c) Obtained property from the complainant
    • (d) With intent to Defraud
      

STATE EVIDENCE

11. The evidence of Paul is that on 11 February 2015 he saw a for sale sign on a bus so he called the phone number provided and he talked to Hillary. The next day on 12 February 2015, he and his wife met with Hillary in his 5 Door and they paid Paul K53, 000 cash as part payment towards a total purchase price of K55, 000.00 for the bus. The bus was given to them on that day and they paid K2, 000 at a later date as final payment for the bus to Hillary at the police station.
    
12. A few months after Paul had bought the bus and was operating it National Micro Bank officers impounded it at Eriku. It was at this point in time that Paul and his wife found out that Hillary had obtained a loan from the National Micro Bank and had not repaid and also when Hillary informed Paul and his wife that he had used the bus as security to get a loan; and so when he went into arrears the Bank impounded the bus. They were able to get the bus released back to them by the Micro Bank and operated it again but then later on the Bank impounded the bus again for a second time and had it kept at the police station. Hillary never repaid the money so Paul went looking for him. The bus was returned to Paul but in an irreparable state.
    
13. In cross examination Paul said that the bus was locked up at Tent City but they released it. While doing its normal duties the same people came with Police Mobile Squad 13 and held the bus at main market. They took it away and locked it at the Lae Central Police Station. The next day he called Hillary but he went into hiding so Paul went and laid a complaint with Sergeant Jack Madiring at the CID office. Sergeant Jack Madiring called Hillary and he showed up. Paul told Hillary that that was the second time the bus was taken away from him so he wouldn’t take it back. A few days later, Hillary came with two relatives and Paul came with two relatives to the Fraud Squad Office. Mr. Hanson Simon, the lawyer from the Public Solicitors Office was also present. They both filled out a statutory declaration form with Hillary promising to repay K40, 000 for the bus and K7, 000 for loss of business (during the time the bus was impounded by the bank) to Paul. However after a month, Paul hadn’t complied with the terms of statutory declaration so Paul went to Hillary’s house and found the bus there with parts of it missing.
    
14. Maureen Kopa’s statement was admitted and marked as exhibit B. Her evidence was similar to Paul Kopa’s evidence.
    

DEFENCE EVIDENCE

15. Hillary in his evidence to Court said he sold the bus to Paul and it was after this sale that the National Micro Bank officers impounded the bus for the first time. He asked the Bank to release the bus back to Paul but he did not get a good response from it. When the Bank impounded the bus for a second time they refused to release it so he obtained a court order for its release by the bank and so it was released by the Bank and he gave it to Paul who operated it for a while before the bank impounded it for a third time. He then got another court order against the Bank manager and so the bus was again released by the bank. This time Paul refused to take possession of the bus and told him to refund the K55, 000.00 that he had paid for the bus. In response to this he told Paul that the bus should be valued by a reputable motor dealer after which he would buy the bus back at the valued price but Paul refused to accept this suggestion. Hillary said that after this he was threatened so he signed a statutory declaration promising to repay Paul’s money. His personal car was also impounded and Paul eventually got the bus back and he got arrested.
    

APPLICATION

16. For a successful conviction on a charge of false pretence, it must not only be proven that the accused by false pretence or willfully false promise obtained property from the complainant, but did so with an intention to defraud which is a separate element. I will look at what he did or the results of his actions or omissions as well as consider whether those actions or omissions on his part in the circumstances amounted to being fraudulent. It is the criminality of the act that is the gist of an offence involving fraud or dishonesty.
    
17. Now how does the law define the expression “false pretence”? Section 403 (1) of the Criminal Code defines it as being “A representation made by words or otherwise of a matter of fact, past or present that- (a) is false in fact; and (b) the person making it knows to be false or does not believe to be true, is a false pretence.
    
18. What does the law say about the expression “intend to defraud”, for assistance I refer to a few cases on point.
    
19. Mens rea which is a common law doctrine is defined as the intention or knowledge of wrongdoing that constitutes part of the crime, as opposed to the action or conduct of the accused. E.g. a mistaken belief in consent meant that the defendant lacked mens rea.
    
20. The leading statement on mens rea is found in the judgment of Windmeyer J in Timbu Kolian v R [1967-68] PNGLR 320:
    

“In general, criminal responsibility is today attached to moral blame. And according to deeply rooted beliefs blame-worthiness does not depend simply on what a man did or the results his actions caused. It depends upon his knowledge and his intentions when he acted or upon-or upon his advertence to the possible consequence of what he was doing or about to do, or his careless ignoring of them. That of course is trite. The doctrine of mens rea in the common law and of dole in the law of Scotland express this element in guilt. I see no reason for thinking that s.23 (of the Code) demands any departure from this basic concept or that it all attenuates it”.

21. With respect to the phrase “intent to defraud”, Miles. J in SCR No 1 of 1980; Re S22A (b) Police Offences Act; Biyang v Liri Haro [1981] PNGLR 28 (6 March 1981) said firstly, that “a lack of intent to defraud” is a state of mind and that state of mind is a fact and secondly that the decision as to whether a person has an intent to defraud in one sense is not solely a question of fact. It is a mixed question of fact and law which will be decided by the court trying the case.
    
22. In Prosecutor’s Request No 4 [1975] PNGLR 365 the Supreme Court stated:
    

“The obtaining by a false pretence does not itself necessarily show an intent to defraud within s.427 of the Criminal Code (Queensland adopted); no doubt it will usually do so, but it will always be a question of fact whether the accused fraudulently intended by the inducement to obtain property”.

23. Having referred to these authorities I make the following findings with respect to the actions of Hillary in light of his assertion that he never intended to defraud the complainant:-
    
    • (a) First, Nationwide Micro Bank had a lien over the bus as he had used it as security for a loan and he wasn’t entitled to sell the bus yet despite of this he still sold it. In doing so he chose to ignore the interests of his creditor. He knew that he couldn’t sell the bus until he had discharged what he had borrowed from the Bank.
    • (b) Second, he admitted in cross-examination that he sold the bus fully knowing that the bank would go after the bus and seize from Paul. He had the foresight that Paul would have issues with the bank over the loan he had obtained from it and for which he was still repaying yet despite this he deliberately ignored it and he sold the bus.
    • (c) Third, at the time of the sale on 12 February 2015 he failed to inform Paul that the bank had such an interest in the bus. This omission was misleading and Hillary intentionally misled Paul in his quest to sell it to him. This omission gave rise to an incorrect expectation on the part of Paul that he would have exclusive interest in the bus. Had Hillary disclosed to Paul the Bank’s interest in the bus before its sale, Paul would have been better placed to make a decision whether or not to part with his K55, 000.00 in purchasing the bus. He omitted this fact so that he could influence the decision of Paul in his favor.
    • (d) Fourth, when he fell into arrears on his loan repayments to the Bank he never informed Paul about it. He deliberately omitted to inform Paul of this vital information and chose to keep up the misleading representation so that the complainant would not ask for his money back.
    • (e) Fifth, Paul chose to maintain the façade of the bus being without any encumbrances for an extended period of time i.e. a couple of months. He chose not to fully appraise Paul of this situation during this period of time to set the record straight. Paul only became aware of this situation when the Bank officers seized the bus from his possession and impounded the bus, and that he didn’t have any right of ownership to the bus while Hillary still had an outstanding loan to repay to the Bank, as it was the security used by Hillary to secure the loan.
    • (f) Sixth, he had sold the bus for a large amount of money which he knew he wasn’t entitled to receive from the sale of the bus. And he never returned the K55, 000 cash despite having the means to repay.
    • (g) Seventh, he swore a statutory declaration saying that he would repay the complainant but he failed to do so. The statutory declaration was used as a means to pacify Paul who was very frustrated and angry after the Bank had impounded the bus for a third time over a period of months since he had paid K55, 000.00 for it.
    • (h) Hillary said that when he signed the statutory declaration he did so under duress. I find this not plausible for two reasons, firstly, I note that there was the presence of a lawyer from the Public Solicitors Office that had been helping him present when he signed the declaration and secondly, the signing was done in the middle of the main police station in Lae city, specifically at the Fraud Squad office. I note that Hillary says he had been threatened before he signed the statutory declaration to get him to pay so I pose the question, that if the violent means of threats which preceded the signing didn’t work then how would it be possible for the signing of a document make him pay up?
    • (i) Finally, any attempt on his part to get the bus back was not done voluntarily but on the insistence of Paul.
      
24. In light of my findings I find that when Hillary sold the bus to Paul he did so when he had no right to sell it and when he did he intended to defraud Paul.
    
25. In all of these circumstances it can be safely said beyond a reasonable doubt that Hillary’s actions and omissions amounted to false pretence or willful false promise with an intention to defraud.
    
26. I note and appreciate the amount of work, Mr. Boku of counsel, obviously put into defending Hillary and this is reflected in his submission however the circumstances of this matter dictate that I cannot subscribe to the main thrust of his submission that what Hillary did after the sale of the bus shows a lack of intent to defraud as in my view what Hillary did and did not do before the sale was wrong in law and what he continued to do and did not do after the sale of the bus clearly show the presence of an intention to defraud Paul.

DETERMINATION OF THE CHARGE

27. I find that the State has proven all elements of the charge of False Pretence beyond reasonable doubt.

VERDICT

28. I return a verdict of guilty of false pretence against the accused Hillary Talopa Kepo.
    

Public Prosecutor: Lawyers for the State
Public Solicitor: Lawyers for the Accused